Not surprisingly, the Muskrat Falls Project took centre stage
— again — in 2018, while in the last quarter the Commission of Inquiry stole
the spotlight, including among the mainstream media.
The Inquiry heard a sordid tale and irrepressible proof that that the project was based on false premises. The
integrity of the sanctioning process was undermined by a number of disclosures including confirmation that other options (power from Hydro Quebec and LNG) in addition to the Isolated Island option (small hydro, wind and thermal) offered the province less risk and possessed greater viability. Estimates for the project were “low-balled” (a
long-standing claim of the Anonymous Engineer). The Commission exposed myriad instances of official
interference with the very consultants whose compromised Reports Nalcor
and the Government used to justify Sanction.
Readers of the Uncle Gnarley blog have probably heard enough
of the Muskrat narrative since the Inquiry began in September. Likely, most have
broken out the Christmas cheer — including the legal weed — which is sensible,
as long as the car keys are buried. Sobriety
may not be good for your health right now. In what other way, I wonder, could the drip-drip-drip of mind-numbing
testimony extracted by Commission Co-Counsel be suffered by a decent citizenry,
however necessary? Fortuitously, O’Brien and Learmonth have been gifted the
skills of interrogation, each one displaying the painstaking artistry of the dentist’s
drill. It is a useful tool, too, so many of their subjects having exhibited
excessively large memory cavities. Poor mental dentition was repeatedly the
politicians’ escape. Ignorance of cavernous proportions was also on display, overlain
with unbridled hubris. Ed Martin even elicited from the Commissioner an unscheduled
interim report — actually a tongue-lashing — which described him as “rude”,
though I expect an even harsher assessment awaits.
Muskrat Energy Cost – Another Measure of Failure
Several leading electricity industry research organizations compile
annual estimates of utility scale generation options.These reports roll up the expected lifecycle
costs relative to energy output to provide a single energy cost figure known as
a Levelized Cost of Energy (LCOE).LCOE allows alternatives with high capital
cost but low operating cost to be directly compared to options with low capital
cost but high operating cost.
The energy industry consistently selects projects that can
deliver competitively low LCOE numbers, however, Nalcor avoided this technique
in favour of a customized and burdensome Cumulative Present Worth analysis that
avoided illustrating the true economic merit of Muskrat Falls.Although the LCOE metric was front and center
in the Nova Scotia regulatory hearing for the Maritime Link, it was avoided by
Nalcor and Government here.Little
wonder, as Muskrat’s LCOE is nothing to be proud of.
Former Premier Kathy Dunderdale is scheduled to appear as a Witness at the Commission of Inquiry into the Muskrat Falls Project today. The question that should be in the public's mind is whether she will display any more knowledge of why her Administration sanctioned the scheme than she did in 2012. At that time she ought to have known that Nalcor was headed by unsuitable and inexperienced leadership and that it was driven by ego (her own and Danny Williams') as well as recklessness underpinned by several unfounded (possibly contrived) assumptions which included some 50-year forecasts.
A few weeks after the Government sanctioned the project (December 17, 2012) this Blog featured a piece entitled "What the Members Opposite Don’t Understand" which had nothing to do with their ignorance (though it could have been about that, too). At issue was the lack of knowledge displayed by Dunderdale, herself.
Now, the former Premier will have to convince Judge Richard LeBlanc that she comprehended the complexity of the project and enormity of its implications - apart from the justification for giving it Sanction.
We await greater illumination from the former Premier in the coming days. Here is the January, 2013 piece:
A comeuppance for Ed Martin was as predictable as the
certainty that Muskrat Falls would become a $12-15 billion project. But it took
nearly three full days of evasion, obstruction and “attitude” from Martin for the
Commissioner, Richard LeBlanc, to run out of patience. Less tolerant Judges might
have reined in the former Nalcor CEO during the first hour of his examination
by Commission Counsel, Kate O’Brien.
Like a spoiled child beyond even coddling, this grown-up
couldn’t discern that his behaviour, every bit as much as his decisions, were
under a judicial microscope. Contrition was never an expectation.
Triggering the Judge to intervene late Wednesday afternoon was
the cross-examination by Geoff Budden, lawyer for the Muskrat Falls Concerned Citizens
Coalition (this scribe is one of the Coalition’s three interveners along with
David Vardy and Ron Penney). But the moment was not his as much as it was Kate
O’Brien’s. Budden had merely continued a line of questioning which Martin interpreted
as a licence to obstruct and to void the Inquiry of the requirement of basic
my guest post of October 4th I explained how the 2002 Gull Island deal was scuttled by then Leader of the Opposition, Danny Williams, aided and abetted by
the then Chair of the Board ofNewfoundland Hydro, Dean MacDonald, and board member Mark Dobbin.
Mr. Williams became Premier in 2003 he proceeded to commence a series of
personnel changes at Newfoundland Hydro which has led directly to the Muskrat
first was the appointment of Gilbert Bennett in 2003 to oversee the Lower
Churchill project. Mr. Bennett formerly worked with Rogers Cable, whose work
experience is in telecommunications. He is no doubt a bright and competent
telecommunications engineer but it is hard to see how that experience readied
him for his current role.
What the Isolated Island Option Could Have Been
In deciding to proceed with Muskrat Falls, Nalcor and
Government could not see the low-cost alternative staring them in the face that
was available to eliminate Holyrood and keep electricity rates stable and low.
First, they could not identify that the
Isolated Island System had no load-growth potential.
Second, they would not recognize that there
was great inefficiency in allowing high seasonal electric heating requirements
Third, they resisted changing
consumer rates to include marginal pricing that would sell Holyrood energy for
what it cost to produce.