Anti-Muskrat group irresponsible: minister

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Nalcor says issues raised by 2041 Energy already addressed

Finance Minister Tom Marshall addresses reporters during a news conference Friday outside the House of Assembly in St. John’s. — Photo by Joe Gibbons/The Telegram

By Andrew Robinson

and Ashley Fitzpatrick

The provincial Finance Minister says a claim made by a group of lawyers that the Muskrat Falls hydroelectric development could bankrupt the province borders on a fear-mongering tactic.

“I just want to assure people of the province that as the minister of Finance that quite simply they’re incorrect, and that the use of such inflammatory language in my view is irresponsible and borders on fear mongering. Especially when we don’t have the final cost numbers yet. We don’t have the financing numbers yet. We don’t have the finalization of the loan guarantee yet.”

On Thursday, the members of 2041 Energy Inc. met with reporters to outline their opposition to the Muskrat Falls project. They said government should give more consideration to smaller projects that could meet the province’s energy needs until 2041 — the year the current Upper Churchill contract with Hydro-Québec expires.

Meeting with reporters midday Friday outside the House of Assembly, Marshall offered his response to a number of issues raised by the group.

“We welcome debate,” he said. “The more debate we have, the better. But, I would hope that the comments made, instead of using inflammatory language, that the comments made will be based on fact and they will be reasoned opinions — not what we heard yesterday.”

He highlighted the fact Dominion Bond Rating Service last week gave the province an A credit rating. While Marshall noted its assessment did identify financing the project as a challenge, it also said the project will give the province a chance to export energy into Atlantic Canada and the New England market, thus diversifying the Newfoundland and Labrador economy.

“(Dominion) talked about one of the challenges we face, is we’re over-reliant on the oil and gas revenues, and we have to diversify the economy.”

Nalcor Energy president and CEO Ed Martin said the issues brought up by 2041 Energy on Thursday are matters Nalcor has addressed on several occasions.

“I read some of that yesterday ... the things that were mentioned are things we’ve been asked before and we’ve answered very clearly. So I don’t see anything new there,” he said, speaking with reporters at Nalcor’s Happy Valley-Goose Bay office.

Given the political affiliations of the group’s membership, which has covered all three provincial parties at various points, Martin said some of the questions it posed would be best handled by government.

Marshall said the final numbers concerning the cost of the Muskrat Falls hydroelectric development project will inform government’s ultimate decision of whether or not to proceed with the project, as will the terms of the federal government loan guarantee.

“I just want to assure the people of the province that Premier (Kathy) Dunderdale and the cabinet, there is no way we would allow anything to happen that would jeopardize the accomplishments that we have made in the financial area,” he said, after making mention of debt reduction progress and social investments that have been made since the Progressive Conservative party came to power in 2003.

When the Public Utilities Board released a report earlier this year based on its review of the Muskrat Falls project, it said it could not certify that it would be the least-cost option for electricity rates because its was relying on data from November 2010, when Nalcor Energy passed through Decision Gate 2. Figures for Decision Gate 3 are due later this year.

“Based on the Decision Gate 2 numbers, this is clearly the best option,” said Marshall. “But obviously we have to wait for the final figures.”

Marshall said if Muskrat Falls is not found to be the best option, government will look to alternative energy sources.

Organizations: Energy Inc., Dominion, Hydro-Québec Public Utilities Board

Geographic location: Decision Gate, Atlantic Canada, New England Newfoundland and Labrador Happy Valley Goose Bay

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Recent comments

  • Cold Future
    August 20, 2012 - 07:38

    We need all the opposition we can get to this project until the answesr come out. Can the project be built and maintain the newfoundland consumers electricity rates in line with the canadian average and average inflation rates for electricitry? If the answer is no then kill it. Only develop electricity projects which are ecomomically viable and meet the needs of the domestic markets. Develop power for the mainland only for profit, not for giveaway discount rates carried the the backs of NL consumers.

  • Don II
    August 18, 2012 - 18:19

    For years the feminists have shouted that men discriminate against women and prevent them from being more active and powerful in politics. The feminists argue that women make more compassionate and reasonable leaders than men do. Well, after watching the current female Premier of Newfoundland and Labrador enact the Bill 29 Government Secrecy Act and enforce a policy whereby opposition members MUST bring the concerns of their constituents to the attention of Government Ministers instead of the public servants responsible for departmental administration, it now appears that the feminists were WRONG! No male Premier, including Joey Smallwood and Brian Tobin, ever resorted to this kind of dictatorial and Soviet like secrecy and high handed action while they were in office!

  • AvalonObserver
    August 18, 2012 - 11:44

    Let me see if I've got this right: In one breath, the minister assures all Smell-a-Rat Falls critics that they are absolutely wrong; in the next, he tells us "we don't even have the numbers". How's that for fact-based reassurance?

  • Maggy Carter
    August 18, 2012 - 11:06

    Financial models are only as reliable as their underlying assumptions. Some of the assumptions incorporated in the Muskrat model are little better than guesses. These include the domestic demand for power in a province with a shrinking population, the price of crude and interest rates over an unprecedented amortization period of 57 years. Although the NALCOR model skews domestic rates so that the next generation of Newfoundlanders pays a disproportionate share of the costs, it is naive to think that successive governments would, or should, honour that undertaking. The reality is that governments will ultimately charge local ratepayers whatever the market will bear. When increases in the price of electricity reach the point of diminishing returns, government will be forced to subsidize NALCOR operations - perhaps to the tune of hundreds of millions of dollars per year. If alternative energy sources become cheaper, homeowners who can will switch away from electricity. NALCOR could be forced to sell the resulting excess power outside the province at a price well below the cost of production (as it already intends with Labrador mining companies and extra-provincial energy markets). If the price of oil drops back to the $50 per barrel range (which is the prediction of some models in response to the emergence of frac gas), or if offshore production begins to slow (as is also forecast), then the province's treasury will come under enormous stress. Even the much smaller reduction in oil prices experienced earlier this year has pushed Newfoundland back into significant deficit. Imagine the damage to our fiscal position should this occur alongside a drop in the demand for electrical power. Unlike the isolated island alternative, the Muskrat solution is not scalable - that is, it cannot be resized over time in response to changing economic or technological circumstances. Like a home mortgage, it is a fixed monthly charge that must be paid regardless of whether the home is still worth what you paid for it, or whether your capacity to pay is diminished by circumstance. Unlike a home mortgage, the maximum term of which government has just reduced to 25 years in light of the risks, the mortgage on Muskrat will extend more than twice that period. Richard Cashin and the group of five did not say that Muskrat would bankrupt the province -merely that it could. Unfortunately the circumstances under which this could happen are not all that far fetched. The financial risk is unacceptably high, especially in relation to the marginal benefit that would accrue to the province even under the most ideal conditions. As Cashin states, this particular premier has taken it upon herself to shield the public from the true risks associated with this enormous public expenditure. She is demonstrating a callous disregard for the public safeguards (including the PUB) and democratic institutions of the province. It is ironic and disconcerting that, as the province's first woman premier, she is showing an arrogance and disdain for public opinion that is unmatched in this or any other province. Cashin and others are right to call her on the carpet for that reason alone. Hopefully it will lead to a robust public debate not only on the risks inherent in the Muskrat proposal but also on what constitutes an acceptable standard of democratic conduct by government itself.

  • Richard
    August 18, 2012 - 08:55

    If you disagree with government you are irresponsible. I suppose that's better than in Danny's day when if you disagreed with government you were a traitor.

  • George S
    August 18, 2012 - 08:15

    Sure Tom. And the Premier threatening rolling blackouts is NOT fear mongering. Right.

  • Winston Adams
    August 18, 2012 - 07:50

    Diversify the economy. That is very much needed. But to to give power to Nova Scotia for 35 years free in exchange for ownership of the cable, and to export power to the USA for less than cost, is this the best you can do to diversify the economy. Meanwhile our power cost goes up 40 percent or more making our power then twice that of Manitoba , BC, or Quebec. Now a strong economy depends on low cost power, for any industry we have, for manufacturing,for retail, and our residential. What we are doing is to assist other jurisdictions to strengthen their economy at the expense of ours. And this is all at the risk and expense of local power consumers. You call that a vision. Mr Marshall, where is Nalcor's assessment of the 600 MW of waste energy here through heating inefficiency, recoverable at 1/4 or less the cost of Muskrat Falls power and which can avoid the rate increases? Why the silence on this? Vermont does over 10 times more than we do this way, and we can and should do better than they do. I s this why our Premier and Mr Kennedy stayed away from the Governors meeting in Vermont 2 weeks ago. Didn't want media coverage on energy efficiency and our lack of initiative in this. Where's your informed debate on this issue?What is standard practise for our government buildings is too good for our citizens?

  • Devil is in the Details
    August 18, 2012 - 07:46

    bankrupt, in the drak, rolling blackouts...............fear mongering everywhere I've witnessed. The good thing about this new group, is we have a sensible opposition now. If the projects is good, it will be easy to convince them, if it's bad you need to keep up the propaganda. More scrutiny is always good.

  • Graham
    August 18, 2012 - 07:39

    Minister Marshall If youwant to see irresponsible lost and confused all at the same time just look in the nearest mirror. It was sad watching you stumble and stammer you way through your scripted notes at the press conference. Oh well your quitting soon anyway. Too bad we wont be able to vote you out like the rest of Kathys Clowns. Bring on the election. The sooner the better.

  • Maurice E. Adams
    August 18, 2012 - 07:33

    Who is doing the fear mongering? Just yesterday minister Marshall said that in winter when Holyrood operates at capacity it burns 18,000 barrels of oil a day. When in truth, Holyrood operates at capacity only 1.6% of the time (5.5 days a year on average). And last year? NOT AT ALL......... How about the 2.3% average growth over the last 40 years that government/Nalcor touts? When over the most recent and relevant 20 years that average has bee 23 times LESS ---- 0.1% per year..... And over the most recent 2004-2010, six year period, growth was NEGATIVE, an average of 2.5% per year DOWN (not UP)....... How about the so-called 'profit' from outside power sales? When the truth is that sales to Nova Scotia or the mines in Labrador can only be at a SUBSTANTIAL LOSS ---- a HUGE LOSS that has to be paid for FULLY by captive island ratepayers? ...... Muskrat Falls means HIGH COST, HIGH DEBT, HIGH RISK, power. While a tunnel that can carry BOTH people and VERY LOW COST Upper Churchill power can be built across the Strait for $3.4 billion, very high cost Muskrat power will cost $8.5 billion and lock captive island ratepayers in to very high cost electricity for 50 + years. See

  • Not buying the spin
    August 18, 2012 - 07:31

    What accomplishments is Tom Marshall referring to? They spend the oil money as quickly as it's collected, are running what could be nearly a billion dollar deficit when we should be flush, and haven't done shag all to reduce ouur debt owed despite billions and billions of new revenues. What's really irresponsible hewre is that hundreds of millions have been frittered away at a project that is questionable. Whatever happened to due dilligence?