Nalcor CEO wants project decision before year end

Ashley
Ashley Fitzpatrick
Send to a friend

Send this article to a friend.

Ed Martin says he doesn't want loan guarantee rushed, but also wants debate to happen

Ed Martin, Nalcor president and CEO. Telegram file photo

Nalcor Energy president and CEO Ed Martin says he would like to see a decision from the provincial government, on whether or not they want the proposed Lower Churchill development, by the end of the year.

The Telegram was offered an interview with Martin after approaching Newfoundland and Labrador Hydro for a feature on asset management (read more on that topic in The Weekend Telegram).

During the sitdown, in an executive board room at Hydro Place in St. John's, Martin was asked about the cost estimates for the project - specifically the development of the dam at Muskrat Falls, the Labrador-Island Link and the pan-provincial transmission line development.

"What we have to provide is the full economic package. And the province wants MHI (Manitoba Hydro International) to verify that package. A big piece now is the - you know interest costs are a big portion of that total package - ... certainty on the loan guarantee (from the federal government). The premier's talked about that. We're at the table," Martin said.

"I mean, I'm confident. But there's details to be worked out. And we're at a stage now, coming into a sanction decision, we've got to have certainty on what that actually is that you can put into it. The interest costs are a big piece of the puzzle."

Martin was asked if he felt there were "too many cooks in the kitchen" when it comes to the project and making a decision on whether or not to begin construction.

"Not really. I mean that's our business," he said, pointing to negotiations and time for agreements with the Innu Nation and Emera. He noted there had been a push to move more quickly on those negotiations, and release details of the deals before they were completed.

"These are lifetime assets, so we've taken our time, as we should have, with the Emera agreements, with the Innu arrangements, with our engineering, with our water management (deal)," he said.

"These are big agreements. They're relatively complex to someone who's not touching them every day and basically you have to make sure you are understanding and negotiating for every paragraph. And that just takes time. And until you get it, you can't - at this stage in particular - this would be the worst time to try to rush anything.

"As you try to end up closing any arrangement, that's when you have to be the most prudent and realize that all the gains, everything you've acquired up to that point ... You say settle down folks ... We're very, very, very, very close. Now's not the time to get panicked about time. You've got to maintain the value you've achieved, get it closed properly and get the certainty.

"So, that's sort of where I am. I don't think there's too many cooks there. I'm just in the background and I'm sitting there saying we do these deals. This is how we do them. Tell our people, relax - get it right. And when it's right and it's on the table, it'll be history then and we'll keep moving. The same as the rest of the agreements."

On the timeline, Martin has been consistent in saying there will be a point where continuing the debate will start to affect the relevancy of the base work completed by contractors and the Lower Churchill project team - for example, in relation to construction supply lines and scheduling.

In other words, there will be a point where, if there is no OK from the province, Nalcor would be forced to revisit numbers and timelines, essentially doing the work twice over.

"We need to finalize a decision well before the end of this year. We're into this October, November time frame. I think we need an answer there, or else things will be pushed," he said.

"Frankly, we're in a time frame where we do need to make a decision as a province."

Both provincial NDP and Liberal members of the House of Assembly have said they do not have the documentation they needed to weigh the merits of the project versus alternatives.

They have also expressed concern with Premier Kathy Dunderdale's timeline - of having everything completed by the end of October - saying there will realistically not be enough time given for them to properly review the documentation and prepare for debate in the House.

Dunderdale has said the debate will mirror a special debate held in consideration of the Voisey's Bay mining project. That means it will be straight debate between House members, with no expert witnesses called.

afitzpatrick@thetelegram.com

Organizations: Manitoba Hydro International, Nalcor Energy, Newfoundland and Labrador Hydro Hydro Place

Geographic location: St. John's

  • 1
  • 2
  • 3
  • 4
  • 5

Thanks for voting!

Top of page

Comments

Comments

Recent comments

  • Sanction Date A Moving Target
    October 01, 2012 - 11:33

    In June Ed Martin stated on NTV that he needed a sanction decision by "September or October". Now he can wait until the end of the year. You want to know something, he can wait as long as it takes because this is already a done deal. We are being manipulated by the people who are spending our tax dollars.

  • Cold Future
    October 01, 2012 - 08:39

    The most significant word in this article is the word "history" in about the eleventh paragraph. The Muskrat project will be history repeating itself, remember the Upper Churchill - we were so positive about the good deal that was made. The difference will be that we will not be able to blame the lack of an inflation clause. We will not be able to blame Hydro Quebec, we will not be able to blame the province or the people of Quebec. We can only blame a premier who devised an ambitious plan that allowed him to retire and a blind following government who thought if the former premier said it was the right thing to do, then it had to be. We won't have anyone to sue in court either only ourselves. Democracy and politics- you have to love it.

  • James G. Learning
    September 30, 2012 - 16:17

    Should ther decision on the MFP be political? Should the decision be based on solid economics? According to Mr. Martin it's the politics which makes sense. This of course makes no sense, or cents. This is a very tax oriented Project. As well when is an aset an assett? certainly not when it is expensive and destructive, as this one is.

  • William Daniels
    September 30, 2012 - 16:03

    This guy is even acting like he is Premier. Don't go away mad just.........

  • Graham
    September 30, 2012 - 15:51

    If NL Light & Power and NL Hydro were all one combined company our energy bills would be roughly half what they are now. Not as many 6 figure jobs that are nothing more than political appointments.. A lot of Dannys Buddies hold some of those high paying meaningless positions.

  • Casey
    September 30, 2012 - 13:13

    Enough from the conspiracy theorists, get 'er done.

  • powerless
    September 30, 2012 - 12:41

    must be getting his pockets full again

  • Winston Adams
    September 30, 2012 - 12:31

    On the one hand Martin says "settle down folks...We're very, very, very, very close. Now's not the time to get panicked about time. You've got to maintain the value you've achieved,get it closed properly and get the certainity." On the other hand Martin seems rather conserned about time, despite his calm persona. He says "We need a decision well before the end of this year. We're into this October , November time frame. I think we need an answer there or things will be pushed. There will be a point, if there is no OK from the province, Nalcor will have to revisit numbers and timelines, essentially doing the work twice over." But consider this , some 400 million has been spent and Martin is currently spending 12-15 million a month. Much of this is engineering work , which is not lost if the project is delayed 1,5 or 15 years. And if proper analysis of alternatives were done by Nalcor, this process would be further along. Even now energy efficiency is off the table as a serious factor for the island isolated option. And Martin wants "certainity" from updated numbers. The whole scheme rests on a future load growth of about 1 percent, primarily from electric heat. How certain is that, when efficient electric heat and hot water gives a load reductiion of over 50 percent, and who can hold back progress from this technology? Even "Turn Back The Tide" is promoting efficiency. President Obama says most big decisions rests on no more that 55 percent certainity, such as his decision whether to use public funds to save the auto industry. Indeed, those are big decisions with a lot of uncertainity. Personally, I would rank our prospect for sufficient load growth at considerably less than 50 percent. What certainity does Martin need? What amount of certainity does each MHA and our premier need? What certainity does those on low and fixed income and even the middle class need? Perhaps the certainity of the load growth needs further evaluation. Time be dammed.

  • Maggy Carter
    September 30, 2012 - 11:17

    Reading between the lines of Martin's gobbledygook - of which there is much - he is for the first time acknowledging that Muskrat is no longer an absolute certainty. Hallelujah! Martin is saying he wants government to decide whether to sanction the project or not by the end of the year. Why the end of the year? Well, because of some absurd notion that the DG3 numbers which have only now been finalized (and passed on to MHI but not made public) might no longer be valid after the end of the year. If that happens, then NALCOR would have to start all over again. How ludicrous. More revealing perhaps is that Martin is no longer claiming that Hydro's ability to meet its projected demand will be compromised by a delay in making a decision - merely that its numbers could get stale. And yet despite his end of year timeline for sanction, Martin is telling his own people not to panic about time. Based on Martin's comments, the opposition parties should assume they will get almost no information in advance of it being tabled in the House and being forced to debate it in a span of a few days. Clearly there are some within Cabinet and caucus who are having cold feet. They are slowly emerging from their Danny induced coma to realize they've been sold a bill of goods on this project. Senior officials are balking at the numbers and the huge risks to the treasury. Kennedy and other ministers are backing away from their unconditional commitment to it. As well, they have begun to grasp the fact that Harper does not intend to give this province an unconditional, open ended guarantee for a project that shows every indication of coming in fifty percent higher than the original capital cost estimate. And that doesn't even take into consideration the inevitable cost over-runs once the project is started. Is there anyone who doubts that Dunderdale herself would abandon this boondoggle if she could only turn back to the clock to the day she took over as premier? She and her government are on the horns of a dilemma. They have so totally and foolishly embraced something they didn't understand - something that has turned into a mega-project monster - that they are beginning to look for a way out. My guess is that there are many ministers and backbenchers who have their fingers crossed that Ottawa will either say no to the guarantee or drag its feet so much that the thing has to be put on the back burner. Even though they claimed the guarantee wasn't essential, there is no doubt they would quickly seize on Ottawa's refusal as a way out of this nightmare. It would allow Dunderdale to shift the blame on the feds and thereby let her escape the wrath of the electorate.

  • Maurice E. Adams
    September 30, 2012 - 10:55

    "DO WE NEED THE POWER" ---- A RESOUNDING --- "NO"........ Nalcor confirmed in its 2011 submission to the PUB that there is NO forecast increase in industrial demand after year 2015.... Accordingly, government and Nalcor both now say that Muskrat Falls is viable based solely on its "50-year" 0.8% compound annual increase in demand --- and they now argue that that demand is driven by increased electricity use by island "RESIDENTS"...... increased residential use that is due to the increased number of new, larger homes, electric heat and home appliance use. ....... FOR EVIDENCE THAT ANY INCREASE IN RESIDENTIAL ELECTRICITY USE IS NOT DUE TO MORE AND LARGER HOMES, ETC. AND IS SHORT-LIVED, and to see how, after 2018, "residential electricity use" IS TRENDING DOWN, not UP (right after Muskrat Falls comes on stream)........ see www.vision2041.com ........ LESS demand (less than forecast) means that consumer rates MUST GO HIGHER (MUCH HIGHER) than Nalcor forecasts if its multi-billion dollar debt servicing costs are to be paid ....... LESS DEMAND also thereby means that Muskrat Falls is "NOT VIABLE", PERIOD. -------- NO island industrial demand, NO island residential demand -- NO viability. ........ Maurice Adams, www.vision2041.com