Premier responds to Peckford letter

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Ashley Fitzpatrick
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Former premier calls for independent panel to be convened

Premier Kathy Dunderdale sees little merit in the opinions on Muskrat Falls that have been expressed to her in an email from former premier Brian Peckford.

Brian Peckford

 

The letter from Peckford was raised by reporters this morning, following a visit by the premier with primary and elementary school students at St. Francis of Assisi Elementary School in Logy Bay-Middle Cove-Outer Cove.

In the letter, Peckford stated he had worked — both when minister of the former Department of Mines and Energy and as premier — on Lower Churchill development. 

Having followed along with the advancement of the proposed $6.2-billion Muskrat Falls project, he stated he has concerns.“I submit that appropriate impartial assessment to this point has been lacking,” he states.

He goes on to say he does not believe the Board of Commissioners of Public Utilities (PUB) is qualified to review a project the size of Muskrat Falls and the reference question being answered by the PUB is limiting.

He states he believes project proponent Nalcor Energy has a prejudice towards a hydro development, based on its background. 

He refers to the Muskrat Falls project as “Nalcor’s baby.”

“There is deep concern in some quarters of the real likelihood of major cost overruns and the impact this could have on the financial integrity of the province,” he writes.

The former premier ultimately recommends a panel of experts be convened to review the work to date “and to specifically address the natural gas options and test their viability and cost.”

When asked about the letter, Dunderdale stated experts at Nalcor with over 50 years experience with Churchill power, as well as experts at Navigant who critiqued their work, have worked on the current development plan.

As for the PUB review, “the PUB went and got expertise to answer that question, through Manitoba Hydro, who used the expertise they had in the country and worldwide to come back with the answer,” she said.

“Mr. Peckford — I don’t know how close Mr. Peckford ever was to the energy files here in the province in terms of a new development. I know a great deal of work went into (Upper Churchill) redress,” she said.

“And you know the work that’s taken place, certainly in the last eight years, he’s not been privy to. And you know he certainly hasn’t been here for the debate. If he has fundamental questions, or issues to raise, or an analysis to provide to show where we’re flawed in our thinking, or where there are gaps, then you know I’d be happy to hear him. 

“But a message from afar, about a debate that you haven’t been engaged in, or public information sessions that you haven’t participated in, then you know it’s difficult for me to deal with.”

She said the province waits for PUB to conclude its work, but she satisfied with the methodology and the course of the project to date.

 

Here is the text of Brian Peckford’s letter, as received by The Telegram Feb. 21:

Like other Newfoundlanders, I have been following the announcement of your administration’s intention to develop the Lower Churchill River. Of course, as you know, I was heavily involved in this enterprise when I was Minister of Mines and Energy and as Premier. Many meetings over many years were held with Quebec Government representatives and Quebec Hydro officials. A deal was never consummated; actual engineering work was done by Techmont Engineering on the technical feasibility of laying an underwater cable across the Strait of Belle Isle and many discussions about the Anglo Saxon route which is now a part of your present proposal. Legislation was passed creating the Lower Churchill Development Corporation, a Federal Provincial body, which unfortunately was mysteriously allowed to expire. This Federal Provincial Corporation could have been of great assistance over the past few years.

That is a little history; important, I think, for context, if nothing else.

Times have changed. In the sixties and seventies and even eighties hydro was king. This is not necessarily so today.

Some have expressed concern over the announced project. I, too, have my concerns.

Let me be clear. It may be the best project ever. But the project has to be tested objectively, especially given the size and complexity of the project, and the severe financial implications on the Province if the contingency identified is insufficient.

I submit that appropriate impartial assessment to this point has been lacking. Here are my reasons:

Number one:

It is unfortunate that the project was referred to the PUB. Frankly, the Board and its staff do not have the expertise to evaluate this project. The Board, as we all know, is really a regulatory body dealing with rates for electricity, motor vehicle issues and petroleum pricing as outlined in its mandate; it is not structured to assess a multi billion dollar project, examining it against other modes of generation and transmission. I admit it is a gray area and the Electrical Power Control Act, technically, provides the legislative power to so refer. But, I submit, it never was the intent of any legislation dealing with the PUB to make it the chief reference body on a project of this nature and scope. It involves much more than rates! In any case, with all due respect to the Board Commissioners and staff, the expertise does not reside at the Board to do the job. I think we can all agree on that. It is really unfair to the Board to thrust this project in their lap.

Number two:

The reference question precludes a number of options; it simply asks for the lower Churchill project to be tested against one other alternative: oil, a little wind and with some gas turbines for peak power. Unfortunately, the question had already provided the answer.

A far more comprehensive question needs to be answered involving other options, especially as it relates to natural gas. This will take some independent, expert study and analysis. It is true that natural gas is referenced in the NALCO submission and the Navigant Report, but in the former case it gets a scant eight pages referencing a 10 year old study (which is not completely relevant) and in the latter, a mere three pages. The only independent study, the Manitoba Hydro International report, was precluded from examining any other options. This is blatantly insufficient!

Number three:

This is NALCOR ‘s baby and I suspect, given the culture of its predecessor, or should I say its subsidiary, there pervades a bias for hydro power. Given the history, this is natural; the projects of Bay D’Espoir, Upper Churchill, Upper Salmon, Hind’s Lake, and Cat Arm are all successful hydro projects in which Newfoundland Hydro was involved . And, of course, there are the paper mills’ hydro developments.

Holyrood, in contrast, was and is the poor cousin, an unfortunate necessary appendage as the Province grew. This is not a criticism. It is simply the way things developed. Newfoundland Hydro did a great job in bringing those projects on stream, no doubt about it. But as a result, unbiased advice here is questionable.

Number four:

There is deep concern in some quarters of the real likelihood of major cost overruns and the impact this could have on the financial integrity of the Province.  Almost all major projects these days seem to have significant cost control problems due to labor issues and material supply. I suspect this project will be no different given the competition for skills resulting from the high level of construction activity present and projected in the Province.  

Premier, as a consequence of the above, there is an unease abroad; everyone wants to believe this is the best way to proceed, but some are unsure that the level of certainty necessary for a project of this size to proceed has been established.

I recommend to you, therefore, that the Province establish a panel of experts to review all the work that has been done and to specifically address the natural gas options and test their viability and cost against the Lower Churchill Project as presently defined.

A lot has changed in this area as a result of the shale gas phenomenon of recent years. The whole North American energy equation has been turned on its head.

What is the preferred project now to meet the Province’s electrical needs for the next three decades? Hence, a key question, among others, is:

Should the expiry of the Upper Churchill contract in thirty years be a factor in developing energy policy now? This is really not a long time in this context.

Thirty years from now Newfoundland and Labrador will have substantial very low cost hydro power, more than 5000 MW, triple what we will need, making this among the cheapest power on the planet. The present project talks about only twenty per cent (20%) of this. 

Is the Province so focused on the Lower Churchill now that it is failing to see the long term benefits (finally) of the Upper Churchill Contract expiration, and hence the possibility of a pristine Lower Churchill basin? I don’t know, but I think it needs to be fully and independently explored. Should the question be framed as to how we can best get to 2041 to take advantage of this already developed cheap hydro?

This panel should be highly qualified people of international stature in energy policy including production, electrical generation / transmission and energy finance. They would be given all necessary support that they may need to conduct their work. A final report in six months seems reasonable. Of course, this would be a totally transparent exercise.

I do realize that under the present conditions that have been established the project is quite a distance ‘ down the road.’ What I am recommending is to change these conditions and allow for a full, independent, transparent, expert analysis to be undertaken.

I believe some greater certainty is required and that the present proposal be subject to a broader set of questions undertaken by an objective, independent, transparent process.

People talk of legacy. Let’s be doubly sure that only water runs down to the Lower part of the Churchill River and not the legacy of the Upper.

Brian Peckford

 

Organizations: Board of Commissioners of Public Utilities, Assisi Elementary School, Department of Mines and Energy Manitoba Hydro International Lower Churchill Development Federal Provincial NALCO North American

Geographic location: Muskrat Falls, Logy Bay, Churchill River Cat Arm Newfoundland and Labrador

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Comments

Comments

Recent comments

  • Graham
    February 21, 2012 - 21:33

    Sometimes Premier Dunderdale you have a problem dealing with the truth and the facts as is the case here. DEAL WITH IT. Thats why Danny left you this mess before he bailed out.

  • William Daniels
    February 21, 2012 - 20:09

    I agree with Peckford. If this deal happens "have" will be no more. How can Dunderdale keep trying to sell this?

  • redrantingtory
    February 21, 2012 - 18:12

    Sprung Greenhouse is this former premiers legacy. For someone who doesn't live here anymore he sure seems to think he matters. Strange how everyones who is against this are all of sudden experts. I believe nothing out of Peckfords mouth as this is the same guy who tried to sell us cucumbers for 20 or 20 million dollars. Just go away.

  • Eddy
    February 21, 2012 - 17:28

    Tory response is always smear the other side. Muskrat Falls is the Sprung Greenhouse version of the Upper Churchill. It has to be stopped!! Even Tories thinks so.

  • Brian Peckford should be listened to on this matter
    February 21, 2012 - 16:32

    Brian Peckford should be listened to on this matter. The risks of this project are steering us in the face for those of us who are not too blind to see. Only those connected to the project, ex and present politicians are gung hoo on ramming it through. For you critics who bring up the Sprung fiasco, yes that was a $25 Million dollar boo boo, but the risky Muskrat Falls Project could put us in debt $10 Billion. Please, you who bring up Sprung boo boo, think before you open your mouth. You all appear to not to have a brain cell to compare the two entities.

  • MBC
    February 21, 2012 - 16:09

    I have many questions about MF project, but I know I would not rely on a loudmouth like Peckford to influence my support for MF. He knows about MJ project about as much as he knew about the CUCUMBER industry in NL. I read the above article but did and will not read Peckford's letter; he know nothing about MF and NL. Peckford... stick that big fat cigar back in your mouth; maybe paid by NL taxpayers?

  • sam
    February 21, 2012 - 15:04

    I guess Cabot Martin, Ron Penney and Peckford must have recently had a cabinet meeting for old times sake. They seem to be all talking from the same song book. Maybe if Peckford cared abt the Province he would have stuck around. Wonder how things are in BC these days?

  • Mac LeMessurier
    February 21, 2012 - 15:00

    It appears that Peckford is still a legend in his own mind! The same attitude and arrogance that lead to his eventual downfall is still prevalent in his opinions.'The fact that all of the Due Diligence and debate is ongoing and the review of The PUB and Manitoba Hydro apparently is not sufficient for him to give his "blessing" to this project!! Good riddens to him as we "have not" got to listen to him any more!! Pony Man

  • emma
    February 21, 2012 - 14:31

    My 1st question to Peckford would be who would he consider to be experts? Would it be engineers at Nalcor who have studied this for yrs, employees at Manitoba Hydro with yrs of experience, or people like Danny Dumeresque(who have all the say but no expertise in the field)? According to the nay sayers there are no experts, except themselves. No matter what anyone says some will not agree. Let's either get the project started now or scrap it altogether and let the chips fall where they may.

  • Louie
    February 21, 2012 - 14:21

    The problem with the Muskrat project is how can we compete with Hydro Quebec in selling power on the mainland when they are developing Romaine River Hydro for sale in the same market with what appears to be about one quarter to one third the price. It will require significant subsidy from the oil revenues combined with substantial increase in our electricity rates to compensate. Proceed with caution to make sure we are not sold down the river.

  • Too Funny
    February 21, 2012 - 14:07

    Our Brian, he'll go far. Not far enough apparently.

  • Scott
    February 21, 2012 - 13:58

    I have no idea if MF's is the best deal or not for the Province. I am still listening to all the information. But i am not sure Brian Peckford is the best guy to listen to either. Anybody remember the Cucumber fiasco?

    • Frank Carroll
      February 21, 2012 - 15:50

      Ad hominem attacks aside, the former premier's comments should be judged on their own merit - not upon what happened 25 years ago.

  • Watch Dog
    February 21, 2012 - 13:30

    Now i know why Ms. Dunderdale is silent on many issues - because when she opens her mouth she puts her foot in it. "If he has fundamental questions, or issues to raise, or an analysis to provide to show where we’re flawed in our thinking, or where there are gaps, then you know I’d be happy to hear him." No, Ms. Dunderdale you wouldn''t - you just heard them and ignored them.

  • Bob
    February 21, 2012 - 13:18

    Let he who has not sinned throw the first stone. I think we should question the validity of this project and the task that was given to the PUB. We all know Brian Peckford has skeleton's in his closet (Sprung) but to what benefit is it for him to come out and question this governments "do it no matter what" stance. You can bet if he is right in his letter that this government will blame it on the PUB and not themselves for their shortcomings. Food for thought!

  • wayne
    February 21, 2012 - 13:13

    I have not made up my mind yet about Mushrat falls ..whether it's a good idea or not....but Brian Peckford having the gaul to give us advice !!! The man who brought us the Sprung Greenhouse fiasco. Stay out in BC , be quiet and grow your own cucumbers please......we had enough of you. It's almost enough for me to say that if he does not like it then it must be a good thing !

  • Jeremiah
    February 21, 2012 - 12:59

    Too bad this administration seems to have a closed mind when it comes to Muskrat Falls.I do not know whether it is a good deal or not but I do know that it is advisable to proceed with caution. This is a big project with big and long lasting implications. Take your time Premier, proceed with caution and be sure of what u are doing. The risks are too big to make a mistake.

    • gerry
      February 21, 2012 - 13:27

      Has there ever been an administration that didn't have a closed mind.

  • tom
    February 21, 2012 - 12:45

    Whether this is a good project or not, Dunderdale is going to make it happen. I would also like more information on the sales aspect when it is completed but these details are sketchy at best. Muskrat Falls is going to happen - good for the province or not.