NEED FOR POLLUTION CONTROLS AT HOLYROOD A CASE OF FRAUDULENT MISREPRESENTATION

 Guest Post by PlanetNL

PlanetNL44: Holyrood Air Pollutants Surprisingly Low

Need for Pollution Abatement Equipment Was Another Muskrat Fraud

 As Uncle Gnarley properly pointed out in his post last week, the vilification of the Holyrood Thermal Generating Station was a central tactic of Nalcor and Government’s communications strategy for proceeding with the Muskrat Falls project.  Tremendous tales of woe were repeated ad nauseum about the risks of using the Holyrood plant by the shameless promoters of Muskrat. 

They were all untrue.

This post sums them all up with particular emphasis on the topic of pollutant emissions, a problem that had ceased to exist.  Not that Government or Nalcor could ever let something as simple as the facts stand in their way of building Muskrat.

NOTE TO HYDRO CEO: THOSE “GROWING PAINS” MIGHT BE YOURS

The new Hydro President, Jennifer Williams, is either threading very softly with a Furey Government afraid of taking decisions or has already succumbed to Nalcor’s long established culture of deception.

Because Ms. Williams is still new, we can only hope that her comments to CBC last week are matters of misspeak rather than signs of an evolving attitude. There is good reason to be concerned.

CEO Williams suggested to CBC that it is common for new utility infrastructure to experience “growing pains”.

The comment left the impression that those “growing pains” include the major problems currently plaguing the Muskrat Falls project, which are limiting production to around a third of capacity. After spending nearly $15 billion and years behind schedule, growing pains should constitute only the minor problems identified in a punch list audit during commissioning.

THE LABRADOR ISLAND LINK IS “SUNK COST”

We should be worried that GNL will double down as big problems persist and costs continue to rise on Soldier’s Pond and the LIL, all the way to Muskrat Falls. It seems destined to be a victim of the "sunk cost" fallacy which describes a tendency to sink more money into a scheme in which a large investment of time and money has already been made, regardless of whether the costs outweigh any benefits.

Last week’s post described the chief conclusion of the second Haldar and Associates report that the Labrador Island Link transmission line (LIL) is under-designed and may need salvaging as often as every six years.

The Report was ultimately conducted for Public Utilities Board which wanted more data to help forestall a repeat of the 2014 outage known as #DarkNL.

MUSKRAT FALLS AN UNMITIGATED DISASTER

Guest Post by David Vardy

Recent news reports have disclosed that the November 26, 2021 completion date for Muskrat Falls will not be achieved. No target completion date has been set. Yet the project continues to accumulate costs. A recent Tweet put the daily cost of the delay at $1 million a day. This is an understatement. What is the daily cost, both in total and on a per capita basis?

In this post we set out the bare facts of the unmitigated and misguided Muskrat Falls project, its costs, without rate mitigation, and how they compare with the cost of Holyrood-generated energy, for which Muskrat Falls was intended to offer a less costly solution. We will also look at how unit energy costs for power sold to Emera compare with the costs imposed by the power purchase agreement on local ratepayers. We will show how the project was a misguided, mistaken choice, and how, through the power purchase agreement, it places an unsustainable burden on ratepayers.

DAVID VARDY'S TEN COMMANDMENTS FOR RATE MITIGATION

Guest Post by David Vardy

THE DECALOGUE: THE TEN COMMANDMENTS FOR RATE MITIGATION

Introduction

The silence on rate mitigation is too deafening. The public needs to know what is happening and what objectives are front and center in the negotiations, now led by former Nalcor Chair Brendan Paddick. We need to adopt a set of principles or criteria, which can both guide the negotiations and measure their success. This post is an attempt to propose ten “commandments” for successful rate mitigation. Because the “misguided” Muskrat Falls project and its impacts on the province are of such “Biblical” proportions it is appropriate to invoke the Mosaic law of the Decalogue, The Ten Commandments.

Premier Andrew Furey was first sworn in as Premier of Newfoundland and Labrador on August 19, 2020. He appointed Brendan Paddick as chair of the Rate Mitigation Team on September 25, 2020. This signalled that the rate mitigation plan announced on April 15, 2019 by Premier Dwight Ball remained unfinished. It also signalled that the progress reported by Premier Ball and regional Minister Seamus O’Regan at a press conference on February 10, 2020 had not advanced as planned and needed a “reset” and a new Team.

THE HARD TRUTH ABOUT THE VALUE OF THE MUSKRAT FALLS PROJECT

Guest Post by PlanetNL

PlanetNL36: A Market Value Estimate of the Muskrat Falls Project

Simple Calculations Reveal Hard Truths

Have you wondered what the $13.1B Muskrat Falls project would be worth if it were treated as a business that had to fairly compete on the wholesale energy market?  Was it even worth the original cost estimate of $7.4B indicated by Nalcor at the time of sanction?

This post uses a simple economic analysis method useful for determining the fair market value of most any business or to determine if a project concept may be viable.  The accuracy of the method mainly relies on inputting honest numbers. 

This is the analysis Nalcor would not do and still refuses to acknowledge.  You will see why.

PENNEY REFLECTS ON "NAYSAYER" STATUS AND THE MUSKRAT INQUIRY (Part I)

Guest Post by Ron Penney 

The following are two segments containing speaking notes from my presentation to the Wessex Society on October 14, 2020. A third part, dealing with the Province's democratic deficit, will be posted on Monday, November 23. The presentation is available at the Wessex Society of Newfoundland, wessexsociety.ca

Part 1 

Setting the Stage:

Unfortunately the delayed release of the Muskrat Falls Inquiry Report on March 5 of this year coincided with the worst public health crisis since the Spanish flue of 1918, which had the effect of dampening public interest in the report and its conclusions. So aside from a few interviews in March this is the first opportunity given to me to comment on the report in some depth. 

The main thrust of my lecture is to deal with a fundamental issue which the Commissioner declined to examine, which is what democratic deficits in our society allowed “a Misguided Project”, to proceed.

TRUMP FAMILY FIGHT SHOULD INFLUENCE HOW WE THINK ABOUT OUR MUSKRAT OBLIGATIONS

Guest Post by Cabot Martin

An interesting piece appeared in the New York Times last week concerning a big dust up between President Donald J. Trump and his, to put it mildly, “estranged” niece, Dr. Mary L. Trump. Both Donald J. and her father, Fred Jr, were sons of Fred Trump Sr., the Trump family patriarch.

Dr. Trump has a “tell all” book coming out next week that promises to give the world a unique look inside the mental world of a man who has wreaked havoc on his nation and the world for the past three and a half years and is bidding , through re-election, to repeat this extraordinary performance .

The title of her book foreshadows it’s substance: “ Too Much - Never enough : How My Family Created the World’s Most Dangerous Man”.

Now Dr. Mary L. Trump (she has a PhD in Clinical Psychology and is a certified Clinical Psychologist) is obviously not your average political commentator and The Donald has wheeled out his overworked legal team in an attempt to use the courts to avoid the publication of her professional/personal scrutiny.

COVID-19: THE NEW COVER FOR DELAY AND OVERRUNS AT MUSKRAT

It took a Commission of Inquiry to uncloak the deceit that flowed from the Offices of former Nalcor CEO Ed Martin, who thought he should be the one to define the “lowest cost” option and the extent of “cost overruns”.

It seems Stan Marshall is finding some of the tools of deception that Ed Martin left behind.

The Muskrat shutdown — a precaution amidst the COVID-19 pandemic — is now to blame for Marshall’s failure to “finish strong”. “The end is in sight, even through the fog of the COVID-19 pandemic,” the CBC quoted the blustery Stan, neither the CBC nor the CEO willing to measure the fog of incompetence that still inhabits the Crown Corporation.

STAN MARSHALL IMPRESSES LESS AND LESS

The construction industry continues to hum throughout the province during the COVID-19 pandemic. Some big projects enjoy no interruption, including Memorial’s Science Building. Then, too, the line-ups at COSTCO confirm the daily congregation of 300-400 customers and staff. In proportion, Walmart and Dominion Stores are equally well populated; all have implemented physical distancing measures.

In contrast, the Muskrat Falls project is dormant. Laden under $13 billion of debt (likely, more) Nalcor executives cannot employ even the management skills of a Walmart “Greeter” to keep the operation running.

ENGINEER EXPECTS MF INQUIRY to CONFIRM ALLEGATIONS of FALSIFICATION, DECEIT

Guest Post by the "Anonymous Engineer"
EDITOR'S NOTE: The author of today's article is the whistleblower, dubbed the "Anonymous Engineer", who disclosed – on this Blog - falsification of the estimates for the Muskrat Falls project in January, 2017. His disclosures helped bolster the case for the Government's call of the Commission of Inquiry under Judge Richard LeBlanc.

The Muskrat Falls Project – Nalcor's DNA (Deceit, Deception, Falsification)

Background

The Muskrat Falls Inquiry is over. We are awaiting the Provincial Government's release of the report by Judge Richard LeBlanc. What the evidence at the Inquiry has revealed, through 6 million documents, 135 witnesses, is an intriguing sequence of deceit, deception and falsification, which has essentially become the DNA of Nalcor. Almost every aspect of the project was falsified, information withheld, writings edited to dilute the impact, and no one takes ownership, accountability or responsibility for anything.

MUSKRAT'S "DOOZY" OF A PROBLEM

Guest Post by James L. Gordon

What else can go wrong – this one is a doozy!

There are 3 synchronous condensers (SD) at the Soldiers Pond substation on the Avalon         

Peninsula, the down-power end of the DC transmission line.

MUSKRAT COSTS “HARD WIRED”?

Guest Post by David Vardy
In August of 2018 Premier Dwight Ball told us that ratepayers would not have to pay for Muskrat Falls. Recent news reports indicate that the Premier has met with the Prime Minister and further federal support will be announced in January.  Does this mean that Nalcor CEO Stan Marshall was wrong when he told the PUB the cost was inescapable? The PUB heard little in the way of proposals to lighten the burden other than the shifting of costs from ratepayers to taxpayers. This offers little comfort because for the most part we are all both ratepayers and taxpayers.

ROCK SOLID: ANOTHER MYTH EXPOSED

Guest Post by David Vardy
Our credit rating, albeit already downgraded, hangs on a slender thread. It depends upon the false premise that Muskrat Falls is self-supporting and that Nalcor Energy is a “self-sustaining” Government Business Enterprise (GBE). Nothing could be further from the truth. This is the myth which supports our credit rating and which is our tenuous buttress against falling over a steep fiscal cliff.

Sturge: Project Rock Solid
On March 28, 2019, Nalcor’s then Vice President and Chief Financial Officer Finance Derek Sturge told the Muskrat Falls Inquiry that the financing of the project was “rock solid”  (page 26). This is the same CFO whose contract has just been terminated “without cause” and who was awarded a compensation package of $900,000, in keeping with Nalcor Energy’s entitlement culture. Legal counsel for the Muskrat Falls Concerned Citizens’ Coalition had asked him:

MUSKRAT: LESS A PLAN THAN A CONSPIRACY?

Last time, author and consultant to the Commission of Inquiry, Dr. Brent Flyvbjerg’s thesis of “strategic misrepresentation or political bias” (at P - 00004, p 17) was discussed as an explanation for how the absurdly unnecessary and uneconomic project Muskrat Falls project received sanction.

Flyvbjerg’s thesis posits  that “… forecasters and planners deliberately and strategically overestimate benefits and underestimate cost and schedule in order to increase the likelihood that it is their projects, and not the competition's, that gain approval and funding.”

Undoubtedly, there are still people who believe that the Muskrat Falls project grew out of a process of evaluation based on the statutory requirement of lowest cost and reliability.

WHEN YOU THINK MUSKRAT, DO YOU BELIEVE “NEVER AGAIN”?

There are a few matters that need to be discussed before the details of the Muskrat Falls debacle test the patience of readers (as if they haven’t already).

Reflections on the past year, as the Inquiry examined a bevy of politicians, bureaucrats and consultants, leads essentially to a single question: how did so many people in positions of responsibility exclude themselves from common ethical norms and processes, as well as the “best practices” of their professions, affording themselves engagement in a lengthy, complicated, and costly plan of deception to achieve the sanction of such a reckless, state-sponsored project?

The question is only partly addressed here; the lengthy and diverse evidence supporting the mostly likely thesis — better coming from the Inquiry Commissioner anyway — would test most anyone’s patience. Still, the likelihood of Muskrat’s repeat is high. If the next one is not on that scale of “crazy” it is only because no one is foolish enough to lend us the money — not because the current political leadership is any less reckless. 

THE ELEPHANT IN THE ROOM

Guest Post by David Vardy
The province’s deteriorating fiscal position has been linked with Muskrat Falls but yet it has received scant attention. Virtually absent from the Muskrat Falls Inquiry (MFI), and from the PUB reference Inquiry into Rate Mitigation options, is the fiscal impact of the project. It remains the elephant in the room, in plain view but virtually ignored by both inquiries.  Yet it is the major public policy issue facing the province.

The PUB reference Inquiry is focused on the means whereby revenues can be generated to pay the increased revenue requirements to operate our electrical power system, rather than on the fiscal impact. In its work the PUB has been directed to examine measures to reduce the cost of providing electrical power as well as to identify new sources of revenues.  The fiscal impact of the project remains outside of the scope of the PUB. All of this suggests we must look to the MFI for an assessment of fiscal impact.

"ANONYMOUS ENGINEER" REFLECTS ON INQUIRY

Guest Post by the "Anonymous Engineer"
EDITOR'S NOTE: The author of today's article is the whistleblower, dubbed the "Anonymous Engineer", who disclosed – on this Blog - falsification of the estimates for the Muskrat Falls project. That was January 30, 2017 . His comments were recorded in a post entitled Muskrat Cost Estimates "A Complete Falsification". A second post called Muskrat: Allegations of Phony Cost Estimates provided significant additional details of low-balling which ultimately were used to justify the Sanction of a project. His assertions have been confirmed by Forensic Auditor, Grant Thornton and by various Witnesses who gave testimony at the Commission of Inquiry. — Des Sullivan

Nalcor - A Documented History of Deceit
Now that the Inquiry is reaching a conclusion – after almost 130 days of hearings and at least 125 witnesses of all stripes – left exposed is an unmistakable narrative, a trail of deceit and misinformation that is beyond belief. 

Let’s look at this trail from the very beginning: 

QUEBEC APPEALS COURT BREAKS HQ STRANGLEHOLD ON MUSKRAT

The Decision by the Quebec Court of Appeal to overturn the Quebec Superior Court and grant CFLco the right to sell power in excess of the “Annual Energy Base” (AEB) seems to have reduced the province’s stress level. The obligations of CFLco in relation to the AEB is integral to the issue of water management and the abilty to efficiently run the Muskrat Falls plant. 

The Annual Energy Base was established in the original Upper Churchill Contract and states an amount of energy used to calculate minimum monthly payments by HQ to CFLco (and “ensure(s) a certain degree of stable revenue for CFLCo.”. This figure is also in dispute (footnote 53 of the Decision) but the amount is thought to be 28.97 million MWh — the figure used in three successive Nalcor Annual Reports.

MUSKRAT: THE BIGGEST GAMBLE OF ALL

Guest Post by David Vardy

Recent disclosures at the Muskrat Falls Inquiry confirm that the project is on track to become a financial tsunami. Former Finance Minister Cathy Bennett told the Muskrat Falls Inquiry that the Department of Finance was marginalized in the decision-making process. This was confirmed by former Deputy Minister Donna Brewer when she was on the stand this week. Yet the provincial government played a pivotal role in the financing of Muskrat Falls. In fact this pivotal initiative was the biggest gamble ever taken by this province.