Monday, 19 February 2018

STAN MARSHALL DOUBLES DOWN ON BLUSTER

Stan Marshall's Muskrat Falls Update entitled “Understanding Muskrat” ought to have been an opportunity for the Nalcor CEO to engage with the public and sensibly discuss a litany of concerns. That's not what he had in mind.

Perhaps it was the air of arrogance that killed the evening at Memorial’s Bruneau Centre, though the softening of his “boondoggle” coinage inspired a measure of incredulity. The readiness to bully every critic of the project — no matter the legitimacy of their claims — spoke to a man who needed understanding less than he did validation, though condescension is not normally known to help win friends.
Photo credit: CBC
The tone of the meeting was set by Nalcor's well paid booster, Dr. Wade Locke, who just made Uncle Gnarley's “Moonshine” List.  Locke's demeanor presaged Marshall's with the announcement that the CEO would take questions, whereupon he asked the audience to be “respectful”. Perhaps, given the average age of the attendees, he could only have been concerned that they might attack Marshall with their walkers. 
In the early days after Muskrat Sanction, Stan Marshall went about the cocktail circuit proclaiming that he wouldn't touch the project with a “barge pole”. Now he declares that politicians have a right to engage in public policy including “boondoggles” — a dubious claim to be sure. He rightly asserts that if Muskrat was a decision about the “lowest cost option,” it was not a good one. Strangely, in almost the same breath, he suggests that if it was a decision to engage in boondoggle politics, then we got what we paid for.  There is no mention of deliberately distorted estimates, mismanagement on an egregious scale, or of a terribly unqualified management team. 
He offers no apology for having failed to check whether any of Ed Martin's appointees had “heavy civil” or “megaproject” on their resumes. He extolls Nalcor’s safety record. “No deaths” was his benchmark of success. I wondered if the ones buried up to their necks in wet concrete following a blowout in formwork — which, as a long-hidden report confirmed, suffered deterioration including “rot” — would agree with his assessment. 
Ownership of the project, after having embraced Ed Martin’s team as all “good people,” seems to have changed Marshall. 
The “new” Stan’s purpose seems less inclined towards engaging the community than to do a “sell” job. Stan was selling “Stan”. Except he had chosen the wrong audience.
To be fair, no one expected Marshall to continue his “boondoggle” rant. After all, morale at Nalcor — and on the Project — is as low as it can go. When the new CEO reminds you daily, by his sheer presence, that your work is worthless, that you are engaged in a political scheme, a “boondoggle” — and when the facts confirm the same — staff might be conscious that they don’t work for the best of crown corporations. That is unfortunate — because most are good people. But not all of them. And it must feel awful when the capable ones know that the real culprits, mostly the ones overpaid, are seated down the hall.
For that reason alone, an approach that recognized Muskrat’s origins and how Nalcor will co-operate with Judge LeBlanc’s Inquiry would have been appropriate. Stan was having none of that — in aid of which his script contained the unmistakable imprint of the PR team inside central casting.
Marshall did begin by telling us what we already knew: that MF was a mess from the beginning; that Astaldi was nearing bankruptcy. But he was quick to add that after he separated the management of the transmission and generation projects, all has gone swimmingly. 
The script from central casting persisted.
Apparently, we have been characterising Muskrat all wrong. The public, Marshall said, had neglected to see “the big picture;” that we were assessing the project only through the lens of the project’s constituent parts. We were drawing all the wrong conclusions.
As you can imagine, the gasp from the packed hall was audible. How in the world could perspective change what everyone knows is an “international cock-up” — more than 100% over budget and more than two years behind? What in the world had we all missed?
In support of this claim, Marshall offered the observation that Muskrat was mainly a transmission project. Even if the assertion were true, and it isn’t, where was this line leading? I still don’t know. 
But, for some reason, it was important to him. Marshall bolstered the claim by adding the cost of the Maritime Link which Emera built on time and on schedule. It is an Emera asset for the next 35 years. The fact is that, with the ML cost removed, transmission and generation each represents 50%. In addition, the lack of a Water Management Agreement undermines the value of the LTA asset — namely, the transmission line to the Upper Churchill — and underscores his dubious thesis.
Stan then moved to the next plank in bolstering his “big picture” thinking. He declared that we shouldn't be complaining so much about the unit power cost of 17.42 cents per kWh to Soldier's Pond. After all, he stated with characteristic bluntness, Ontario already has MF rates and we should just suck it up. 
As if Nalcor is imbued with some genetic fault, always choosing the shortest route to crash, Marshall likewise was all too determined to follow the Muskrat train wreck. 
A savvy audience knew that he had conveniently neglected to mention that Ontario has committed some of the worst energy policy blunders; it’s just that they can afford screwing up better than NL can. The audience also knew that, saving Ontario's bacon, is cheap natural gas — which Ontarians use for heating and much more. 
But that wasn’t the worst propaganda from central casting. Obscured in his narrative was the mother of all statistics: 17.42 c/kWh is the price needed for every single kWh of the 4900 GWh to be produced by the project — including the free stuff to Nova Scotia (and that number does not account for line losses.) Marshall had failed to tie together his own Chart 26 which sets the Island requirement at 1324 GWh out of the 4900 GWh (slide 25) the project is supposed to produce. That’s only 27% of MF power. Let's do the math: 17.42/0.27 = 64.5 cents per kWh.  

Marshall acknowledged that Nalcor will net only 2 cents per kWh from the sale of the surplus power. But he didn't give the issue context or as much as acknowledge that Muskrat Falls will need revenues of over $800 million just for debt servicing, operations and management. Nalcor's own numbers suggest export power will contribute only around $50 million to the revenue demand. He offered no answers as to how the difference might be bridged. The very least he could have done was provide an additional chart showing the net requirement of 62.5 cents/kWh.
Does Ontario pay 62.5 cents/kWh including for heating? On what public policy basis — even if political — might he assert that 62.5 cents/kWh power constitutes a rational decision?
His pie chart described the cost of generation at seven cents per kWh, but he didn't tell the audience that the financing structure is back-end loaded and the return on equity delayed — all for later inclusion in the rate structure.
As to the impact on energy consumption from 17 c/kWh power, there was no a mention. “Elasticity of demand” (a very basic economic concept which predicts a drop in consumption as the price of a commodity increases) was avoided and panned by him when I raised it in the Q&A Session.
Where was the “big picture” perspective he had promised? 
Obviously, an entire audience failed to capture his superior discernment as to what is really important. Perhaps they were too put off by his unseemly aggressiveness and bluster to have caught on. 
The Q&A session was no more enlightening — though I did cast an eye about to see who had a firm grip on their walker and whether Dr. Locke was ready for sacrificial intervention should someone interfere with the CEO of his generous benefactor.
Marshall dismissed a questioner on FERC or open access transmission tariffs (remember Bill 61 was designed to stamp out competition) while Nalcor seeks to export power to the U.S. in defiance of FERC rules.
He tells us he is not fond of the Commission of Inquiry. “The last thing I need is more people coming in for explanations,” the CEO commented. I can understand that. Imagine the whining he will get from all the management people he kept on who will have to explain their role in what went wrong! Besides, hadn’t Nalcor long ago eschewed independent “oversight,” giving speed to the train wreck?

“This has been the most over-governed project ever,” said Marshall.
Except Stan should be the first to know that not one of those individuals given an oversight role had a clue about the megaproject, not even what questions to ask — including Cabinet Ministers and successive Premiers. That group includes the Oversight Committee, which only recently got a couple of independent types who are probably asking about Nalcor's (limited) capability.
Without doubt, the coup de grâce of the evening occurred when a gentleman named Sean McGrath challenged the Nalcor CEO for the failure of democracy in the province and Nalcor’s role therein, McGrath noting how Marshall had glossed over the irreparable harm to the province's fiscal standing wrought by the foolhardy project. 
McGrath was thanked for his thoughtful remark with the condescension and scorn which Marshall delivered onto most of the questioners, including the one prior to McGrath who took the CEO to task regarding the implications of the North Spur stability problem. Not surprisingly, the applause that erupted was not for Stan Marshall.
On the North Spur, Stan announced that Dr. Bernander “doesn't know what he's talking about.” (Note to Stan: Bernander is Swedish, not Norwegian.) (Note to Memorial University: please omit sections in Geoscience literature in which the research of world-renowned expert, Dr. Stig Bernander, regarding "sensitive clays" is discussed.) 
As to the North Spur remediation scheme, he adds: “I'm confident of the design — 100%” and added, “Nobody is going to drown downstream — nobody.” 
David Vardy reminded Marshall that those Consultants he hired were Nalcor appointments — that perhaps he would let “independent” geoscientists review Nalcor's design… in response to which he was given a burst of petulance: any more studies, Marshall sternly instructed, he (Vardy) would have to pay for.
As this narrative suggests, at the podium was not the “able, skilful, confident” Stan Marshall long fabled in envelopes from Fortis, tucked in with the “Notice of Dividend”. This Stan Marshall seemed content to have been captured by the Lilliputians of the “boondoggle” whose best skill is “spin”. 
I expected better. I think the audience did, too. The perfunctory applause, and the looks of bewilderment afterwards, provided the best review of Stan’s performance.
If the evening offered a single benefit, it was this: Marshall’s performance was a much-needed reminder of the wisdom of a line contained in an old Andy Moor lyric — “Give no one your faith undeserved.”
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Updated Feb. 19/2017