Monday, 10 September 2012

On Muskrat Falls, Fortis fails to live up to its name

(The following Essay, written by Uncle Gnarley scribe, was published in The Telegram 30/08/2012 and is provided here for Blog readers.  To date, neither Fortis Inc. nor its subsidiary, Newfoundland Power Co. Ltd., have offered an explanation for their complete silence on the Muskrat Falls project eventhough it will have a significant negative impact on their 227,000 captive customers in Newfoundland.  Their customers deserve better.)

A few weeks ago, I took a phone call from a well-spoken young lady from Newfoundland Power.  Her purpose was to inform me that electrical power rates, beginning July 1, 2012, would increase by 7%.  She could not have known my thoughts at that time.  I did not want to seem ungracious, so I thanked her and ended the brief conversation. 
Perhaps, it was good PR.  The power utility wanted to save me, and other commercial customers ‘rate shock’; it thought a little advance warning was necessary.  The caller was an able representative of her company.  Yet, I could not help thinking that Stan Marshall, President and CEO of Fortis Inc., parent company of Newfoundland Power Co. Ltd. (NP) was really the person with whom I wished to speak.  Why?  It was not because of this shock, but because of all the rate shocks that are pending, for both commercial and residential customers, as a result of the Muskrat Falls project.

NP distributes virtually all the power required by on island consumers.  As the regulated power utility, it profits from that service. That’s fine.  The company’s shareholders have a right to a return on their investment.
However, corporations, like Fortis (and through it, NP), also have a civic responsibility, no differently than individuals do. They benefit from our laws and institutions; they pay taxes, but they have the protection of operating within a modern and civilized society; hence, they have an obligation to contribute to it, even when their Boards and CEOs feel uncomfortable being at odds with the government. 
Because NP has accounts with virtually every household in the Province and is a regulated utility, it is different from most other companies; implicitly, it bears some of the burden of price and consumer protection, insofar as the consumption of electricity is concerned. 

Accordingly, NP has a fundamental role to play in the Muskrat Falls project. Its corporate interests and those of its customers are more directly aligned than those of most service providers.  Therefore, it has a social responsibility, to take a position in the Muskrat Falls debate.
Fortis Inc. boasts expertise in hydro-electric facilities in the U.S., Alberta, B.C., as well as in this province and has built hydro-electric facilities in western Canada and Belize.   It is a successful company with homespun roots; it has comfortably made good profits here.

It is all very well that the corporate leadership prefers to escape the prospect of offending the politicians who have the ability to make life difficult for companies exposed to their whims, their ignorance and  bad public policies.  But Newfoundland and Labrador is not Belize, or anywhere else Fortis may have been treated poorly.  Fortis Inc. owes its customers and the public generally, the benefit of its substantial experience, expertise and guidance.
Fortis decided not to present before the PUB on Muskrat; a serious omission, not lost on many observers.  It chose to leave the matter to a plethora of individuals who did not have the advantage of the funding, experience or research found at Fortis.  Inside the corporate boardroom, Directors were likely impressed by the contributions of several individuals, who clearly had an impact on the PUB.  They must have jeered at the premature and poorly articulated conclusions of the province’s Consumer Advocate.  Yet, the company stayed silent, even as one individual ratepayer, preferring to remain anonymous, saw fit to submit a 165 page Report to the PUB; such was his concern as to its prospect for failure.  Fortis did not lift a finger to engage the process.  It chose to hide.  

Indeed, if Fortis Inc. supports Muskrat Falls, as a necessary and viable concept and the best option for replacing Holyrood, its CEO should say so.   Clarity is always favoured over silence. But it requires more courage, too.
Fortis enjoys significant political clout in this Province and is able to articulate its own interests, as it did, last year, when it weighed in on the City regulations governing the height of its downtown office tower.  The CEO of Fortis Inc. enjoys the reputation of not being a shrinking violet on behalf of shareholders.  Regretfully, when courage is demanded by its customers, the same CEO chooses to cower rather than tell government, or a concerned public, what he really thinks.

Corporate social responsibility is not just about contributing part of its profits to worthy causes; nor is it only about operating sound profitable companies.  Fortis does both very well. But a good corporate citizen will also be prepared to ruffle some egos, if necessary, and advise those in positions of power that the standards that apply to government decisions should not stray too far from those expected of private corporations. 
Fortis Inc. has an opportunity to be a social force, to reflect the qualities of courage and strength which its very name implies.  It can speak out, with knowledge and authority and with a genuine concern for its customers; on this rarest of occasions, such corporate interference in a public policy issue, was and is clearly justified.  The company has failed, so far, at least, its most important test, ever.

If Muskrat Falls is the boondoggle, as many believe it to be, we will think of the senior executives of Fortis Inc. and Newfoundland Power.  But not kindly.