Muskrat Falls—more price-shock surprises?
It is interesting to reflect on the excitement and interest attendant upon announcements by government of large projects. Such announcements usually are accompanied by considerable fanfare over related jobs and future anticipated socioeconomic benefits. Many readers will recall the media/public hype when, in 2010, then Premiers Danny Williams of Newfoundland and Darrell Dexter of Nova Scotia launched the Muskrat Falls Hydro Electric Project for Labrador.
The project, allegedly designed to produce in excess of 800 megawatts of energy at an estimated completion cost of between $5.5 and $6.2 billion, was promoted as a new and exciting power source for both provinces. Further, there were expectations that excess energy would/could supply Northeast U.S. needs. Access to clean/ green energy enabling reduction of fossil fuel usage was a much-touted benefit.
Many of the near-term benefits from Muskrat have already been realized, including a large numbers of jobs created.
One disappointing aspect of the project is the absence of transparent detailed reporting on project-changing circumstances occurring in Newfoundland. For example, in the July 15th edition of the St. John’s Telegram, former Newfoundland Justice Minister Ron Penney wrote an article titled “Muskrat Falls: A Heritage Project”—this might well have nudged up the lid on Pandora’s Box! By way of illustration, a festering situation regarding perceived or real project mismanagement blew up in June when Project Manager, NALCOR President and lawyer Ed Martin was either relieved of his position or quit. Coincident with that action was the resignation of the entire NALCOR Board. Fair to say that two of the core issues were first, evidence of major project cost increase; and, second, significant delay in project completion.
Former Fortis Corporation CEO, now retired, Stan Marshall, immediately was pressed into service by Newfoundland Premier Dwight Ball to attempt to rescue what appeared to be a sinking ship.
On June 24, 2016, six weeks after Marshall was rushed into command, he gave a public briefing on the status of the project. The word boondoggle best summed up the new CEO’s assessment.
Marshall was clear that the case for the project had evaporated since its sanctioning in 2012. Further, it was built on “false assumptions — faulty assumptions and it went from there.” The scary message for Newfoundland power customers is that unless some relief can be found within federal resources or otherwise, power rates will increase from the current level of ll.9 cents per kilowatt hour to 21.4 cents by 2021. Rounded, it appears to mean an average household monthly bill will increase by $150 by 2021.
NSPML is a distinct and separate component of the overall Muskrat Power Development; and Emera and N.S. Power offer repeated assurances that their cable project is on schedule and budget. The NSPUB did a thorough job at the May 2013 public hearings on the MuskratNSPML matter sheltering Nova Scotians from price-shock surprises. The Nova Scotia Consumer Advocate System also functioned effectively. Nevertheless, Nova Scotia is joined at the hip with Newfoundland on this one and only the competence of the new NALCOR/ Muskrat management will determine final outcomes.
Since power rates affect our pocketbook, consumers should look at what happened in Ontario. Former Premier McGinty’s rush-to-green 12 years ago was an honest attempt to respond to climate change, but his choice of policies nearly bankrupted the Ontario manufacturing industry sectors and overly burdened consumers.
The majority of citizens have bought into the need to address climate deterioration. We have yet to solve the how!