NL econ­o­mist com­pares Site C dam to Muskrat Falls

‘It re­ally gives you an op­por­tu­nity to see just how bad the project here is’

The Aurora (Labrador City) - - EDITORIAL - BY EVAN CAREEN

In Bri­tish Columbia, a hy­dro­elec­tric dam called Site C has been gen­er­at­ing con­tro­versy for a long time.

The newly minted NDP gov­ern­ment in BC is hav­ing the project reviewed by the Bri­tish Columbia Util­i­ties Com­mis­sion. The BCUC made a call for sub­mis­sions on the project and New­found­land and Labrador econ­o­mist David Vardy made a sub­mis­sion com­par­ing the be­lea­guered project to our own res­i­dent hy­dro­elec­tric boon­dog­gle, Muskrat Falls.

“My main rea­son for do­ing this re­ally was I wanted to get more na­tional at­ten­tion for what is hap­pen­ing here with the Muskrat Falls project,” Vardy told the Labradorian. “I’m very con­cerned about it and I have been for quite some time, as a threat to the fu­ture sus­tain­abil­ity of the prov­ince be­cause of the size of the debt rel­a­tive to the pop­u­la­tion.”

Vardy, the for­mer chair of the Pub­lic Util­i­ties Board in the prov­ince, sub­mit­ted a 30page pa­per com­par­ing the two projects, fo­cus­ing on a num­ber of key ar­eas. He com­pared and con­trasted the project sizes rel­a­tive to the pop­u­la­tion of the prov­inces, which is an area of con­cern.

“Bri­tish Columbia has a pop­u­la­tion of 4.5 mil­lion peo­ple and is ex­pected to have growth in that in the next 20 years. Whereas our pop­u­la­tion has been de­clin­ing since the mora­to­rium and is pro­jected to de­cline, fur­ther within the next 20 years. Here the cost is about $27,000 per capita com­pared to $8,000 per capita in BC.”

The fi­nanc­ing of the Muskrat Falls project was an­other area Vardy fo­cused on in his re­port, which he said will cre­ate an eco­nomic and fi­nan­cial bur­den on the prov­ince that ap­pears to be be­yond the ca­pac­ity of New­found­land and Labrador on its own, even with the fed­eral loan guar­an­tee in­creased from $5 bil­lion to $7.9 bil­lion.

“I wanted to draw at­ten­tion to the fi­nanc­ing scheme that’s used here,” he said. “It’s very hard on the con­sumer, it puts a big bur­den on the con­sumer to pay for the cost, what­ever it may be, and im­pose a big cost bur­den on New­found­lan­ders and Labrado­ri­ans that we will have to carry a long time in the fu­ture.”

He said be­cause con­sumers have to buy the power from Muskrat Falls through NL Hy­dro and Nal­cor, it puts the con­sumers in a po­si­tion whereby they would be fore­go­ing bet­ter op­tions to buy power in the mar­ket­place.

“We are cap­tured to pay for the loan guar­an­tee and to make enough to keep the pay­ments go­ing on the debt that we have in­curred,” he said.

Fi­nanc­ing for Site C is a prob­lem as well, Vardy said. They se­cured a pro­vin­cial loan guar­an­tee in­stead of a fed­eral one and the prov­ince doesn’t have as much eq­uity in­vested in it. They’re ba­si­cally de­fer­ring a lot of the ex­pen­di­tures into the fu­ture, he said, shift­ing the cost of these projects to fu­ture gen­er­a­tions.

Vardy also touched upon pub­lic safety, cost es­ca­la­tion, and the need for a pub­lic in­quiry here in New­found­land and Labrador, among other is­sues. He said with the me­dia at­ten­tion on Site C he wanted to draw at­ten­tion to what he sees as a sim­i­lar project.

“We have two projects go­ing on, in many ways very sim­i­lar but in many ways very dif­fer­ent. When you use Site C as a bench­mark for the Muskrat Falls project, it re­ally gives you an op­por­tu­nity to see just how bad the project here is,” he said. “Their project is very con­tro­ver­sial; a lot of peo­ple are ar­gu­ing about it, a lot of peo­ple in BC think it’s too big of a project. Of course, for us Muskrat Falls is even big­ger, rel­a­tive to our pop­u­la­tion size and rel­a­tive to our need for en­ergy.”

He said what is go­ing to hap­pen here is the cost of Muskrat Falls power is go­ing to be so high that peo­ple are go­ing to find al­ter­na­tives.

“Peo­ple in ru­ral ar­eas will cut more wood; peo­ple in ur­ban ar­eas will buy heat pumps and put more in­su­la­tion into homes be­cause we are not go­ing to pay those rates Nal­cor is pro­ject­ing.”

Vardy said this would make Muskrat Falls a stranded as­set with no de­mand for it. Sales into ex­port mar­ket will not be enough to cover op­er­at­ing costs, he said, and the project will be shut down.

Lack of pub­lic en­gage­ment is a big is­sue Vardy went into as well, and the need to al­low due process when ma­jor pub­lic pol­icy de­ci­sions are made.

“Gov­ern­ments should be cau­tious about cur­tail­ing pub­lic de­bate,” he wrote in the re­port. “Pow­er­ful crown cor­po­ra­tions should be ac­count­able and trans­par­ent. In the case of Nal­cor, its be­hav­iour has been less open and trans­par­ent than in­vestor owned cor­po­ra­tions who must make dis­clo­sures to their share­hold­ers, dis­clos­ing in­for­ma­tion which Nal­cor has been free to keep to it­self, un­der the guise of pro­tect­ing “com­mer­cially sen­si­tive” in­for­ma­tion.”

He said he wrote the re­port as a way to pro­vide help to the BCUC but was mostly do­ing it to help peo­ple here in New­found­land and Labrador to high­light the case, which has not got­ten the na­tional at­ten­tion he said it de­serves.

Vardy gave 14 rec­om­men­da­tions to the BCUC, in­clud­ing that they be guided by the pol­icy ob­jec­tive of sup­ply­ing least cost, re­li­able power and that they must be vig­i­lant to re­flect the in­ter­ests of present and fu­ture gen­er­a­tions.

FILE PHOTO

For­mer PUB Chair David Vardy

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