The
appointment of Stan Marshall was seen by many, including this scribe, as one that
might presage real change in the management of Nalcor. Based upon his lengthy
experience as head of a large multi-national company, Fortis Inc., it was
thought that he might possess the skills and the moxie to inaugurate a long
overdue re-set of the Muskrat Falls project, too. An update on Muskrat is due
by month’s end. But last Wednesday, Marshall signalled that any high
expectations of him may be excessive.
I don't
think anyone expected the new Nalcor CEO to be a miracle worker. There is hope
he might unveil a revised mandate for the crown corporation; stop it from wasting
money on the Gull Island power project, on seismic surveys offshore, and on
high-risk equity investments in the offshore oil industry.
But most
observers know that the mandate given Nalcor by former Premier Danny Williams falls
within the bailiwick of the Ball Government to change. The Premier has already
proven that he doesn’t understand policy or what constitutes “real change”, so there’s
little chance that he has given Marshall any such instructions.
However bringing
new talent, both to Nalcor and to dealing with the horrible mess at Muskrat
Falls, is something expected of Stan Marshall.
An entire
province is witness to a shaky Treasury being toppled as a result of a series
of colossally bad decisions, taken first by Williams and Dunderdale and then by
people inside Nalcor. Yes, the Wicked Witch has been wealthily retired, but Ed
Martin wasn't the only culprit of doubtful competence.
From its
very conception, Muskrat was at best a speculation, and at worst a contrivance.
Its unfounded fundamentals were made worse by the appointment of an ill-suited
cable TV manager to run the megaproject.
One might
have expected Marshall to search world-wide for a few people of suitable
pedigree to assist him. That did not occur. Indeed, his feeble realignments are
shocking in their short comings.
Marshall did,
however, manage to attract at least one fan of this display of dither.
NDP Leader
Earle McCurdy ran to Marshall’s press conference fearful he had sold the works
to Fortis Inc. and announced feeling relieved. As if private capital seeks out
white elephants!
Those exhibiting
more common sense would be worried public ownership of anything costs two or
three times what it should. They would be preoccupied that Marshall had failed
to exorcise the rot from that crown corporation.
Big minds
are hard to find. And, in this case, Stan Marshall has waded through a shallow
gene pool (and that is being kind!) and has come up with the very same people
who helped create the Muskrat disaster in the first place.
Among them
is Gilbert Bennett. We will return to him because his wasn’t the only
re-appointment about whom we should be concerned. The other is Jim Haynes.
Jim Haynes
A little history
is necessary.
The decision
to operate Newfoundland and Labrador Hydro as a separate business unit, engaged
solely in activities regulated by the PUB, was a recommendation of the Liberty Consulting
Group, an independent consultant acting for the PUB.
Liberty
investigated Hydro’s management, maintenance records, and operating culture.
The Group ferreted out what led to days of “black-outs” known euphemistically as
#DarkNL. Liberty learned that the
security of the electrical grid was compromised by poor management and a lack
of focus. Said Liberty: “Hydro needs a single executive under which it can
consolidate the principal functions associated with delivering utility service…”
Marshall
chose the occasion of minor executive adjustments to implement Liberty’s
recommendation. He selected former VP of Hydro, Jim Haynes, as the new Hydro CEO.
Marshall called him “a steady hand”.
We should ask:
just how “steady” was Haynes? Some might rightfully suggest that “motionless” is
a better characterization.
Haynes’
LinkedIn page states that he was VP Regulated Operations at NL Hydro (Nalcor) 2001
– April 2013 (12 years). He oversaw “generation, transmission and distribution
of utility operations, including maintenance, capital and operating budgets”.
When did
#DarkNL occur? Only 8 months after Haynes’ retirement. This historic event began
with rolling blackouts in late December 2013 which were followed by, as the CBC
described, “full blown turmoil” on January 4, 2014.
Can we
connect #DarkNL to Jim Haynes? We most certainly can.
It is a fact
that makes his re-appointment by Stan Marshall disturbing – that is, unless the
Reports of the investigation by the Liberty Consulting Group are rubbish. Here
are just a few small items from Liberty’s two reports:
-
Hydro
wasn’t using the right models to forecast electricity demand.
- “Hydro
has planned its system to the same overall standard for many decades (which) provides for lower reliability than what Liberty has observed in other regions of North America”… Hydro has “roughly twice” the frequency of supply related outages as
found elsewhere.
-
Overall
reliability performance (2009–2013) has been below comparable Canadian utilities.
What were some of the comments of the Public Utilities Board (PUB) following the
Liberty Report?
- The
PUB found this statement particularly alarming: “Hydro stated that it is not
aware that [it] is normal utility practice to provide the necessary resources
to adhere to preventative maintenance schedules in addition to addressing emergent
and critical capital work.”
- The
PUB stated: “The resulting findings by the board of imprudence by Hydro are
significant and reflect failure on the part of Hydro's management… The
consequences of this imprudence for customers are significant, both in terms of
impact on service adequacy and reliability, as was shown during the outages of
January 2013 and January 2014, and in terms of cost.”
Jim Haynes
had a long career at NL Hydro including 12 years at the VP level. Degradation
of Hydro’s equipment and the evolution of what Liberty described as a poor
management culture were not found to have been the product of VP Rob
Henderson’s eight-month tenure alone. Liberty’s damning indictment of NL Hydro,
as one of the poorest run Utilities in North America, grew out of a far longer
stretch: when Haynes was second-in- command.
This is not
the stuff that inspires re-appointment. It merely suggests “good riddance.”
Did former CEO Ed Martin stymie Jim Haynes in his ability to operate Hydro as a modern electrical provider?
Did the PUB
deny NL Hydro approval for funding to maintain equipment or to fund competent
management?
If Jim
Haynes experienced any of those difficulties, he kept them to himself.
Hence, he
may have left Hydro enjoying the perception of a public servant in good
standing. But he returns with an imprimatur tarnished by objective review—unless,
of course, we suffer from the collective amnesia to which Ed Martin was fond of
giving reinforcement.
Gilbert Bennett
Gilbert
Bennett is the new Executive Vice-President of Power Development (the
powerhouse and related generation components at Muskrat), formerly the Vice-President
responsible for the whole Muskrat Falls project.
Gilbert
Bennett reminds us of what we hate most about recycling.
Stan
Marshall, having cut his duties by half, wants us to believe that Bennett
represents change.
Yet Gilbert
Bennett, a former manager of Danny Williams’ cable company who possesses no
experience as a megaproject lead, has been at Nalcor since the Muskrat Falls
project was conceived.
He was there
to help Ed Martin stick-handle the project away from full consideration by the
PUB, to pillory the “naysayers”, and to admonish Dr. Stig Bernander, a Swedish expert
on quick clay, over his well-publicized concerns about the stability of the
North Spur.
It was
Gilbert’s job to decide how contracts should be packaged—to oversee the
contract language and project logistics that has Astaldi claiming additional hundreds
of millions of dollars.
Did not
Gilbert Bennett choose Astaldi—the one with no cold weather experience—as the
project’s contractor?
Did he not
fail to intervene as Astaldi wasted precious months gearing up for the work? As
the schedule fell behind, finally falling off the rails altogether?
Did he not
bolster Ed Martin’s assertions about “unit pricing” until they could no longer
bear the burden of their inherent deception?
Was it not
Gilbert’s job to install adequate standards of Quality Assurance, a problem
frequently noted on this Blog, illuminated recently by the failure of a major
concrete pour and by the miles of transmission line towers improperly
installed?
Wasn’t it Gilbert
Bennett’s job to install a competent management team on the project?
Isn’t it under Bennett’s management that the province holds its breath in fear that all those failures, and others, will leave us not with merely the highest electrical rates in North America, but possibly in a state of bankruptcy too?
Can we
separate Bennett’s culpability from that of Ed Martin, who was fired as CEO?
On what basis is Bennett’s re-instatement, in any capacity, defensible?
Stan
Marshall said he wants to keep him around, along with the others, "because they're good people".
No one has suggested
Bennett, or any other executive at Nalcor, should not be considered “good people”. The question
is: what are they good for?
Though
Bennett’s role has been cut in half, his re-assignment by Marshall confers on him
an unwarranted approval of his abysmal past performance. It sends a dreadful
message to other executives at Nalcor, and to the other members of the project
management team, about any requirement for performance commensurate with their
titles and pay packets.
Bennett’s
re-appointment is incredulous. It is an explicit commentary on Stan Marshall’s
own poor judgement. It is proof that he has already ascribed to this publicly
funded corporation a far lower standard than would be applicable to private
capital.
Is Mr.
Marshall overwhelmed by the mess at Muskrat? Has he been bamboozled by the very
architects of the project who, for so long, have layered its complication with
their own incompetence?
If Stan
Marshall has discovered anything since becoming CEO, it should be that managing
Nalcor is not the same as a normal day at Fortis Inc. where growth (organic or
by acquisition) is achieved amidst a talent pool assembled over many years. There,
questions about the viability of new projects are not smothered by politicians
or by the private agendas of a group for whom Muskrat represents a golden
chariot delivering a comfortable retirement. Nor did Fortis Inc. thrive by
giving career shelter to the ill-suited and letting them screw up.
Nalcor needs
steady hands to be sure. But the sheer magnitude of the problems at Muskrat
Falls evokes thought of the need for a Hank Van Zente, who put a failing
Hibernia GBS back on track. Exxon Mobil did not engage in the wishful thinking afforded
by the limp stir of a shallow gene pool.
If Stan
Marshall can keep Nalcor executives, including Gil Bennett in spite of his
miserable failures, then why didn’t Ball keep Ed Martin, too?
Marshall’s first
steps are not just disingenuous; they are perplexing, given the kind of
decisions on Muskrat that must soon follow.
Loudly, they
make the pronouncement: Don’t get your hopes up that change is any more a part
of Stan Marshall’s lexicon than it is of Premier Dwight Ball’s.
