Over the past year of reporting on Site C and looking into other dam projects around the world, Muskrat Falls quickly grabbed my attention earlier this year. In reviewing how the government of Newfoundland/Labrador decided to proceed with the project,the projects path to construction was eerily similar to our BC Liberals governments path to ‘get Site C past the point of no return’.
In fact, I have written about those similarities in 8 different blog posts since February of this year. You can read those posts, newest to oldest, here: https://lailayuile.com/tag/muskrat-falls/
And today, following the continuing story at the dam site where land protectors entered over the weekend and brought all work to a grinding halt, I am again reminded of those blog posts in which I have questioned whether the premier will learn from Muskrat Falls or continue down the same path.
From the National Post ( gasp, YES!) :
Protests, ‘voodoo economics’ and soaring costs: How Muskrat Falls became a ‘boondoggle’
ST. JOHN’S, N.L. — Then-premier Kathy Dunderdale had a dismissive air when she rose in the legislature on Dec. 18, 2012, to answer another opposition question on Muskrat Falls.
Her Progressive Conservative government had just sanctioned the $7.7-billion hydro project, the largest publicly funded venture in Newfoundland and Labrador’s history.
It was a heady time for a province of 530,000 people — about the same as the Toronto suburb of Brampton — which was flush with oil riches and ambition. And a week before Christmas 2012, Dunderdale had little patience for skepticism.
One former provincial economist called Muskrat Falls a high-stakes gamble based on “voodoo economics.” Even Public Utilities Board reviewers said they hadn’t been given enough information to form an opinion about it.
No matter. The 824-megawatt development — which this month became a national flashpoint for indigenous rights — was touted as the cheapest option for required power, and Dunderdale was confident of success.
“We have imagined every scenario, everything that could possibly go wrong, and we have a remedy in case it does,” she said.
HN: How closely you’re watching the Muskrat Falls project in Labrador? It seems every couple weeks you hear something that’s gotten more complicated, or there’s another cost overrun there. How does B.C. keep from falling into a similar situation?
CC: The same reason we have a balanced budget and they don’t, and the same reason we have the fastest economic growth in the country and they don’t. We really watch our Ps and Qs, (and are) very careful about those financials. Important though to remember too—BC Hydro spent 10 years planning this project. This isn’t a back of the envelope project. That’s meant they have worked through almost every scenario and tried to risk-manage that. So it’s really minimized any of the risk that they have. That kind of extra work and the time that they took to do it is really paying off now. I don’t know very much of the background to Muskrat Falls, but I do know that in British Columbia we have proven ourselves and the country to be the leaders in managing the province’s finances well and that includes BC Hydro.
“Premier Bennett, you got it started and I will get it finished. I will get it past the point of no return.”
The new consumer advocate for Newfoundland and Labrador is not a fan of the embattled Muskrat Falls project.
Lawyer Dennis Browne, who previously served as consumer advocate from 1996-2004, was appointed to the role by the province’s Independent Appointment Commission on Thursday.
As protesters continued to fight against the planned flooding of Muskrat Falls amid concerns of methylmercury contamination in Lake Meville on Friday, Browne told CBC’s On The Go he’s never believed the project was a good idea.
“My feelings really have never changed. I always thought that it was a project that was flawed from the beginning,” he said.
Browne was part of the 2041 group, a team of lawyers who stood in opposition to Muskrat Falls.
“It was a project that should never have seen the light of day,” he said.
“It was a bit of a sad spectacle the way it was gone about, because anyone who was opposed to it was silenced or ridiculed, and they didn’t put it fairly in front of the Public Utilities Board.”
Sound familiar? Dennis Burden knows all about that. It is hard being right when the wrong has already been done and I shared his thoughts here over the summer. But there is more.
As consumer advocate for the people of N.L., Browne said he worries about the cost of electricity once the project comes online.
“Everywhere you look where you need electricity, people are going to be burdened on account of this project,” said Browne.
While Dwight Ball’s Liberal government continues to deal with issues surrounding Muskrat Falls, Browne is deflecting the blame back to the people who made the decision in the first place.
“It’s on those who passed that legislation, the [Kathy] Dunderdale government and those who were with them.”
“They stood in the house when the other two parties were trying to get some common sense in the regime to get it to the Public Utilities Board and denied all due process.”
Nalcor ( their hydro company) actually admitted right at the end of June – while most people were busy with the end of school and plans for the short Canadian summer-that Muskrat Falls was the wrong project for Newfoundland/Labrador. Their CEO also admitted their estimates were wrong, along with pretty much everything else. You can read that and listen to it at this blog post here: https://lailayuile.com/2016/06/24/shocking-admission-from-nalcor-energy-ceo-serves-as-chilling-warning-to-bc-government-that-exempted-site-c-project-from-independent-review-of-bcuc/
I said then, as I say now, that admission should serve as a chilling warning to the BC government, because they exempted the Site C dam project from the independent review of the BC Utilities Commission….kind of how the Newfoundland Labrador government of the time rammed it right through.
Newfoundlands public utilities board was not given the proper information to review Muskrat Falls… just as the BC Utilities Commission that already rejected the Site C dam project twice, was not allowed to review Site C this time around.
Both Nalcor and BC Hydro have claimed their estimates were correct, double checked and tripled checked by their own team of professionals…and good for them but when the public regulator is not allowed to do its job properly, this is the result. Their estimates were wrong. Their numbers were wrong. And it’s the good people of Newfoundland Labrador who are paying the price for their political incompetence.
And yet even in June of this year, Newfoundland columnist Russell Wangersky had pretty much summed up why this matters in an excellent column every single British Columbian who worries about their Hydro bill should read. And when you read it, substitute Site C for Muskrat Falls please :
The cost to each individual resident of this province of Muskrat Falls has just risen from an already-astounding $14,509 to a staggering $22,353.
Got two people in your household? That’s $44,706 you’re on the hook for. Four? Try $89,412. And, unlike the provincial debt, it’s money every electricity user will have to pay back.
And we’re just getting started here.
The leap in costs for the Muskrat Falls project — from $7.4 billion at sanctioning to $11.4 billion now (and the expected increase in the price of electricity, from 11.9 cents a kilowatt hour now to 21.37 cents a kilowatt hour five years from now) — is so staggering, its satellite effects are hard to comprehend in advance. But there are going to be additional spinoffs, and they will be coming from your wallet, too.Problem is, electricity is so ubiquitous that price increases there are like general tax increases. (Plus 15 per cent HST that will added onto any increase.) The concept is, quite simply, budget-blowing.Take a look at Confederation Building — not too long ago, The Telegram did an access to information request looking at power bills for the Confederation Building’s West Block and newly renovated East Block. The power bill for Jan. 1 to May 8? $1,024,592.28. Multiply that bill by the anticipated increase in power rates, and you get $1,839,961.09. So, where do you think the extra $815,368.81 is going to come from?What about food? Well, your local grocery store has to keep the lights on and the coolers cool. They don’t do it out of charity, so expect to see their increased electrical costs reflected in the price of food.Got a streetlight on your street? Well, your city or town has to pay to keep that light on. Two weeks ago, the City of St. John’s paid $475,852.51 to Newfoundland Light and Power for electrical services. A month earlier, they paid a bill for $425,213.86. The combined increase for those two bills alone under the expected new rates would be $717,067.10 — and that’s not spare change that city council is going to be able to find under the couch cushions. They will have to find it in the pockets of municipal taxpayers.
Say you work in the fishing industry — if you’re a plant owner, you know how much it costs to power a blast freezer. How do you increase those costs to almost double what they are now and manage to stay competitive in a marketplace where other plants in other provinces or countries are paying less for power? You can’t even pass the cost on to your out-of-province customers, because your competitors can undercut your price. And once again, you’re not running a charity.
Problem is, all of this should have been expected. The Muskrat Falls project was rammed through every step of the way without undergoing the most basic financial examination — someone stopping and asking the question, “What if our basic assumptions are wrong?”
Other people — other utilities — were already learning about that the hard way, even before we moved ahead with our particular money-sump.
Four and a half years ago, before the project was sanctioned, I wrote, “Muskrat Falls is based on a series of informed assumptions — but those assumptions could be wrong. They have to be tested independently, right down to their underpinnings — and frankly, that has not been done yet.”
I wrote that because Manitoba’s electric utility was seeing project costs balloon on hydro dams (a 50 per cent increase, almost exactly what we’re seeing now with Muskrat Falls), because natural gas prices (and therefore electricity export prices) were dipping sharply, and because oil supplies were ballooning with the shale gas revolution, even though the current price slump hadn’t hit yet.
Those assumptions weren’t ever tested.
Now, new Nalcor head Stan Marshall is pretty blunt about exactly that: the core problem with Muskrat Falls, he said Friday, is that “it was built on false assumptions, faulty assumptions, and it went from there.”
When people asked for reviews of specific aspects of the project, they were told they were stupid, and that smarter people had everything covered. When others asked hard questions, politicians told them to shut up, go away and stop being unpatriotic. (I know precisely and personally what that back of the hand feels like.)
Look what it’s gotten us.
And while affordability is a huge issue in this province of BC right now…it is so much more than just the cost of electricity for every person in Newfoundland… or British Columbia. The numbers may be different here but the sentiment and truth behind them remains the same.
Here BC Hydro is clearing the path for the dam while two court cases from the two First Nations directly impacted by the dam await a decision. Landowners Ken & Arlene Boon are being evicted by BC Hydro by December. And yes while everyone with a BC Hydro account will pay for this dam in BC whether they realize it or not, the reality of flooding an entire valley with highly productive farmland, unique ecosystems and a cultural significance that continues to this very moment, is priceless.
I don’t understand why it is so hard for politicians to admit they have made a mistake. We all make mistakes, that is what makes us human. The first step to making things right is to admit the wrong… and in Newfoundland that happened in June. But to now make things even more wrong by not clearing the reservoir to prevent a build up of methyl mercury in the fish and waters they inhabit…it’s akin to a slap in the face considering Nalcor already admitted the project should never have happened. This… is not right.
Make it right Premier Ball. After all this, it is the least that should be done. You may not have started this mess but you have an obligation to to fix this now.
And please, have a good long conversation with Premier Clark when you have a moment.
Because if there is any saving grace to Muskrat Falls, let it be the light it shines on Premier Christy Clark and her vow to get the Site C dam project past the point of no return.