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NOTES ON NUCLEAR LIABILITY X B&Mans, 6th Nov. 2003

...
FIN5:
THE HELSINKI CITY COUNCIL MADE THEIR DECISION BLINDFOLDED


Remarks on the City of Helsinki (Finland´s Capital) energy company Helsingin Energia´s participation in the TVO´s FIN5 -enterprise, and on the processes that led to the City council´s positive decision.


Internet-article, International version, published 26th November 2003

Public domain.

Author/editor:
Timo Vuorio, thill@suomi24.fi
Concerned finnish citizen who wants
his computer to run on something other
than nuclear generated electricity.

Appendices:

NOTES ON NUCLEAR LIABILITY

Bo-Erik Ekström´s Internet article. [B&Mans 6th Nov. 2003]. (Link not active yet, proofreading underway).

These can be found by clicking with the mouse on the links at the block over the headline.


To begin with

On 12th November 2003 the City Council of Helsinki made their binding decision on the Helsingin Energia´s (the energy company owned by the city) participation into the TVO´s (Teollisuuden Voima, energy company owned jointly by the State and communal energy companies - i.e. taxpayers - and private industry) FIN5 new Nuclear Power Plant (NPP) project, that is being planned to materialize in 2009 or 2010 (there are four NPP´s in Finland currently and this is going to be the fifth). As we all know by now, the Council answered "yes", practically by storm (53 - 29). [Helsingin Sanomat, 13.11.2003].

It seems very likely that the decision on the participation was actually made already before the Council meeting by the "nuke-parties", i.e. the National Coalition Party (conservative) and Social Democrats, and that their representatives in the council only behaved accordingly.

This because the City Council was forced to make their, in many ways far-reaching (man!), decision armed with less than appropriate individual judgement and less than valid information.

Fuzzy logic at the top floor

A prestigious and a very instructive expert statement on the financial aspects of the Helsingin Energia´s (HelEn) participation into the FIN5 enterprise has been made by MBA Bo-Erik Ekström, Senior Advisor in Strategy, Organization and Finance, and he is very concerned. In his Internet article he crystallizes his concerns in one question:

"Why are the (FIN5-) investment calculations classified?"
[B&Mans, 6th Nov. 2003, "Does Helsinki have the ambition to become a larger industrial player on Northern European energy markets?": Item 10. Article published here with the kind permission of the author]
.
Finland´s most widely circulated swedish newspaper Hufvudstadsbladet (Finland has a swedish-speaking minority of some 6 % of the population. Helsinki is one of the major swedish-speaking areas) published Ekström´s op-letter "Medaktör på Nordeuropas energimarknad?" 11th November, i.e. the day before the crucial Council meeting. [Hbl].

This op-letter in Hbl is a slightly briefer version of the above Internet article.

The tabloid Iltalehti also knew their journalistic responsibilities, as they published a news story on the issue, even though this was only the same day as the crucial decision was to be made, i.e. 12th November. The news was titled "Top consultant considers Helsinki´s nuclear decision a jump into the dark - why are the calculations secret?". This news is based on the above Internet article also, and it was supplemented with a few remarks given by Ekström in an interview. [IL].

The City of Helsinki´s Juridical Office pronounced the HelEn´s FIN5 investment calculations "secret" as the TVO had suggested. The other levels of decisionmaking, the City Board and the Technical Committee of the City included, had been delivered the calculations, but the members of the City Council got their hands on the calculations only the very same day that the binding decision had to be made. [HS 13.11.2003]. Ekström describes the situation in Iltalehti:

"For example most of the City Council members get their hands on the `top secret´ -classified memorandum only in the Council meeting tonight (12th Nov. 2003), just a moment before the hearing on the binding decision."
[IL].
Many societies expressed their concerns against the decision, and the author was involved in a citizen movement organization that left a common statement left to the council, also several energy experts presented grounded arguments against the FIN5 enterprise in the media.

Are we gonna take it?

Everything mentioned above of course is absolutely impossible to legitimate on any grounds, as all this violates democratic decisionmaking on citizen interests.

In the financial world it is completely normal in itself that budgets are not discussed in public. But it is equally clear that those responsible for decisions, "owner reprentatives" or "shareholder representatives", should be able to know what they´re heading into. They have to be able to study the issues and ask for consultation from financing professionals if needed.

Financial consultants handle confidential information on a daily basis, and it is completely normal that they can see and hear information that is classified "secret" - obligation to maintain secrecy holds here also, as Ekström states. [B&Mans: Item 10]. Financial consultants are there to give responsible actors, "active owners" so-called "second opinion" estimates on the enterprises´ profitability or non-profitability so that these wouldn´t have to make their decisions poorly informed.

It is pretty hard to find any reason why the TVO´s FIN5 enterprise and HelEn´s participation in it should make an exception in this respect. This, however, was/is the case.

Energy politics at gunpoint

So the investment calculation was delivered to the city council members only the very last minute and classified "top secret". And so they didn´t even have a theoretical chance to study the calculation thoroughly. Or consult a financing pro? Ho-hum.

Also the calculation seems to have been formulated in a misleading manner. First of all, nothing but the sums required for the enterprise were known in advance. [IL].

45 million euros was demanded for the project from the HelEn directly. In addition to this the stock company Mankala (that governs the majority of the City´s TVO ownership) will participate in the project with 35 million euros risk investment without guarantees from the City. These two added the total sum is some 80 million euros, and figures of this order have been presented in the public regularly. [B&Mans: item 4], [IL] .

The TVO´s current estimate of the total investment of the project is 3,2 billion euros. The City of Helsinki i.e the HelEn owned by the City has, through its three partnership companies, an about (actually slightly less than) 10 % share of the TVO. As the City Council of Helsinki has decided to join in with a sum equal to its share of the TVO, the total financial risk taken by the City of course is a little less than 320 million euros. [Ibid.].

In Iltalehti Ekström makes the remark that in the investment calculation this total sum is actually not mentioned at all:

"Moreover in the paper there´s no single mentioning of the fact that in addition to the investment of 80 million euros the City of Helsinki would take a share of some 240 million of the financial risks (...) should it stake into the (FIN5) enterprise." [IL].
Is this any short of a scandal? It certainly has the appearances of one.

All this at the very same time that, for example, the City´s health care and social services budgets are being downgraded significantly. And yet the City´s now given the blessing for the their investment into the FIN5 enterprise, cheeringly one might say. [B&Mans: Item 4], [B&Mans: Item 8], [IL].

For all the above reasons Ekström describes the Helsinki City Council´s decision as a "jump into the dark". [IL].

More fuzz

Ekström points out several other views and asks further questions that the Council members should absolutely have been familiar with. We can´t tell if these topics are covered in the investment calculation, but it is for sure that the council members haven´t had the chance to get acquainted with the topics before the binding decision. This because, as noted above, they got their hands on the information on the very last minute, and by no means had any chance of studying it with proper professional help.

If not the Finnish State at least the European Union is very likely to do something to the business institutions´ tax-free status, even within the time horizon we´re now looking at (within 8-10 years, that is). This because the tax-free status gives them a significant advantage over joint-stock companies. At the moment of this writing the HelEn has an advance of 29 % in taxes over joint-stock companies, but this is very likely to change before the FIN5 Nuclear Power Plant (NPP) has generated one single kWh. And if the investment calculation is based on the HelEn´s current profit expectations, a change in the tax structure would subvert the calculations severely. [B&Mans: Item 1], [B&Mans: Item 3].

The fact that the FIN5 enterprise will require serious sums of money from the very beginning, but starts to cash in only after nearly a decade, must not be so attractive to the City people (= the prime owners of HelEn) either. [B&Mans: Item 7].

Worry not, we know what we´re doing (and who´ll pay all that, folks)

According to the introductory memorandum of the Technical Committee the estimates on the enterprise´s profitability have been made up on the principle of cautiousness, and they are based on the prognosis that the price level of electricity will increase in the future. But no numerical estimates are given in public documents. [IL].

In his Internet article Ekström notes excactly the same and asks in slightly different words:

"How will the electricity market price develop during the next 15 years - does Helsinki have a view of its own?"
[B&Mans: item 7].
And:
"Are the owner representatives familiar with HelEn’s current risk management policy? What risk management principles (and future electricity price expectations) are the investment calculations based on?"
[Ibid].
Other factors exist to add to the insecurity:
"... the price and conditions of the debt will in turn determine their decision to join. This may prolong the process. When Helsinki makes a (binding) decision on whether to join or not (12th Nov. 2003), other members of the group will not be known."
[B&Mans: item 5].
Why?

As the HelEn is 200 % self-sufficient (that´s right, folks) in respect to electricity (which is produced mainly by the most efficient, combined local district heating system) even at the moment of this writing it is more than puzzling that they want to make such a massive investment into extra electricity - produced by a condensed power plant separated from local consumption of heat and electricity. One can ask, with a good reason, if the City of Helsinki is going to double their use of electricity before the (possibly) upcoming FIN5 enterprise materializes?

The advocats of the FIN5 enterprise often refer to their own prognoses of future electricity consumption. The argument is always basically the same: as Finland´s use of energy has somewhat doubled (or even more) during the last two decades, there is no reason to assume that the same would not go on in the future, and also the only way to go is to build the NPP, i.e. to build 1600 MW at one stroke.

This argument violates all rationality of optimal power investment planning based on the nation's vital interests, and benefits only the nuclear business´ interest at the expense of the citizens.

The consumption of electricity has not at all increased so tremendously in the last few years as in - say - the late 1980´s; the growth rate to be expected is well below the highest rates of the past due to more efficient use and better appliances. And this trend is continuing everywhere with ever more advanced technologies that develop according to incentives for technology and domestic engineering development.

We believe that the current growth rate of electricity consumption can better than adequately be met by domestic energy options, renewable energy technology and enhancing overall efforts and incentives for less energy intensive solutions in industry and households, i.e. giving a fair chance to domestic energy engineering development instead of the foreign atomic industry.

Once again: Why?

If this was too complicated simply ask yourself the following:

If the consumption of electricity has so tremendously increased in the near past isn´t that enough? HUH?

The production, consumption and distribution of electricity are not acts of god, but political and economical questions that develop according to market powers, value judgements and political decisions. We believe that the current level of electricity consumption is enough, actually more than that. And there is absolutely no reason why Finland´s industry should go on its energy-intensive track to the indefinite future.

Over and above all this, the very fundamental thesis of political economy (and ecofascism, by the way) that man by nature simply wants more and more and more and then some more, has been proven false countless times, in several studies. Here both classical cultural anthropology and market studies in the industrialized world give endless amounts of evidence. Today´s man would rather have (for instance) more time for his family and a less hectic pace of life than increasing material "wealth" and consumption, which so often is paid for in the form of burnouts, divorces, overworking to death - and on the other hand unemployment and marginalization. The common man is not to blame for the all-consuming, exhausting growth. PERIOD.

I mean it: Why?

So the most fundamental questions are left in the air: "Why should the HelEn venture into FIN5 after all?" or "What on earth does the City of Helsinki need more electricity for?" [B&Mans: Item 6].

When the Council members, in an issue as far-reaching as this, have to base their decision on nothing else but the recommendations by the City Board and the Technical Committee of the City, one cannot help asking why on earth does the Council exist in the first place. As the Council members have no personal capacity to question the arguments offered to them for the benefit of the citizens, it seems that the Council is just a rubber stamp with no real power, and whose existence just gives the impression that decisions are being made in an democratic and honest manner. As we´ve noted earlier, the investment calculation was given to the City Board and the Technical Committee, and on the basis of it they gave their recommendation to the Council that HelEn join the FIN5 atomic bandwagon, which the Council 12th November agreed, as we all know.

It´s a small world

It must be noted that the City Board and the Technical Committee of the City have significant legal obstacles considering the TVO´s FIN5 enterprise.

Ekström states:

"(In addition to the Technical Committee, the City Board and the City Council there´s the) Mankala’s executive board (that) makes the official investment and agrees on the possible new terms with TVO. Chairman of the Board is Mayor (Eva-Riitta) Siitonen, and Vice Chairman is Martin Meinander. Mankala’s Managing Director is HE’s Managing Director, Seppo Ruohonen, who is also a member of Mankala’s executive board
[B&Mans: Item 9].
And:
"Through Mankala the City of Helsinki has also one representative in TVO’s executive board, HE’s Managing Director, Seppo Ruohonen. He also represents the City in financial committee (of the FIN5 consortium)."
[Ibid.].
And:
"TVO has an Administrative Board where Martin Meinander (Helsinki Deputy Mayor, responsible for technical issues, 1st Aug.1996 - 31st July 2003) represents the City of Helsinki."
[Ibid].

Facts, my precious facts

So do facts really speak pro extra nuclear power, as during the spring 2002´s heated nuke debate the political elite and every single media mantrically chanted? Everybody in Finland remembers how anyone who dared to criticize extra nuke was being blamed for building on gushiness, idyllic but false illusions of soft technology, all kinds of horror visions of nuke holocaust - you name it. And the pro-nuclear lobby were being presented by the media (quite single-handedly) as the only rational and deliberative.

Also the question of nuclear liability in case of nuclear accidents is very essential to nuclear power´s financial profitability.

Some remarks on this in the appendix "NOTES ON NUCLEAR LIABILITY".

The Helsingin Sanomat - A case study in critical journalism (?)

Helsingin Sanomat (HS) is by far the most widely circulated newspaper in Finland, and it is widely considered a critical and impartial media. HS reported these seemingly alarming events in detail and in a very critical manner. ["The council members didn´t get the profitableness calculations", reporter Olli Pohjanpalo, HS 13.11.2003].

In the following we´ll quote the HS news story.

"The decisionmaking in the council meeting was hampered by an unprecedented quarrel on how the council members can make (binding) decisions when all the information on the issue had not been delivered to them."
[HS 13.11.2003].

"Participation into the FIN5 project has been alleged with a profitableness calculation. The calculation is based on estimates of the future interest rates, the future development of the price of electricity, the growth of consumption and the firmness of operation of the power plant. According to the Board of the city council participation into the enterprise will be financially profitable to the HelEn."
[Ibid].

"The City Board had the access to the calculation, but the (regular) council members did not. According to the TVO the profitableness calculation included information comparable to business secret. The TVO suggested the HelEn that the calculation shall not be delivered (to the Council members). HelEn passed this suggestion on to the city officials."
[Ibid].

"In the end the City of Helsinki´s juridical office and the City attorney Eila Ratasvuori decided that the preliminary financial information shall not be delivered to the members of the council."
[Ibid].

"The financial information was available for the Council members to study at the City´s financing manager Tapio Korhonen´s office, but just a few took the opportunity.
[Ibid].

"The chairman of the City Board Jussi Pajunen (The National Coalition Party, conservative) wondered why the calculation was classified secret. He wouldn´t have ranked its secrecy classification very high."
[Ibid].

"The discussion on the secret documents culminated in the question if the City Council has had enough preliminary information for decisionmaking. For example Henrika Bargum (The Swedish People´s Party) told that no information had been given to her. Several others, including Ilkka Hakalehto (independent) and Hannele Luukkainen (The Green League) criticized the secrecy clause also."
[Ibid].

"Paavo Arhinmäki (Left Alliance) was one of the few who took the opportunity to study the calculation at Korhonen´s office. He said the enterprise is doubtful and proposed that the City should stay out of it."
[Ibid].

At this point it must be noted that Arhinmäki actually was the only (!) one of the 85 council members who took the chance to study the calculations in financing manager Tapio Korhonen´s room. Korhonen told this to a reporter from the radio station Radio Helsinki in 14th November.

"The entire National Coalition Party and the entire Social Democrat party stood in the majority (53 members) that voted `yes´. The majority put their trust into the investment calculation and considered the project good for several reasons including the Kyoto agreement."
[HS 13.11.2003].

"`Complexity (of the production structure) brings safety and guarantees moderate price of electricity´ stated Tatu Rauhamäki (National Conservative Party)."
[Ibid].

The way Helsingin Sanomat acted with the issue is nothing short of disgusting. Why disgusting? Isn´t this journalism at its best, "journalism in motion"?

No it isn´t. Helsingin Sanomat published this news story 13th November, i.e. the day after the binding FIN5 decision! Who forgot the deadline?

This is not the way you act within a parliamentary democracy. This is the way you act within organized crime or an occult sect.



This article can be found in the web at:
https://www.angelfire.com/folk/placebointl/
And it´s public domain so just go ahead.

The original finnish version, published around 20th November 2003, can be found in the web at:
https://www.angelfire.com/folk/placebo/

This international version was prepared by the author with some help from my dear fellow citizens.


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