Monday, 28 April 2014

LIBERTY REPORT SHATTERS NALCOR'S CREDIBILITY

When the Public Utilities Board released the Interim Report of Liberty Consulting Group into the causes of DarkNL last week, it was Nalcor’s CEO Ed Martin, the man earning in excess of six hundred thousand dollars annually, who jumped in front of the cameras.

That’s big pay for damage control.

Nowhere to be seen was the senior man at Nalcor subsidiary, NL Hydro, V-P Rob Henderson.  Henderson was the first to emerge in the early days of the ‘black-outs’ to confess Hydro’s deficient maintenance practices; the Utility, he stated candidly, had failed to complete its summer maintenance program. It was January and the lights were out; people were cold in their homes or huddled in warming centers.   

Henderson disappeared from the public stage quickly; the honesty seemingly bad for Nalcor’s image and Ed Martin’s, too. Martin became the official spokesperson, not only for Muskrat Falls, but also for DarkNL.

Now, the Liberty Group has essentially confirmed Mr. Henderson’s version of events even if they were still understated.
It’s been nearly four months since DarkNL.  One does get tired of Ed Martin’s spit and spin.  Our long winters are a drag, too.  The body knows when it needs a shot of Vitamin C just as the mind craves the reassurance that simple honesty crowds the halls of government. 

It is no secret that the ‘spin meister’ is not big on disclosure.   But Liberty was not assessing the Muskrat Falls project or the current level of cost overruns.  The Consultants were merely assessing Hydro’s machinery, its capability to conduct normal maintenance and management procedures, review its demand assumptions and generally evaluate its ability to keep the lights on, especially in winter.

The Liberty Report, as The Telegram noted, does not describe a group of “world-class” experts. Having read the Report, the Paper’s Editor also concluded “there’s nothing world-class about this situation”.  

To its credit, Liberty baldly stated the facts. It cites failures in the “operation of key transmission equipment”, including a failure to replace transformers and maintain major circuit breakers.

Quoting again from the Report: “Liberty found that Hydro’s shortage of generation capacity was exacerbated by a failure to complete planned outage work needed to ensure the availability of its full range of generating facilities as the winter season began.”
The situation, it notes, “raises questions about Hydro’s operation” that it “did not complete recommended maintenance activities on the equipment that failed…”

The Liberty Report is damning criticism of a NL Hydro; a well-funded Utility by the ratepayers of this Province. And, it did not stop there.
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Liberty said Hydro held an “insufficiency of generating resources to meet customer demands”…, that their demand numbers were based upon the temperatures of an average winter day rather than an “average worst winter day”, that Hydro wasn’t even using the right models to forecast electricity demand.

It stated that Hydro relied, not on providing adequate generating capacity but on ‘outages’ to take us through periods of high demand.    

Said Liberty, “Hydro has planned its system to the same overall standard for many decades. This standard provides for lower reliability than what Liberty has observed in other regions of North America” (emphasis added).  It noted that Hydro’s plan is based upon “roughly twice” the frequency of supply related outages than found elsewhere. It found that Hydro “tended to allow decisions at the margin to favor more versus less risk”. (emphasis added)

Liberty found that a “continuing and unacceptably high risk of outages from such causes
remains for the 2015-2017 winter seasons”. 

It failed to note that had the Vale Inco smelter been completed on schedule the outage crisis would have been far worse.

Among a plethora of additional problems it goes on to raise the spectre that, even after Muskrat Falls comes on stream, system reliability is in doubt; that is the major item to be addressed in its Fall Report.

Given Liberty’s indictment of Hydro, when Ed Martin faced the media quite possibly reporters thought him ready to apologize and to resign.  It would have been the right thing for the CEO to do.

Martin had no such plan.  He went before the media not to take responsibility but to place blame.  The man whose pay packet, last year, of $618,173 included a $141,425 "performance contract" came out ready to lay all the problems of Hydro at the feet of his predecessors.  No one cared to remind him he has been at Nalcor since 2005.

In the private sector, one whose management shortcomings are exposed in such grim detail, as Liberty describes, would be fired!  That is a necessary penalty for failures which placed lives at risk, not to mention the Province’s economy.

Yes, Rob Henderson should have been present to have his candor acknowledged.  But Premier Tom Marshall ought to have there, too, to inform Ed Martin his services are no longer required.  

5 comments:

  1. Great summary! However, I was expecting a commentary on the premier's statements captured last week on VOCM, where he clearly stated that once the full range of tendering for Muskrat Falls is completed , should the overruns go beyond the viability threshold for this project, other options would have to be considered. For Marshall to make such a statement is amazing. Even if you are not inclined to pay close attention to this entire fiasco, his comment would leave you confused and bewildered. I also believe, they know the project is doomed and this is an early signal as to where this is headed.

    As for Frank Coleman, little wonder that he is keeping a very low profile. If Muskrat Fall is shelved, who in their right mind would want to face the people of this province to explain how we got into this mess and more importantly, what it has cost the taxpayers. And then to face the electorate in a general election. I know nothing about the man, he appears to be sincere and to put his personal reputation on the line by taking over this mess from the clowns that created it, defies common sense and logic.

    Enjoy the articles.

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  2. I listened to the Premier's statement on VOCM last week regarding cost overruns on Muskrat but I did not get the sense, as did others, that he was prepared to shut down the Project. Marshall has a way of being glib; when you look at what he is saying, it is actually very little. Regardless of how bad things get the real story of Muskrat overruns will not be told until it is far too late. The Premier's completely inadequate Oversight Committee is the best evidence of that.

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  3. The current PC government, and their relationship with Ed Martin reminds me of President Bush and Donald Rumsfeld. Like our most recent 2 premier's relationship with Martin, Rumsfeld seemed to call the shots over the president when it came to direction in the Iraq war. Bush would often defer to the decision, and wisdom of his secretary of defence.

    But eventually everyone knew that it was time for a change, that Rumsfeld had to go. The personal loyalty, and to some extent subservance that Bush had for his secretary of defense impaired his ability to do what was so blantently obvious to the most casual political observer.

    This is much like Martin now. His lack of experience, and poor decision making (in operations as well as Muskrat Falls) is now becoming obvious, his great communication tools not being able to spin public perception. The Liberty Report as well as the IE report has exposed some of the dirty laundry of the Nalcor organization.

    Rumsfeld eventually fell on his own sword... Bush did not ask for his resignation.

    What will it take for as a minimum a review of Martin's leadership at the helm of Nalcor?

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  4. All I have to say is there is more than just Ed Martin who need to resign. The whole lot of the PC brass should do us all a favor and pack it in. The secrecy and misinformation the PC govt exhibits toward the people of NL is disgraceful. There are a number of individuals who have been pushing for this disgusting Mega project from day one who definitely have financial investments of a personal nature and to me that is criminal. And if it's not technically criminal due to their Bill 29 then it's down right unethical and immoral! I hope the liberals have an ounce or two of public service and aren't as greedy and self serving as this joke of a govt! NLers are going to wake up soon enough when the arse falls out of this sham MF. And our power bills skyrocket and sales tax etc, go through the roof to pay for this disgrace of a project. Corruption ain't the word for it!! We will be bankrupt in 15 years!!

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  5. Martin has to go! He has systematically funnelled maintenance plan budgets into Ed glorification budgets ignoring the needs of this mysterious electrical industry he managed fool into hiring him as a CEO. Electrons are not his thing, dollars are! Imagine collecting 600k while ruining the reputation of the company he runs. He will make many honest employees liars before he is done. R Henderson broke the Nalcor golden rule of "lying first and spinning later", refreshing but career limiting he is just learning to lie after all.

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