RECENT DEVELOPMENTS
RECENT DEVELOPMENTS
As the last Special Committee noted in its Report, DEVCO’s management and workers achieved a considerable degree of success in the first year of the Corporate Plan. This Committee agrees and notes that, despite having had its share of bad luck, the corporation essentially achieved its bottom line objective in 1996-97; DEVCO’s cash requirement was $34.6 million, slightly higher than the financing arrangement limits approved by the federal government. Significant gains were made in the area of labour-management relations, as addressed later in this Report. Collective agreements were also signed with all four bargaining units, while grievance and arbitration statistics were the lowest since DEVCO’s inception.
Investments related to the corporation’s non-contributory pension fund also performed well in 1996-97. This pension fund, discussed in greater detail below, had been expected to have an unfunded liability at least until 1998-99. Indeed, in 1995-96 the corporation reported an unfunded liability of $36 million in that fund. However, DEVCO reported a surplus in this fund at the end of the last fiscal year.
Poor geological conditions contributed in large measure to DEVCO’s production problems last year. Despite these difficulties, DEVCO’s workforce demonstrated the dedication that this Committee believes is necessary to get things turned around. The last Special Committee was told that the corporation’s year-end output level would have been much lower without the strong commitment and hard work of employees at both of DEVCO’s collieries. In the final quarter of last year, workers at the Phalen mine restored production on 7 East Wall and by year’s-end had regained 77% of planned output, up from 68% for the first three quarters of the year. In the final quarter, workers at the Prince colliery initiated an earlier-than-planned start-up on 15 West Wall and by year’s end had achieved output 128% of that planned. Clearly, these efforts served to minimize the output losses caused earlier in the year by poor geological conditions. Perhaps equally important, these efforts demonstrated the ability of the workforce to be flexible in implementing the Corporate Plan, one of the ingredients that all members of this Special Committee believe to be key to achieving self-sufficiency.
There are things that we could and should be doing better. There is no question that, given time, we will continue to make improvements in all aspects of the corporation. We are in the second year of a turn-around of a major, dilapidated company, a company that was on its last breath, and it has not been easy for anyone, including all of our employees and the families of our employees and the communities generally (Chairman of the Board of Directors, 18/11/97). |
DEVCO’s five-year Corporate Plan is updated in the spring and fall of each year. Every twelve months, a new year is added to the Plan so as to maintain a five-year horizon. DEVCO has provided this Committee with its updated Corporate Plan for the period 1997-98 to 2001-02. Table 1 (see Appendix A) provides a comparison (where data permit) between the first four years of the updated Plan and the same time period in last year’s Plan.(1) Each of the first three years of the updated Plan projects a level of saleable output slightly higher than found in last year’s five-year Plan, while the fourth year projects a slight drop. Overall, average annual saleable output in the first four years is projected at 3.34 million tonnes, compared to 3.25 million tonnes in last year’s Plan. As a result of expected higher output, projected operating costs are somewhat higher under the updated Plan. For the three-year period for which data are available, operating costs per saleable tonne of output are consistently higher under the updated Plan, although these costs are projected to decline steadily each year throughout this period.
We have downsized to the point where we are mining coal cheaper than we were five or six years or 10 years ago. Every year we are changing (International Association of Machinists, 19/11/97). |
The updated Plan projects lower sales in the first and fourth years and larger additions to inventory, especially in 1997-98, than were anticipated under last year’s Plan. One of the most significant differences between the two Plans pertains to projected net funding requirements. Under the updated Plan, DEVCO expects to witness a cash surplus of $2.1 million in the first four years, compared to the $14.1 million cash surplus that was projected under last year’s Plan for the same time period.
The updated projections presented in Table 1 do not take into account the prospect of a fully funded non-contributory pension plan or the cessation of roadway development at the Phalen mine. Both of these matters, which are discussed later in this Report, could serve to raise the projected cash surplus over the planning period. If the Phalen mine were phased down, however, DEVCO would have the added costs of a new human resource strategy.
The long-term contract between DEVCO and its major customer, Nova Scotia Power (NSP), is renegotiated every five years. The current agreement, which calls for an 18% price reduction phased in over a three-year period, must be re-negotiated in the year 2000. DEVCO realizes that it must continue to reduce costs in the interim if it is to be in a position to maintain NSP as a major customer.
Domestic demand for DEVCO’s coal around the turn of the century is also expected to be influenced by the Sable Offshore Energy Project (SOEP), which is intended to supply gas to markets in Eastern Canada and the North-eastern United States.(2) A small quantity of gas is expected to be processed into liquid form and transported by way of a branch line to Point Tupper for shipment. The SOEP producers selected the Maritimes and Northeast Pipeline Project (M&NPP)(3) to transport the gas. The Joint Review Panel on the SOEP approved this project in October 1997. Various federal and provincial regulatory bodies must now approve the Joint Review Panel’s report and recommendations. Production is expected to start by the end of 1999.
This Committee was told that natural gas could have both positive and negative effects on DEVCO’s Corporate Plan. In terms of the former, gas offers NSP an opportunity to lower its SO2 emissions. Nova Scotia’s overall limit is 145,000 tonnes per year and this limit has almost been reached. If gas replaced the heavy oil currently used at the Tuft’s Cove and the Trenton power stations, overall SO2 emissions would be lowered and some room created for additional coal sales to DEVCO’s major customer. On the other hand, the conversion from oil to gas could indirectly displace coal sales, if the output at coal-fired stations were to be reduced as a result of increased output at the newly converted gas-fired stations.(4) Moreover, there is some concern that gas could be substituted for electric heat, thereby lowering the overall demand for electricity. Finally, NSP is expected to face more competition once the electricity market in Nova Scotia has been deregulated; this too could displace DEVCO’s coal sales to NSP.
While it is not known what impact environmental standards, natural gas and the demand for electricity will have on DEVCO’s coal sales in the years ahead, it is known that to achieve self-sufficiency DEVCO must be able to compete with producers of coal and other fuels around the world. To do this, DEVCO must change and it is unrealistic to expect this to happen instantly. The five-year Corporate Plan contains a number of elements designed to, among other things, improve management, enhance product quality and service and reduce the costs of production. These and other objectives are being pursued throughout the planning period one year at a time.
As in previous quarters, DEVCO sold more coal in the first two quarters of 1997-98 than had been projected under the Corporate Plan; mid-year sales exceeded the Plan’s projection by 11%. Although export sales were 108,000 tonnes below projections, sales to DEVCO’s primary customer, Nova Scotia Power, were 238,000 tonnes above them. The data in Table 2 (see Appendix A) show that inventory declined by 100,000 tonnes as a result of these additional sales. According to the Plan, DEVCO had intended to restore inventory in 1997-98; however, as a result of the production problems experienced at the Phalen mine, mid-year coal inventory was 530,000 tonnes below the Plan’s projection. If, as expected, the Phalen mine becomes operational and continues to produce over the remainder of the year, management expects that DEVCO’s coal inventories will increase by year’s end.
As coal sales exceeded the Corporate Plan projection for the first half of 1997-98, it is not surprising that revenues also surpassed mid-year expectations. In fact, as illustrated in Table 2, revenues exceeded the Plan’s targets by 16% in the first quarter of the year and 12% in the second.
This Committee was told that DEVCO is learning to work better under heavy roof conditions, but geological factors (e.g. sandstone intrusions, heavy roof conditions, etc.) continue to account for many of the corporation’s current production and development problems and delay the achievement of key objectives in the Corporate Plan. According to the 1997-98 Performance Report for the six-month period ended 30 September 1997, output at the Phalen mine for the first two quarters of 1997-98 was approximately 30% below that projected under the Plan. This Committee was told that third quarter production had also been interrupted as Phalen’s only producing wall, 3 Centre, collapsed under heavy weighting. With the continued dedication and hard work of Phalen’s workforce, the Committee was told that DEVCO hopes to resume production by the middle of December.(5) If all goes well thereafter, the corporation hopes to produce 840,000 tonnes of coal by the end of the fiscal year.
… we do accept responsibility as employees that we have to do our fair share. If you could travel to Phalen colliery right now, you would see that we are serious about keeping this industry alive (United Mine Workers of America, 19/11/97). |
According to mid-year results, development at both Prince and Phalen was well behind the Corporate Plan’s targets; development at Prince was 50% of that projected and at Phalen it was 38%. Equipment problems and a reallocation of manpower to production were the main reasons cited for the shortfall in development at the Prince mine, while poor geological conditions had halted development at the Phalen mine.
In view of the shortfall in output, operating costs for the first six months of 1997-98 were slightly lower than those projected in the Corporate Plan. As of 30 September 1997, operating costs were $77.1 million, 2% less than expected; however, when differences in saleable output are taken into consideration, actual operating costs for the first six months of the year were $61.15 per tonne, rather than the Corporate Plan projection of $47.34 per tonne. This difference clearly illustrates the adverse impact of poor geological conditions on corporate performance. Non-operating costs (e.g. pensions, workmen’s compensation, administration, etc.) during the first half of the year were roughly one-fifth lower than the Plan’s projection. Overall, DEVCO reported a loss of $12.3 million for the first six months of the year, more than double that projected under the Corporate Plan. After making the necessary adjustments for amortization, deferred pension costs, payments for early retirement, capital and payments for environmental projects, DEVCO’s funding requirement as of 30 September 1997 was $14.2 million, almost two-thirds higher than the Plan had anticipated.
… when you examine the budget and relate it to on-going activities, the loss in production can clearly relate to a geological problem which is beyond the control of management (Chairman of the Board of Directors, 18/11/97) |
The determination of everyone at DEVCO - management, labour representatives and miners - to make the company work has been very evident throughout all the hearings before each of the Special Committees on DEVCO. In March 1997, the second Special Committee was told repeatedly that the technology existed for working through the challenging geological conditions in the Phalen mine and that that these geological conditions could and eventually would be overcome. Unfortunately, it became clear during the recent hearings that in this area much-need luck has so far eluded the company.
When you work and work, as our people are doing – and a lot of guys are working long hours, most of them working five, six or seven days a week – it seems like you are always cleaning up a mess because of the roof falls and water problems. We then have this. It is discouraging but, as the president said, we will look at every option available to us (Chairman of the Board of Directors, 18/11/97). |
After several months this year when production at Phalen was going very well – with the new wall face averaging 50,000 to 60,000 tonnes a week – DEVCO’s luck turned once again. While developing the main slopes at the Phalen mine, workers encountered a number of rock/gas outbursts, which seem to be getting stronger. A similar situation on the No. 3 slope stopped development in 1994; and previous mines have had the same experience at the same depth.(6) The Committee was told that the corporation intends to do some exploratory work in the hope of finding a solution. However, rock/gas outbursts, unlike heavy roof conditions, pose a danger to miners. DEVCO management was clear and unequivocal that it did not want workers put at risk in order to extend the life of the Phalen mine.
First and foremost, we do not want a situation where any of our employees would be put at risk unnecessarily to try to make that mine work. That is a major concern; namely, that we do not want anyone to get hurt or trapped or killed, or whatever, in the mine. The board is deeply concerned about that (Chairman of the Board of Directors, 18/11/97). |
DEVCO intends to examine all its options and, once the best course has been determined, it will revise the Corporate Plan accordingly. The Chairman of the Board was particularly concerned that his testimony not be misinterpreted, as he outlined the options for the "worst-case scenario", which offers no long-term future for the Phalen mine. In that worst case it was estimated that approximately 12 million tonnes of coal would be available for production. The rate of extraction would determine the remaining life of the Phalen mine. However, DEVCO management testified they are not yet at that "worst case" - geologists will try to determine whether the mine plan can be changed to work around the outburst-prone areas and, if it can, the development will be adjusted to see if the areas can be circumvented.
For the past several years, the mining at Phalen has had certain amounts of success depending on geological conditions. This will continue as long as Phalen colliery is feasible, viable and economical. However, at some point in time, if we continue to run into these problems, someone, not mother nature, probably an accountant, will say Phalen cannot run economically anymore (United Mine Workers of America, 19/11/97) |
By contrast, the recent results at the Prince mine have exceeded the expectations of both the Plan and DEVCO. The second Special Committee’s Report noted that north-south development at Prince was ahead of schedule and that DEVCO had developed a longer-term plan for the mine. The unions supported this initiative, which was thought would extend the life of the Prince mine by 15 to 20 years.
During its hearings, this Committee was told that DEVCO had recently completed a reassessment of the Prince mine, identifying about 44 million tonnes of coal in total, roughly double what had been thought to exist there. At current production levels, this reserve would significantly extend the life of the Prince mine.
Some of the good news is that we have just done a reassessment of the life of the Prince mine. We have done some work in the last two months or so, and we think there is about 44 million tonnes at Prince that is mineable, which would give that mine a very long life (President and CEO of DEVCO, 18/11/97) |
This Committee commends both management and labour for their effort to work through the difficult and often unpredictable geological problems at the Phalen mine.
Recommendation:
That DEVCO continue its exploration plan at the Phalen colliery and examine all possibilities for continued development. The Committee also recommends that DEVCO continue to inform the public on the future of the Phalen mine.
Each Special Committee on DEVCO has maintained that good labour-management relations are key to the company’s attaining self-sufficiency. The goals inherent in the Corporate Plan will be achieved only if management and workers pursue the Plan’s objectives as a matter of common interest. Like its predecessors, this Committee also applauds the efforts of management, workers and the unions in achieving much-needed progress towards enhanced co-operation in DEVCO’s workplace. Grievance and arbitration statistics in 1996-97 were the lowest in the corporation’s history. And, for the first time in 21 years, all four bargaining units signed contracts in 1996-97 without a conciliator or outside involvement.
In the recent hearings, both management and labour representatives told this Committee that labour relations at the local level had improved. Last year, DEVCO implemented "Beyond 2000", a strategic initiative designed to identify the changes necessary to achieve DEVCO’s goals. This Committee was told that there are currently some six teams working under this initiative. Both management and labour referred to a quality improvement team (consisting of miners, electricians, mechanics, superintendents, foremen and others) that was directly involved in establishing equipment and operating requirements for setting up the coal face known as 8 East Wall (Phalen colliery). Although "Beyond 2000" was not the unions’ preferred method of increasing worker involvement in decision-making, they did report that this approach is working.
George White proceeded with his management quality teams. He set the teams up. We did not oppose that because we felt that this was the type of process that we should have. Employees have input into what machinery should be bought or what adjustments should be given the machines. They did work well. We came up with a lot of suggestions for improvements for the next wall face … (United Mine Workers of America, 19/11/97). |
By contrast, relations have always been difficult between the unions’ district executives and DEVCO management; this situation would appear to continue today. During the proceedings of the last Special Committee, it seemed that tensions were easing, but this improvement now appears to be stalled. One union representative told the Committee that communications between the two sides remains poor. Other causes of tension, such as a lack of trust, were also cited. It was apparent to the Committee that the increased uncertainty over the future of the Phalen mine, and with it the future of DEVCO, is also undoubtedly (and not surprisingly) a contributing factor to the continuing tensions between labour and management.
The first Special Committee’s Report identified several requirements for improving labour-management relations: increased transparency in corporate decision-making and planning; a higher level of trust between unions and management; better communication between the two sides; a real "sharing of expertise"; and labour predictability. This Committee recognizes that improvements have come about in many of these areas; nevertheless, it realizes that much more must be done to instil the level of labour-management co-operation identified at the outset of this Report as being necessary to provide the best chance for DEVCO’s success. This Committee urges all DEVCO workers, managers and union representatives to continue in their quest to improve labour-management relations at all levels of administration and organizational structure. This Committee is not aware of any instance in which effective, successful labour relations have been conducted through the public media.
Recommendation:
That all parties, especially upper management and the union district executives, strive to improve labour-management relations and develop a more co-operative environment within which to achieve the objectives of the Corporate Plan.
The issue of pension costs, especially as these relate to DEVCO’s non-contributory pension plan, was a focus of the previous two Special Committees. According to the first Special Committee’s Report, the Corporate Plan for the five-year period 1996-97 to 2000-01 projected an expenditure of $82.5 million to cover the unfunded liabilities associated with DEVCO’s non-contributory pension plan and older pre-retirement and early retirement plans. Following a directive from the Superintendent of Financial Institutions in 1991, the Corporate Plan provided for a payment of $23 million in each of the first three years of this planning period in order to remove the unfunded balance in the corporation’s non-contributory pension plan. To help reduce the burden of these costs, the first special Committee recommended that the federal government provide an appropriation equal to one-half of the total cost of the unfunded liability in the non-contributory pension plan and older pre-retirement and early retirement plans. As this recommendation was not adopted, the second Special Committee recommended that the repayable loans extended to DEVCO be forgiven, provided the corporation was able to achieve its bottom line objective in each year for which the loan was paid.
According to DEVCO’s Annual Report for the fiscal year ended 31 March 1997, the corporation recorded a surplus of $416,000 in the non-contributory pension plan. This Committee was told that four fund managers invest these pension funds along with those from the company’s contributory pension plan. In 1996, these invested funds realized a rate of return that was comparable to the industry average; however, it must be remembered that the financial status of these plans fluctuates somewhat with market conditions.
According to the testimony, the non-contributory pension plan must meet two tests – an actuarial valuation and a solvency valuation – before the Superintendent of Financial Institutions can be satisfied that it is fully funded. While the plan may be fully funded on an actuarial basis, its financial position with respect to the solvency test will not be known until the end of 1997. If the plan is deemed to be fully funded at this time, DEVCO’s cash requirements could be less than those projected under the updated Corporate Plan.
This Committee views as a positive development the fact that 93 workers joined DEVCO’s contributory pension plan this year. As membership in the contributory plan grows, not only do the workers involved receive a larger pension, but future liabilities associated with the non-contributory plan fall.
Recommendations:
That management and the unions continue to encourage DEVCO’s workforce to become members of the corporation’s contributory pension plan.
That DEVCO’s pension plans be audited on the same fiscal-year basis as that used for the Annual Report.
As a result of the consultations among DEVCO’s stakeholders, the corporation agreed to provide quarterly progress reports providing basic information on the implementation of its Corporate Plan. DEVCO also agreed to engage the services of an independent accounting firm to verify the accuracy of the contents of these Performance Reports. DEVCO produced three quarterly reports and a year-end report in 1996-97 and two quarterly reports in 1997-98. In addition, DEVCO meets with stakeholders on a regular basis.
We have regular meetings. We finished a series of meetings last week as a result of our six-month quarterly reporting period. We had a board meeting and then we had a meeting with the union executive. We had meetings with municipal government and the business community and the clergy … [w]e have been communicating to the best of our ability with the community and with all the stakeholders, including members of your committee … (Chairman of the Board, 18/11/97) |
This Committee is encouraged by DEVCO’s efforts towards open communication with the community and stakeholders. As noted at the beginning of this Report, communication is one of the key elements for ensuring the best possible chance for DEVCO’s success. While recognizing the importance of the Performance Reports and the effort put into their production, this Committee has, however, experienced some difficulty in comparing the reports, as the format and data can change from one report to the next. For instance, some of the projections for the year 1996-97 as presented in the five-year Corporate Plan tabled with first Special Committee differ from those in the Performance Report for the year ended 31 March 1997. To reconcile these figures, adjustments must be made to revenues, operating costs, and pension and human resource strategy costs. The Committee is aware that these Performance Reports are relatively new and are continuously evolving in response to the needs of DEVCO’s stakeholders. Nevertheless, the Committee believes that more consistency of format and content would better serve these stakeholders in the future.
Recommendation:
That DEVCO try to be more consistent in its presentation of the data in the corporation’s quarterly Performance Reports.
The Donkin coal reserve is thought to be the last major block of coal in the Sydney coalfield and is estimated to consist of approximately 1.5 billion tonnes of coal. This coal reserve is also regarded by many to be the future of Cape Breton’s coal mining industry. Aware of the potential importance of this reserve to the future of the Cape Breton coal industry, but recognizing that the economic viability of the mine was far from clear, the first Special Committee recommended that DEVCO and the Government of Nova Scotia undertake a study to ascertain the development potential and cost of opening the Donkin mine.
This recommendation was not adopted because the studying and developing of the Donkin mine was not within DEVCO’s Corporate Plan as approved by the federal government. DEVCO’s position, as explained by the Chairman of the Board to this Committee and its predecessor, is that the corporation must focus on making existing operations economically viable. Nevertheless, the second Committee was told by the former Minister of Natural Resources that the government would consider proposals from any party interested in assessing the economic potential of Donkin as a private sector initiative.
… if there are others who want to enter into discussions with the Government of Canada about updating or further enhancing the feasibility studies done in relation to Donkin with respect to perhaps developing them through some private sector initiative, I am more than willing to discuss that and to make available that which we have (Minister of Natural Resources, 20/3/97) |
The current Minister of Natural Resources, appearing before this Committee, reiterated the government’s position, which is that the development of the Donkin coal reserve, by DEVCO or by the private sector, must be based on sound business principles and be commercially viable.
Governments are no longer in the business of mega-projects or the subsidization of business and industry; economic self-sufficiency is a paramount consideration (Minister of Natural Resources, 3/12/97). |
While the second Special Committee was preparing its Report in April 1997, it learned that DEVCO’s Board of Directors had signed a letter of intent to enter into an agreement to sell the land and transfer the leases related to the Donkin mine site and coal reserve to Donkin Resources Limited (DRL).(7) As yet, no agreement has been signed. The Minister of Natural Resources told this Committee that negotiations are on hold until DEVCO has reviewed all of DRL’s preliminary reports (e.g. coal quality, marketability, and viability of mine plans) and has received an appraisal of Donkin assets.
According to DRL, private sector development is but one option. Under two other options proposed by DRL, DEVCO could acquire all rights to a detailed plan for the development of the Donkin mine or Donkin could be developed and operated as a private-public partnership.
The Minister stated that the government "has given DEVCO some very clear guidelines for the negotiation of any agreement to sell the Donkin mine. It is also important to note that the final decision on such an agreement rests with the government, since it would represent a significant deviation from DEVCO’s approved five-year Corporate plan. When we receive DEVCO’s revised corporate plan in the new year, our government will look closely at its ramifications for the corporation, and for workers and for the Cape Breton economy." In the context of this statement, the Committee reiterates the following recommendations of its predecessors:
- That the future of existing mines be clearly assessed;
- That a longer-term perspective for current and future mine development with contingencies, be included in the Corporate Plan; and
- That the geological and economic data of the Donkin mine be thoroughly assessed to ascertain whether and under what circumstances Donkin would be commercially viable.
It is clear from the evidence that, after assembling and analysing all of the preliminary data, a detailed feasibility study would be the next step. This would require an estimated investment of $1.5 to $2 million and could be done by DEVCO alone, by DEVCO in partnership with DRL, or entirely through the private sector.
Before an option is chosen, this Committee recommends that the government make the fundamental business and public policy decision on whether to keep and explore the potential of Donkin through DEVCO or to make some other arrangement involving the private sector. In view of the importance of this decision, this Committee hopes that it would be made only after consultation with the Cape Breton community and consideration by an appropriate parliamentary authority.
This Committee has examined DEVCO’s Annual Report and Performance Report for the fiscal year ended 31 March 1997 and the Performance Reports for the first and second quarters of 1997-98. This Committee is grateful for testimony it received from several witnesses during the period 18 November 1997 to 3 December 1997.
This Committee, like its predecessor, is impressed by the progress DEVCO’s management and workers have made in such a short period in such difficult circumstances. When geological conditions have been good, DEVCO has demonstrated the capability to produce a volume of coal that is equal to or better than that projected under its Corporate Plan. Moreover, sales and revenues have frequently exceeded corporate expectations. When geological conditions are poor, corporate performance suffers; however, it is especially during these periods that the resolve of DEVCO’s workforce is most apparent. As noted previously, thanks to the valiant effort of workers at the Prince and Phalen collieries in the final quarter of last year, the Corporate Plan’s cash requirement targets for the year were essentially achieved.
With a little luck, DEVCO could witness a cash surplus (excluding loan repayment provisions) in the coming fiscal year. This will depend, of course, on a sustained period of production at both collieries, the decision on Phalen’s development prospects and the financial status of the non-contributory pension plan.
DEVCO’s management and workers are trying to establish a more flexible, communicative and co-operative corporate culture, which will be vital to the success of the Corporate Plan. This Committee recognizes the achievements made thus far and encourages workers, management and the unions to surpass these in the years to come.
This Committee thanks all of the witnesses who shared their time and expertise during the hearings. It also appreciates the work of those who provided timely responses to the Committee’s requests for additional information. Without this support, the Committee would not have been able to prepare its Report.
1 The updated Corporate Plan does not make any provision for loan repayments, as the terms and conditions related to repayment have not yet been finalized
2 SOEP is made up of the following firms: Mobil Oil Canada (50%), Shell Canada (35%), Imperial Oil (9%) and Nova Scotia Resources (6%).
3 The M&NPP is composed of the following firms: Westcoast Energy Inc. (37.5%), PanEnergy Corp. (37.5%) and Mobil Oil Canada (25%).
4 According to NSP’s presentation to the Joint Review Panel on the SOEP, NSP entered into a joint venture with Consumers’ Gas Energy Incorporated to compete for laterals and associated natural gas distribution rights in Nova Scotia. In addition, NSP has signed an agreement with M&NPP to purchase 90,000 million Btu per day (subject to a commercially acceptable price) to supply Tuft’s Cove for the generation of electricity. NSP also intends to convert one generating unit at Trenton so that when one of the units at Tuft’s Cove is down, Trenton can take up the slack to keep the load factor high (Joint Public Review Sable Gas Projects, Order No. GH-6-96, Keeley Reporting Services Inc., Volume 54, 10 July 1997, p. 11617
5 While the Committee was preparing its Report, it learned that Phalen is not expected to restart production until the beginning of January 1998. The Committee also learned that Nova Scotia Power intends to import at least 180,000 tonnes of coal.
6 Indeed, it emerged during Mr. Farrell’s testimony that the same problem may exist at the Donkin site; if so, he told the Committee this would cut off a considerable amount of coal. However, he added that he is not convinced that this problem will emerge at Donkin.
7 The approval of Nova Scotia’s Minister of Natural Resources is necessary to transfer the leases, since the province owns the leases to the Donkin coal reserve.