NL: 'Inconclusive Muskrat Falls report' wasted $2M, says Dunderdale

Sue Bailey
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The Canadian Press

Premier Kathy Dunderdale has accused Newfoundland and Labrador's Public Utilities Board of abandoning its mandate to assess whether the province needs more power through to 2067 and if Muskrat Falls is the cheapest solution.

Following question period Monday afternoon, Natural Resources Minister Jerome Kennedy (left) and Premier Kathy Dunderdale met with reporters outside the House of Assembly where they discussed the Public Utilities Board report on the Muskrat Falls energy project. — Photo by Joe Gibbons/The Telegram

[ST. JOHN'S, NL] — Premier Kathy Dunderdale gave in to opposition calls for a special debate and vote on a planned hydroelectric megaproject after Newfoundland and Labrador's Public Utilities Board said it couldn't assess if Muskrat Falls is the cheapest energy option.

Dunderdale said she was disappointed and puzzled by the board's much anticipated but inconclusive report Monday, calling it a waste of time and money.

"I did expect after nine months and $2 million that we would have a recommendation," she said. "There was nothing to prepare me on Friday night as I sat waiting for the report that I wouldn't get a recommendation."

Dunderdale accused the board of abandoning its mandate to assess whether the province needs more power through to 2067 and if Muskrat Falls is the cheapest solution.

She said it's especially puzzling because others, including Manitoba Hydro International and the province's consumer advocate, both concluded Muskrat Falls is the cheapest option using the same data that was available to the board.

Dunderdale had touted the review as an independent analysis of a project she has adamantly defended.

But the board said information provided by Crown corporation Nalcor Energy was not detailed enough.

Nalcor and Nova Scotia's private utility Emera (TSX:EMA) are working on a deal to jointly fund the $6.2-billion project.

Muskrat Falls would bring power from Labrador to Newfoundland and then Nova Scotia using subsea cables.

Board chairman Andy Wells got his mandate in June and was originally to report by Dec. 30. He got an extension until March 31, but the government refused his request for more time to conduct public hearings.

Wells has publicly lambasted Nalcor for what he said were "torturous" delays in the delivery of requested documentation.

In its report released Monday, the board refers to "gaps in Nalcor's information and analysis," saying that electrical integration studies were not done, nor were industry-standard reliability studies.

It says cost forecasts dating back to November 2010 — the most recent price projections available — are inadequate to assess whether Muskrat Falls is the cheapest option.

And the board cites "uncertainty" surrounding the project's adherence to standards set by the North American Electric Reliability Corporation. It says the design of a key overland transmission line "is not in accordance with accepted standards and best practice."

"Of particular concern to the board is the fact that Nalcor does not accept the recommendation of MHI (Manitoba Hydro International) with respect to transmission line design criteria," says the board, referring to a separate Muskrat Falls review released in February.

Such gaps could affect not only "project definition and costs" but also reliability of a crucial power source, says the board.

Any major power loss that may result "could significantly impact Hydro's utility and industrial customers and lead to additional costs for the system and customers, in addition to the possible societal and economic impacts associated with an extended outage."

Dunderdale said Monday the province has once again hired Manitoba Hydro International to assess the most updated cost projections before Muskrat Falls is sanctioned or not. Those numbers, along with new reports on natural gas and wind options, will be tabled in the legislature in coming months, she said.

She also promised a special Muskrat Falls debate and recorded vote in the legislature — something opposition parties have long called for — even if it means recalling the house of assembly from summer break.

Nalcor CEO Ed Martin said in an interview Monday that Nalcor is working to close some of the data gaps described in the Manitoba Hydro International report and again by the Public Utilities Board.

"A couple of those we agree with, and others we're considering," he said of transmission concerns.

Cheryl Blundon, a spokeswoman for the Public Utilities Board, said the report speaks for itself and there will be no further comment.

Nalcor has said it was co-operative and did its best to comply with multiple and complex requests for data.

There were doubts in some quarters about the board's ability to assess the project.

Former Tory premier Brian Peckford wrote a letter to Dunderdale in February, saying Muskrat Falls should be independently reviewed by international energy experts because the board does not have the expertise to evaluate the project.

He joined a growing list of former public servants, academics and lawyers who have raised questions about Muskrat Falls. A coalition of environmental groups has applied in court for a judicial review of the project, saying an environmental assessment was incomplete.

And opposition critics have also cast doubt on the development.

Provincial NDP Leader Lorraine Michael said Monday that the premier is now capitulating to intense scrutiny of Muskrat Falls that has escalated in the last year.

"I think what we're seeing is the government giving in to public pressure. The pressure has been mounting over the last months, experts unattached to government .... have come out and made their statements.

"I think the government can no longer deny what's being said out there and they have finally given in to the pressure."

Organizations: Hydro International, Public Utilities Board, Emera TSX North American Electric Reliability

Geographic location: Muskrat Falls, Newfoundland and Labrador, Nova Scotia Manitoba

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