Calling Muskrat into question

Barb Sweet & James McLeod
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Minister defends against new criticism around hydro development

Several prominent experts came out Wednesday to pose some pointed questions about the Muskrat Falls project.

In a letter to The Telegram, former Public Utilities Board (PUB) chairman David Vardy and former Deputy Minister of Justice Ron Penney called for a full review of the project by the PUB.

Vardy and Penney also called for a public referendum on the issue, saying it’s “the most important public policy issue ever to have faced Newfoundland and Labrador.”

Also Wednesday, the C.D. Howe Institute published a study by MUN economics professor James Feehan questioning the necessity for the Muskrat Falls hydro dam.

The paper argues energy prices are artificially low; if prices were higher, people would use less electricity, which would delay the need for the hydro development.

“The electricity options facing Newfoundland are costly. Making the right choice, getting the timing right and maximizing the net benefits have to be based on the correct price signals,” Feehan concluded. “The provincial government should allow efficient pricing and then reconsider the options. Authorizing Muskrat Falls now would be premature and imprudent.”

Both Penney and Vardy, speaking to The Telegram, said this was further evidence the PUB needs to have the chance to do a full review of the project.

PUB chairman Andy Wells has asked for a deadline extension until June to complete the review of the plan. The government has refused, saying that his report must be completed by March 31, so it can be publicly debated in the House of Assembly spring session.

Plenty of opportunity for input, minister says

“The idea that it’s not going to be properly reviewed, and this idea as well that there’s going to be some sort of debate in the House of Assembly, but not a vote, I just don’t understand,” Penney said. “If the government doesn’t change its mind, we’re going to have basically a half-assed report and it’s not going to be helpful in terms of informing debate.”

Natural Resources Minister Jerome Kennedy said the public has had plenty of opportunity to have its say, despite the fact government has turned down the PUB extension.

Kennedy said there was an environmental assessment process, Nalcor had more than 20 open houses last year and there has been numerous opportunities for commentary in the media.

“At the end of the day, the (PUB) public presentations, I’m not sure what they will add,” Kennedy said.

As for the PUB’s concerns Nalcor has been dragging its feet on filing information, which has left the PUB in a bind, he said the report from outside experts Manitoba Hydro International later this month will review all technical aspects.

“What the PUB is being asked is a very specific question. The answer in my mind can be yes, no, maybe or we don’t have enough information,” Kennedy said, referring to the least-cost option for electricity.

“We need to wait and see what is in the Manitoba Hydro International report. That will give us a better idea and will give me a better comfort level at that time as to  whether or not the PUB has the information they require.”

The PUB is also concerned information it got from Nalcor is only current to December 2010, but Kennedy said government will have all the up-to-date costs, fuel estimates and other data when it comes to making the final decision on sanction of the Lower Churchill deal.

Asked whether he’s concerned about the perception he and his government will be remembered for rushing a decision if the project is deemed a failure in the future, Kennedy said unlike the Upper Churchill deal of the 1960s, government is allowing debate in the House this time around.

“We have to learn from the mistakes of the past and especially the Upper Churchill,” Kennedy said.

“As politicians, we have to look at all the facts in making our decision and while no one certainly wants to be the new Joey Smallwood, also we can’t be afraid of making decisions because of that type of issue.”

Kennedy said the NDP and Liberals can debate Muskrat Falls during the speech from the throne debate, in question period and during budget debate. While he didn’t signal there would be a special debate on the project, he said government is prepared to debate it all night if it has to.

“We feel the best and proper place for this to be debated and to allow for full debate is in the House of Assembly,” Kennedy said.

Commenting on the letter written by Vardy and Penney suggesting opponents are afraid to come forward, Kennedy accused Vardy of refusing to represent his side of the argument in a discussion next week with economist Wade Locke at the Harris Centre.

“I find it odd that these individuals are engaged in letter writing and criticism and yet, when push comes to shove and he’s given the opportunity to get out there, he refuses to do that,” said Kennedy, adding he is encouraging the public to attend the discussion.

Both opposition parties blasted Kennedy for refusing to wait for a fully conducted review by the PUB.

“It’s quite obvious to me that government does not want an open process around the review of this particular deal,” Liberal energy critic Yvonne Jones said. “If they did, they would certainly grant the time that was necessary to do it appropriately.”

NDP Leader Lorraine Michael said it was “disturbing” that the PUB won’t be given the time it feels it needs to complete a full report. If need be, she said, the debate should be delayed until the summer, or the fall.

“I want my full discussion in the House, but I want full information,” she said. “It’s only government that’s saying the full discussion in the House has to happen this spring.”

Organizations: Public Utilities Board, C.D. Howe Institute, Hydro International NDP Harris Centre

Geographic location: Muskrat Falls, Newfoundland and Labrador, Manitoba

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Recent comments

  • Michael J. Laurie, B.A., J.D.
    January 12, 2012 - 23:50

    While they are certainly entitled to their opinions, I note that Dave Vardy, Ron Penney and James Feehan, each chose a salary from public coffers with guaranteed taxpayer-paid pensions at retirement ; each one is or was always the power behind the throne where personal chances were not taken. Hence, I am not surprised that they say "do nothing" with respect to developing Muskrat Falls. What a society we would have if everyone chose a "cushy" job and took orders from political masters of whatever level of government? Those who know me know that I supported the Liberal Party all of my adult life, but when its leaders are being partisan just to criticize, I have to say "enough is enough." In 2041, the Upper Churchill Falls Contract will have lapsed, but this province without a power line to take electricity in any direction but across Quebec, will be faced with the same vicious enemy pecuniously. Quebec will have the upper hand and this province will be shafted again. If we have an alternate route irrespective of cost a few cents either way per kilowatt hour, then NL will be able to walk away from Quebec's table if a proper deal cannot be negotiated. And moreover, we can use the lines, even upgrade them if required, to sell our electricity to ourselves, the Maritimes and to New England. Unlike the above-mentioned, ivory-tower trio who live on monies one way or other flowing from the public coffers of this province, I note that cumulative to persons who took risks or who daily take them as business folks, are not generally against the development of Muskrat Falls. It is a beginning of better things and renewable energy is our future. Notwithstanding my Liberal Party background (and four family members were elected delegates at the last leadership convention), I cheer the Dunderdale administration for charting a clear course to prosperity and not being waylaid enroute. Afterall, she won a landslide victory and who is Dave Vardy to demand a referendum? You know, I worked for Walter Noel, a great friend, when Dunderdale first won in Virginia Waters District. How times change? Michael J. Laurie Strathlaurie House, 48 Main Street, P.O. Box 61, Wabana, Bell Island, NL A0A 1H0 Tel (709) 488=3818 Cell 697-0988 OR 553 St Thomas Line Paradise, NL A1L 3T3 Tel (709) 895-2163 E-Mail: URL:

  • Dwayne Cull
    January 12, 2012 - 19:14

    I agree with Maurice on this. The government is absolutely not listening and not going to. I have to also ask what the big rush is? It's not like the government is going to take the oil money and pay for it. WE the taxpayers and consumers are going to pay for it.....or at least thats what the rumors are. There are enough top secret connotations about this deal to make one nervous. I have to wonder why why why?

  • Foghorn Leghorn
    January 12, 2012 - 13:39

    I have always said that this project has all the makings of a bad - Newfie Joke. Where else but Newfoundland and Labrador would you pay twice for the same thing, a massive increase in our provincial debt to finance the project and then to add insult to injury huge increases in our electricity rates. If this were such a solid business venture why isn't the private sector interested? Please someone stop the madness!

  • Swiler Old Boy
    January 12, 2012 - 13:30

    I tend to agree that the urgency is not there to proceed without a full review. I want to add three points to the discussion. First of all, the private sector is already involved in a number of large natural resources projects in this province and Hebron is nearing project sanction. Speak to any young family in the greater St. John's area or in Happy Valley-Goose Bay and you will hear the local economy is already overheated in terms of housing, prices and salaries and benefits and the transportation infrastructure is stretched to the limit. Forcing Muskrat Falls to proceed now is not necessary from the perspective of economic development and in this environment may in fact lead to adverse socio-economic impacts. Secondly, I also feel we should consider the impact on our power needs of what would be an unfortunate (but increasingly possible) scenario in which the the Corner Brook paper mill is closed by Kruger. As I understand it Kruger generates about 130MW at Deer Lake and Corner Brook and purchases another tranche of power from NL Hydro. If that power goes back into the grid what does that do to supply picture? The Department of Natural Resources must have some insight into Kruger's long-term plans and contingency plans in place - what are they? Thirdly, this province has a history and political tradition of full and informed debate on major natural resource development where the public interest is involved. Given that this is not a private sector development but one that will admittedly be funded and guaranteed by the taxpayers of this province (present and future) how does the executive branch of government have the moral authority to proceed with sanctioning this development without a) a full technical review of all aspects of the project and, b) a subsequent debate and vote in the House of Assembly?

  • Jackie Logans
    January 12, 2012 - 13:23

    Millions spent on studies and reviews; isn't it time to either move forward developing this project, or stop wasting money assessing it and simply shut it down?

  • Bert
    January 12, 2012 - 13:13

    On open line today Paddy said David Vardy can write reams but when he was challenged to a debate lo and behold he backed off. Say it ain't so Vardy!!! You wouldn't write articles and refuse a debate with Wade Locke, would you?? Naw ... And to you Adam Smith. You talk about worshiping Wade Locke. Surely you must feel that Vardy should have stuck up to is writings and debated with Wade Locke and let the chips fall where they may.

    • Adam Smith
      January 12, 2012 - 14:28

      I don't know who the this Vardy guy is other than he's a former political appointment so I don't put much weigh on what he has to say. Feehan would be a better suited to debate Locke but it wouldn't be much of a debate. Locke would say it's the best of these selected options and Feehan will say what about these other options. And that's why everyone is saying slow down and explore this further.

  • Ben
    January 12, 2012 - 11:23

    Why the rush I say, lets hear all the information available. What party i support has nothing to do with my thoughts on this....I wouldn't blindly follow any politician on something like this - but we do need more information. and we need to debate it- but not to decide who is right or wrong....just to make the best informed decision. And John Smith - I wouldnt laugh too hard - I think you missed the point he was trying to make....I dont think hes suggesting anyone raise prices....but that a raise in prices my occur in the future which may drop usuage and place higher demands on alternative energy...

  • Maurice E. Adams
    January 12, 2012 - 10:43

    Do we need more power???? +++++ Nalcor said that our historical increase in demand was 2.3% per year. Then they said (since it was shown that 98% of that increase in demand was in the 1970's and 1980's) that over the last 20 years the historical increase in demand was 23 times lower (0.1% per year). ++++++ Now, with last years numbers in, over the last 21 years demand did not even increase at all (in 2010, demand was less than it was in 1989) ---- going down, not up. ++++ Nalcor also said that Vale would dramatically increase the amount of oil that would have to be burned (increased cost) at Holyrood. ++++++ Now the lastest information is that in 2011 NL Hydro had to spill 694 GWh of equivalent water energy (Vale needs 730 GWH) from our existing hydro reservoirs, that we don't have enough demand on the island to use up even the existing power potential of our existing hydro sites. +++++ Nalcor now says they expect to keep spilling water until Vale gets its plant up and running to take up that excess power capacity. ++++++ that is so, then where will be the additional demand on Holyrood? Where is the additional oil costs for Holyrood.???? With demand going down, Muskrat falls is based on Nalcor's 50 year forecast that demand is going UP 0.8 % every year for the next 50 years -- about 1,000 % more than the facts show (and for the next 50 years, that oil will go up about 400% higher than the Massachusetts Institute of Technology and Canada's National Energy Board forecasts. This is a boondoggle, that HAS to be paid for lock, stock and barrel by NL taxpayers, ratepayers and voters (so that Nova Scotia can reap the benefits) ---- PERIOD.

  • Maurice E. Adams
    January 12, 2012 - 08:53

    The government is not open minded when it comes to the Muskrat Falls project. The decision to move forward with Muskrat Falls (from Nalcor's own documents) was made when Quebec failed to support the province's request to wield power through that province (spring of 2010). +++++++ It has nothing to do with island demand, nothing to do with oil price increase forecasts, nothing to do with carbon footprint, nothing to do with energy security, nothing to do with profits from outside sales, nothing to do with lowest cost power, nothing to do with stable rates. ++++++ It was and is a knee jerk, temper-mental reaction, and an immature, non-strategic reaction to Quebec. ++++++ The world energy situation is changing quickly and dramatically, and this Muskrat Falls project is based on an energy paradigm from the past. +++++++ There is nothing rational, visionary, strategic or well founded about this project. This government is playing into Quebec's hands.

    • Roger Taylor
      January 12, 2012 - 10:06

      Hey Maurice, why did your buddy Dave Vardy decline the challenge to a debate with Wade Locke? Any particular reason?

    • Ron
      January 12, 2012 - 10:50

      You must work for Quebec Hydro.

  • John Smith
    January 12, 2012 - 08:35

    I had to laugh out loud when I heard Feehan say we didn't need any more generation, and that we should raise prices for power so high it would make people stop using it for heat. yep, there's a brainiac for you...LOL Give me a break.

    • Adam Smith
      January 12, 2012 - 12:13

      Obviously you know nothing about economics. What's really funny is how you worship Wade Locke, a MUN economics prof, but insult Feehan, also a MUN economics prof. The swoosh you heard was Feehan's point going over your head.

  • Maurice Rogers
    January 12, 2012 - 08:32

    I don't understand the rush to do this project. There should be more time to do a proper analysis to determine if the project is beneficial and, if so, when would be the best time to do it - doing it when construction costs are at an all time high doesn't make sense.

  • MBC
    January 12, 2012 - 07:42

    Gas has gone from 0.69 cents to almost $5.00 a gallon over the last several decades. Have we reduced our consumption of gas? I think not !!! And if electricity rates increase five times we will consume electricity as we do today. So the basic assumption of the Profs study is weak.

    • Willi Makit
      January 12, 2012 - 09:59

      Your basic assumption is the one that is weak. There are no viable substitutes for gas, it is a critical requirement for transportation and economic growth. Electricity can be generated in numerous ways. New production technology has made natural gas a cheap means of generating electricity, far cheaper than the cost per kw/h that will be required for Muskrat Falls. There's a reason why NALCOR has been unable to secure a single customer other than the captive ratepayers of the province that is willing to pay the cost of generating power from this project. Any revenues received from Muskrat Falls will be on the backs of NL rate payers. That is not new money coming in to our economy, as another poster claims, it is an unnecessary drain. Why the rush to ram this through without a thorough public vetting? It's not as if we stand to lose anything but make work jobs if the project is put on hold.

    • k
      January 12, 2012 - 10:19

      MBC To update you. A gallon of gas cost presently $5.53 in NL. As of 7.00am today. ( $ $122.9 x 4.5 )

  • Paddyjoe
    January 12, 2012 - 07:36

    Mr. Kennedy says he doesn't want to do a 'joey' on Muskrat Falls. But the Upper Churchill was essentially done by a private consortium headed by the Rothschilds. The contract was flawed for want of an escalator clause but it did not plunge the province into debt. Muskrat, has the potential to add significantly to our debt----This added to the fact that price for Muskrat power will be over-priced---Increased demand for power is not pressing and we can handle it for less than the Billions required for Muskrat--also in a scant 22 or 23 years time the Upper Churchill contract ends and we will have access to all the power we will ever need.

  • Bob
    January 12, 2012 - 07:02

    Must be a couple of more liberal appointments jumping on the band wagon. Why does it take so long for all these reports to be done, You can give them all the time in the world and they will be looking for an extension. It is time to get this project going and make jobs with revenue coming to the province for many years to come. The longer we wait, the more expensive it will be.