Netflix
features an interesting PBS documentary called The Race Underground dealing
with the technological, political and social challenges of building the first
U.S. electric subway, in Boston, in the late 1800s.
The
project had a lot of naysayers. Some were concerned about the destruction of
the historic city (especially Boston Common, America’s oldest public park);
others about the enormous financial risk described as “… a jump into the
unknown.” The superstitious and the
religious feared that going underground meant getting close to “the
netherworld”. Then there were the dangers of electricity.
A
vote “by the narrowest of margins” brought the matter to a close and the subway
was built. The people loved it. The subway cars were clean and clothes ceased
being fouled by sooty coal-fired steam engines. Congestion in downtown Boston
disappeared and allowed even more people to come in. The suburbs grew rapidly.
Not lost on anyone was the presence of far fewer stinky, slow horses on the
streets. For investors, the new system was more profitable than the old
one.
Sometimes
naysayers are wrong. Those who choose to take a hard position against an
enterprise sold by proponents as necessary and profitable as well as
economically, socially and environmentally progressive have a responsibility to
consider the soundness of their disagreement.
Naysayers need to be sure that their position is grounded in good
information and analysis, and consider if partisanship, political or financial
self-interest, or some other untenable influence is driving them to come to a
false or misleading conclusion.
Typically,
naysayers don’t have a constituency large enough to outflank a Party in power
unless they are funded by well-heeled vested interests. The challenge of
influencing the political process is far greater when Opposition Parties are
small or weak, or simply want to play both sides. Political Parties eventually
have to be judged on their behaviour in a general election. If naysayers are
wrong, they get to walk away with impunity having no one but themselves to
answer to.
Of
course, the contrary is also true; flag wavers have no less a responsibility
than do naysayers. Locally, interest groups like the St. John’s Board of Trade
have used their membership, financial ability and media access to promote a
project not just injurious to themselves but to the province as a whole. Others
amongst the institutional leadership flag-waved too, or conveniently remained
silent.
When
the possibility of failure due to the size of the investment relative to fiscal
capability and size of the economy is disproportionate — as in the case of
Muskrat, but not the Boston Subway even in the 1800s — no one should feel that
they have social licence to play a high stakes game of recklessness.
There
are other huge differences between our Muskrat Falls project and the Boston
subway project. Naturally, one is tempted to point first to the doubling of
capital costs without even realizing that sanction was given in the absence of
sound cost estimates or adequate consideration to demand issues and price
elasticity in a demographically challenged economy, a deal with Nova Scotia,
water management, an inexperienced team and a host of other strategic and
technical risks. Any one of them was capable of undermining the best business
proposition.
In
the case of Muskrat — unlike the Boston Subway project — there was one risk
that barely warranted mention either by the proponent or the flag wavers. It
might have taken first spot if clearer heads had been more concerned with
success than sanction.
They
never considered that technology had already overrun them.
In
contrast, the Boston Subway represents a winning case of a disruptive
technology.
Possibly,
the Dunderdale Government tried to offset this risk by giving itself a monopoly
over power production and transmission. But the nature of technology is that it
is often ubiquitous. Even if the unwise had gotten just a few of the other
challenges right, they may have still been betting on the wrong side.
Boston
gambled on being a first-adopter of an electric underground. Edison and other
trailblazers, like Frank Sprague who won the contract and designed the motors
for the Subway, were demonstrating how electricity was changing everything. It
was apparent that electric motors would eliminate horses for city commuter
traffic, and a thousand other things.
The 56-minute documentary didn't even mention oil-powered motor cars,
which were still a few more years into the future.
In
short, one of the BIG problems with Muskrat is that our Government wagered on
horses — old technology — when emerging technologies were already transforming
the way we generate and distribute electricity.
For
Muskrat, those changes were not just associated with highly productive shale
gas which has played a major role in depressing the price of electricity in the
New England States and elsewhere (about which Nalcor was warned repeatedly).
Nor
was it reflected solely in efficient heat pumps even though they are an
increasingly pervasive substitute for electricity-gobbling baseboard heating.
Though a simple policy change or two, including use of the pricing mechanism,
could have flattened the high peak demand this monster creates for just a few
months each winter.
The
fact that this is the age of “smart grids” also only speaks to one piece of a
larger, more threatening group of technologies challenging traditional energy
infrastructure. This system employs energy-saving technology using smart
meters, smart appliances, renewable energy and improved control over power
production and distribution. Its arrival - well before Muskrat sanction - only
proves how outdated the idea of big hydro really is.
Should
we be concerned about technologies even more threatening? Many jurisdictions,
including some, like the New England States which Nalcor saw as a major
potential export market just a couple of years ago, are eying the rate of
progress in solar. Virtually every market is following the evolution of battery
storage. Like electric motors in the
late nineteenth century, the most revolutionary phase of electricity
development awaits.
Stan
Marshall acknowledges that Muskrat Falls was far too large for our needs. With
power-producing and power-saving technology moving literally at the speed of
electricity, think of Muskrat as a commodity without (paying) customers.
Likely,
we're going to be stuck with a giant $13B horse that nobody wants to touch, see
or smell. And that stinks.
Lest
they bet on the wrong horse, it makes perfect sense for politicians and
business types, too, to check themselves and ask, when a new and expensive
public investment is next on offer, whether the naysayers know something they
don’t.
