Muskrat Falls debate goes over the deep end

James McLeod
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Economist says he was confused by project’s transmission costs during presentation

Gilbert Bennett — file photo

Memorial University professor Wade Locke clarified his independent assessment of the Muskrat Falls project Thursday — with a little help from Nalcor.

Locke was responding to fallout from a presentation he gave Tuesday evening, where he told a packed lecture hall at Memorial University he believes Muskrat Falls is the least-expensive alternative for electricity which the island portion of the province will badly need.

On Wednesday, he told The Telegram transmission costs from Labrador to the island were not included in his calculations, and that it was “probably not” a fair comparison between Muskrat Falls and an isolated island option.

Thursday morning, at 8:42 a.m., Karen O’Neill, senior communications adviser for Nalcor, contacted The Telegram, saying Locke “made a mistake” when speaking about the project.

About 10 minutes later, Locke emailed The Telegram to confirm he had been confused and misspoke Wednesday. In fact, he said, the transmission costs were included in the analysis.

Speaking to The Telegram later in the day, Locke said Gilbert Bennett, Nalcor vice-president responsible for Muskrat Falls, called Thursday morning after reading the story to explain he was incorrect.

“We don’t have a relationship with Dr. Locke,” O’Neill told The Telegram.

However, Locke said in the lead-up to his presentation he met with Nalcor officials several times to  understand their calculations and the information they’ve presented to the Public Utilities Board (PUB).

“I’m not doing this at the request of them, but I have spoken to their officials, their technical people, to make sure I understand what they did,” he said.

“I sat down with them on a couple of occasions to make sure I understood how this came about.”

At the start of the presentation, Locke spoke at length about his independence and his credibility. He said while he has done work for Nalcor in the past, his current analysis was not done at the Crown corporation’s behest.

Locke said the numbers he used for his analysis were the publicly available submissions made to the PUB by Nalcor.

His statement that the Muskrat Falls project is $2.158 billion cheaper than an isolated island system is based on Nalcor’s engineering estimates. A report by consultant Navigant, commissioned by Nalcor, arrived at the same determination that the project is $2.158 billion cheaper.

He said he was confused about the transmission cost, because on some of his PowerPoint slides it wasn’t broken out as a separate cost.

However, after speaking to Bennett Thursday morning, Locke said he understood the transmission costs had, in fact, been included in his presentation.

Locke said he was trying to demonstrate the difference between the two projects hinges on the cost of fuel.

“I was trying to say that the difference between these projects is that one has a high fuel cost, one has a high capital cost,” Locke said. “When you take account of all the things in present-value terms, this is the differential.”

The confusion created intense discussion and debate online all day Thursday, as supporters and critics interpreted Locke’s comments.

Liberal MHA Yvonne Jones — one of the Muskrat Falls project’s loudest critics — issued a news release, accusing Locke of doing nothing to positively influence the debate.

“Dr. Locke’s analysis is clearly flawed and by not including the cost of transmission he has added more confusion to the public debate instead of clarity,” said Jones. Twitter: TelegramJames

Organizations: Public Utilities Board, PowerPoint

Geographic location: Muskrat Falls, Labrador

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Recent comments

  • John Smith
    January 20, 2012 - 14:06

    Thank god we don't depend upon the unwashed masses to make these critical decisions. Thank God we have trained professional men and women who know what they are doing. They know we will need more power by 2017. They know what is going to happen here on the island and in labrador. They cannot sit back and navel gaze for the next 10 years and dream about gas and wind. They are mandated to have a supply of power ready by then. The cost of borrowing has never been so low, the project is necessary. If we wait ten years the price of oil will have gone up, and we will still be in the same boat we are today. Except we will have a power deficit. This is a good project, it will get us off fossil fuels, provide stable rates, and a connection to the mainland whereby we can ship some extra power untill we need it. The Know Knothing Knaysayers(the KKK) will never be convinced. If Joey Smallwood himself reappeared from the grave they wouldn't believe him if he backed the deal. So here we are. I just hope the deal gets the green light, as it is the best one we have.

  • Maurice E. Adams
    January 20, 2012 - 14:06

    WILI MAKIT SAID: "If this entire debacle was done properly, there would have been a costing and viability analysis of all the alternatives this province has, and the pros and cons of each detailed for public consumption. Instead, what we have is an ''either / or'' decision that ignores what could be much cheaper and more strategic alternatives." +++++++++++ EXACTLY, and I told Naclor that when they had an info session a while back in CBS ---- they were, and are, not interested. They have blinkers on for a dam --- that is what they know. ++++++++++ Not only is MF not good for NL short term, but when 2041 rolls around, if we are to have any strength in dealing with Quebec we will need an alternative market for UPPER churchill power, but what are we doing? We are, ourselves, taking away our own potential market here on the island and in Labrador by filling (in excess) our own market with very high cost MF power !!!!!! ++++ We will then be left with nowhere else to sell UPPER Churchill power -- except again to Quebec. We do it to ourselves.

    • Fred Penner
      January 20, 2012 - 16:50

      A few thoughts: Did you know that HQ owns 1/3 of the Upper Churchill? If we are to sell Upper Churchill power it may be an idea to have an alternative route and so, several more DC links to Nova Scotia (and vicinity) may be required. We can then develop all of the generation sources on the island and in Labrador (including wind) and export everything to the North American grid. This is probably 100 years in the future. I wonder what the cost of a kWhr will be then? This is not really relevant to the current Musrat Falls idea but Muskrat Falls is part of the bigger picture. We will be rich beyond the dreams of avarice and this is something that Hydro Quebec does not want; that is, a significant competitor. Unless we develop the infrastructure to do an "end run" around them (HQ), they will always have us by the shorts.

  • Jackie Logans
    January 20, 2012 - 12:48

    Here's a way to end the ongoing and costly Muskrat Falls debate: JUST DO A JOEY SMALLWOOD and give it to Quebec!

  • Bob Kieley
    January 20, 2012 - 11:51

    I watched some of the TV Evening News on-street interviews last nite. I was flabbergasted to see and hear such ignorance expessed by our "adult" young people who don't have a clue what's going on in NL. Admitting they knew absolutely nothing about the Muskrat project they saw fit to express a giggling opinion either for or against. There's a messagte there for sure.

  • sealcove
    January 20, 2012 - 09:59

    The government pays this man, he will spout what ever Nalcor wants

  • Cowardice Reigns
    January 20, 2012 - 09:57

    Locke put himself out there. He wasn't paid to stand in front of people and say what he believed, he didn't hide behind false names and sling arrows like a coward. He used the only data that is out there which is Nalcor's. He has made mistakes in the past but he always admitted to it, you don't see much of that today, especially on forums like this. But the fact still remains that no one, absolutely no one, has stood up with any facts to show that this project is a money loser. At most there are people that cherry pick statistics to support their own party biased agendas or people that claim "what if" assumptions. In typical Newfie fashion people are picking sides because of what they're against, not what they're for.

    • Willi Makit
      January 20, 2012 - 13:02

      You're hanging your support on the fact that the project will not lose money? Any project that NALCOR undertakes to generate electricity will not lose money, they just set the rates that they sell it to us at a high enough level to make a profit. Being the only supplier, it's a lock (no pun intended). If you want to pose a challenge, ask if there is a cheaper alternative than the Muskrat Falls proposal. NALCOR should have studied alternatives but they didn't, they simply arbitrarily dismissed them because there was no study to draw the numbers from (catch 22). If this entire debacle was done properly, there would have been a costing and viability analysis of all the alternatives this province has, and the pros and cons of each detailed for public consumption. Instead, what we have is an ''either / or'' decision that ignores what could be much cheaper and more strategic alternatives. At the end of the day, the important thing to remember is that regardless what direction is taken, it will be the ratepayers of NL that will foot the bill. It's quite possible that a combination of initiatives and projects could be a much better solution than the megaproject, but we'll never know. Government is not interested in anything but the dam.

    • DD
      January 20, 2012 - 13:03

      ...and sling arrows like a coward. And who might you be sir?

    • Rob Thomas
      January 20, 2012 - 13:46

      Likewise, who might you be DD?

  • Carl
    January 20, 2012 - 09:24

    It's a stretch to call Wade Locke an "economist". He is an academic and a media hound whose so-called "analysis" is always laced with political and ideological commentary.

    • Richard
      January 20, 2012 - 12:11

      Please provide some facts to support your accusation.

  • Graham
    January 20, 2012 - 09:01

    What exactly is this Government trying to hid from us.. Dunderdale is so scared she refuses to open the House of Assembly. Seems like Danny may have quit but never actually left the building. The lies cover ups and corruption continues. Old habits are hard to break I guess.

  • Willi Makit
    January 20, 2012 - 08:27

    Clearly, Locke didn't understand the numbers that he was endorsing if he couldn't figure that out on his own. It seems as if he were simply parroting NALCOR's numbers instead of actually completing an analysis and interpreting the information he had access to.. If that's the case, would he be in a position to provide critical analysis? I can only wonder what else is Dr. Locke confused about? If it's a negative to the business case, you can be sure that NALCOR won't be pointing it out.

    • Thats good
      January 20, 2012 - 09:43

      If Locke doesn't understand the numbers then you can be sure that no one else does.

  • Maurice E. Adams
    January 20, 2012 - 08:08

    I think it is fair to say that Dr. Locke did not provide a clear and cogent presentation on costs associated with Muskrat Falls. +++++ His slide numbers 7 and 8 are titled "How did NALCOR Derive its Price Associated with Muskrat Falls". +++++++ However, in these 2 slides the only costs he presents are Nalcor's cost of $7.582/KWh - Nalcor's reported cost to "generate" the energy only. +++++ In this portion of his presentation, while he speaks to "the actual energy assumed to be used on the island at various points in time", and thereby speaks of "revenue flow", "return on equity", etc. --- all of which can only occur by transmitting the power over transmission lines --- he fails totally to include in these slides the additional 7 cents/KWh that it will cost to transmit that power over these transmission lines. +++++++++ The only time that costs associated with transmission is included in his presentation is by way of one minor reference to Nalcor's total cost estimate of 14.3 cents/KWh much later in his presentation (slide 29), and of course when Dr. Locke discusses Nalcor's CPW comparative cost calculations.

  • Townie
    January 20, 2012 - 08:03

    The ones preaching Jobs, jobs, jobs are not the ones who care about the finances of the Province. They are have an eye out for a quick buck and who cares about the future. And mark this down they will be the ones screaming the loudest amd the most.

  • Paddyjoe
    January 20, 2012 - 07:50

    After having to be rescued by Nalcor because he was " confused " about the transmission costs, Dr. Locke has lost his credibility and should take himself out of this debate altogether.

  • holy smokes
    January 20, 2012 - 07:47

    Locke “made a mistake” .....................10 minutes later, Locke emailed The Telegram to confirm he had been confused and misspoke ......And I say 'Mr. Locke' was told!!! So much for 'independence'.......The right hand washes the left hand.....ALWAYS!

  • Too Funny
    January 20, 2012 - 07:46

    This is better than Seinfeld. People were so quick to go on the attack when they thought there was a mistake but, uh oh, there wasn't. What's funny is how quickly Locke admitted to a mistake that, as it turns out, he didn't make. I wonder how long it will take Jones and all the others who judged so quickly to admit their mistake.

  • NowIsee
    January 20, 2012 - 07:41

    "senior communications adviser for Nalcor, contacted The Telegram, saying Locke “made a mistake” when speaking about the project" “We don’t have a relationship with Dr. Locke,” O’Neill told The Telegram I see what is going on here. Shameful for all the players involved. Please stop pissin' in my boots and telling me it's raining.

  • Frustrated Customer
    January 20, 2012 - 07:40

    Ask customers in New Brunswick about how Government and its Power Company rammed Pt. Lepreau ahead, sound familiar. I will only be satisfied if this project is given a "fair" and complete review by the PUB like any other capital project. Does this following piece of history sound familar MFP fait accompli "The last obstacle was lifted by the federal government in January 1974, with the announcement of a loan program covering half the costs of a first nuclear plant in a province. Hatfield announced his intention to build a first reactor in New Brunswick on February 5, 1974. Reelected in the fall, despite misgivings by part of the population, the Progressive Conservative government follows through with the plan. In March 1975, Hatfield declared on television that the decision was final, and that the reactor would be built regardless of the on-going environmental assessment process, in a move described by New Brunswick sociologist Ronald Babin as the "nuclear fait accompli policy"

  • Fred Penner
    January 20, 2012 - 07:28

    It appears that we have now exited the kiddie pool and have gone "over the deep end"....whats next....the abyss? These terms of reference indicate a conclusion on the part of whomever at the Telegram wrote this story and therefore journalistic objectivity is obviously compromised. I understand the tendency towards sensationalism in todays media but simply fanning the flames does nothing for this important debate and reduces any legitimacy associated with this type of forum. Lets remain objective.

  • MBC
    January 20, 2012 - 07:09

    Wade Locke does not appear to understand in his own documents? What's this all about? Is it Nalcors figures that it is preaching?

  • John Smith
    January 20, 2012 - 07:04

    The only one confused here is Yvonne Jones. Arguing against a project that would bring jobs, energy and prosperity to her region.

    • Eli
      January 20, 2012 - 08:32

      Forget your medication this morning John? Just how far out to lunch can you get.