Nalcor executives questioned at AGM

Ashley Fitzpatrick
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There is no way for an individual in Newfoundland and Labrador to scrutinize every last detail of the Lower Churchill hydro project.

That fact was made clear as Nalcor Energy held its annual general meeting at the Holiday Inn in St. John’s Wednesday

and, despite best efforts of the Crown corporation’s executives in responding to questions, many of those in attendance were dissatisfied.

The executives took questions in front of cameras, with one carrying a live feed online. Their responses often included references to a limitation on how much information they could convey, as a result of either legal agreements or commercial sensitivities.

The questions in Ballroom B were chiefly from a collection of people who have set themselves apart when it comes to the complex Lower Churchill project — studying the complex legal, regulatory and commercial aspects and challenging the plan on behalf of the public. The group includes, for example, former Liberal MHA Danny Duma­resque, former Tory MHA Jim Morgan and former public utilities board chairman David Vardy.

“I think the economics of this project are fatally flawed,” Vardy said on his first stint with the microphone. He submitted 16 questions ahead of the meeting, expressing some frustration at being able to ask only one during the event.

 

“People showed up with some very legitimate questions on several different subjects related to the project. Many of those questions were the ones I would have asked myself,” NDP Leader Lorraine Michael said after the meeting concluded.

“There was very little in the way of actual answers provided to the people in attendance,” she said. “I find it hard to believe shareholders of any other company in the world would be expected to put up with this treatment from the people who are spending their money.”

And yet they do. A standard annual meeting question-and-answer session would not include a company revealing confidential information such as the exact value of a contract on a capital project, though they often present cost ranges, or costs that include more than one contract so as not to identify any particular one.

During the question-and-answer session at the Nalcor Energy general meeting, Nalcor executives included as much direct information as they felt was reasonably possible.

When Nalcor CEO Ed Martin was asked to provide the exact value of the contract awarded to SNC-Lavalin for engineering, procurement and construction management, his response was direct.

“We can’t do that,” he said.

That information is considered commercially sensitive by the Crown corporation. In fact, the exact value of any individual contract on the $7.7-billion Lower Churchill project will not be released.

Lower Churchill project lead Gilbert Bennett could say little when asked for the expected cost of work on the North Spur — a land mass sticking out from the side of the Churchill River, acting as a natural barrier and funneling water into Muskrat Falls. Work to ensure its stabilization, after decades of study, is part of Lower Churchill project spending.

Asked to provide an estimate for that work, his response was straightforward: “No, I can’t, because we’re heading into a commercial bid process.”

The rule is: publicize what you expect something will cost, and you are sure to see contract bids above that publicized cost.

At one point, Nalcor chief financial officer Derrick Sturge was asked about credit ratings. The Lower Churchill project is currently being presented for financing with a

triple-A credit rating.

Before that top rating was acquired, he said, Nalcor collected what are known as “indicative ratings” — what would be expected if, for instance, there was no loan guarantee from the federal government for the project.

“Our arrangements with the rating agencies do not allow us to make those public,” he said. That is a stipulation of the agencies presenting the credit predictions, he added.

“I can’t fault anybody for asking questions and wanting the numbers because, again, it’s taxpayer dollars going into it,” Liberal MHA Andrew Parsons said when asked if he felt Nalcor executives were being secretive.

“At the same time, I can see what Nalcor’s saying in the sense that …there’s confidential information here. We cannot reveal that and it’s the normal course of business,” he said.

“But when you look at the fact that we can’t get inside Nalcor to get at this information, all we can do is ask the questions and hope that they’ll try to provide the information.”

The session was more than an hour past the slated cut-off time — more than an hour and a half into a question-and-answer period — when The Telegram left to make deadline.

 

afitzpatrick@thetelegram.com

Organizations: Nalcor Energy, Holiday Inn, SNC-Lavalin

Geographic location: Newfoundland and Labrador, Churchill River, Muskrat

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Recent comments

  • coco
    June 07, 2013 - 07:04

    So what can people who feel they are being swindled by their own government actually do about it?

  • Jon Smith
    June 06, 2013 - 12:30

    Never before in the economic history of Newfoundland and Labrador will so many ratepayers pay so much through their noses for the colossal bungling of so few and for the short term benefit of so few. We'll owe we'll owe and off to work the grandchildren will go-or will they move to the mainland and prosper!?!?!?

  • Cyril Rogers
    June 06, 2013 - 11:55

    Everything I have read about the AGM indicates that NALCOR is indulging in the same obfuscation and out-of-date data to make a case for this badly-flawed project. They are selling us down the fiscal river(pardon the pun)on Muskrat Falls. Why??? That is the question that I can't get my head around. It is obvious, given the changes in direction of the energy sector, that this project is not doing anything positive for our economy and merely drives us into a deep fiscal hole....yet, they seem completely incapable of the necessary sea change. They have to pull the plug on this project or we will face a fiscal nightmare that will do lasting damage to our whole economy.

    • Tony Rockel
      June 06, 2013 - 12:11

      Government is under orders, from guess who, to ram this project through, so government is using Nalcor as a tool to come up with a set of phoney statistics to justify the whole rotten deal.

    • Rumrabbit
      June 06, 2013 - 12:58

      Huge smell of Labrador mining companies into the mix here. And don't get too excited on whether or not Emera becomes a player. All we were gettingt there is a cable we'll own in 35 years. Where's the barf bag!

  • Maurice E. Adams
    June 06, 2013 - 11:35

    To understand how outdated (and dangerous to ratepayers, our children and our children's children) this so-called Muskrat Falls dinosaur vision(?) really is, see link to "Dam-Nation" (along with is speaking notes) by Graham Lane, sponsored by the Frontier Centre for Public Policy (FCPP), which is a private think tank headed by Peter Holle. Go to www.vision2041.com

  • Tony Rockel
    June 06, 2013 - 11:26

    Anyone who cares about our future energy costs should read the Edison Electric Institute's report on disruptive technologies: anyone in Nalcor who has not read and understood this report should be fired.

  • Wondering
    June 06, 2013 - 10:34

    Martin just beat around the bush on most questions. And his body language suggests the high risk is starting to sink in. Yet he still plows ahead, suggesting its the best choice. A good general knows when to change course, when circumstances change. Martin prefers to remain ignorant that circumstances have changed.

  • Just sayin
    June 06, 2013 - 10:25

    Ed Martin said nothing about the "gravy" to be made from the spot market sales. He finally admitted low gas prices in the USA has driven down electricity prices, as critics forecast would happen. Martin admitted he hadn't read the Edison Electric Institute report "Disruptive Challenges: Financial Implications and Strategic Responses to a Retail Electric Business" This was published in Jan 2013. It points out the changes that puts risk on the utilities, much like cell phones are making the land lines for telephones obsolete, changes in the power business increases risk for the power companies. Vardy said the MF scheme is fatally flawed. Martin up to yesterday, failed to admit that cheap gas wound negatively impact export sales for power. Nalcor has gone with MF on the basis that the island needs more power for winter heating. And they stated that gains from efficiency was approaching saturation. This is false and a fatal flaw. Martin has failed to acknowledge that energy efficiency for electric heating, reducing heating energy by 50 percent will impact their forecast. And new housing codes, with construction improvements reduce energy use here by another 27 percent for new construction. Both of these type disruptive challenges are noted in the Edison study. But why would Ed Martin want to read this stuff. Better to remain ignorant I guess and deny such risks. Forecast is already well below what they predicted. See the chart on the site Vision 2041.

  • saelcove
    June 06, 2013 - 09:54

    Anyone ever watch scams scounderls and suckers

  • david
    June 06, 2013 - 09:46

    Commercial secrecy is a very valid reason to not reveal economic details publicly.....in a competitive free-market business environment, financed with private investors' money. As opposed to this: a government monopoly, embarking on a potentially financially ruinious whim, which is quite reasonably and justifiably suspected of not having been adequately analyzed by an acceptably objective, competent third-party, and is financed entirely using the public's money. The arrogance and contempt being exhibited by Nalcor would be absolutely shocking if it weren't so rooted in historic precedent here in Newfoundland. Joey is laughing.

  • The Emperor
    June 06, 2013 - 09:10

    Another 90 million out the door! Good thing Kruger kicked up when they did! I think the province is now tied up into something that has gotten away from them and gone adrift. All just to build this Death Star. It has consumed our Premier to the point that they can't govern our province because of this Political business.

  • John Smith
    June 06, 2013 - 08:37

    This is a well thought out, intelligent answer to our coming energy needs. It is being accomplished by the hard work of thousands of NL men and women, and is something we should all be very, very proud of. We will need increased sources of energy here in the province, and Muskrat is the lowest cost alternative. This project has been scrutinized on a level that is unprecedented, and no matter how much the naysayers want to muddy the waters by foisting their conspiracy theories...there is not one iota of fact to back up the ravings of the lunatic fringe...

    • Tony Rockel
      June 06, 2013 - 09:39

      "We'll thought out"?? Well, I guess unless you are part of Nalcor's inner sanctum, you must be psychic, or how else would you know their thought processes. The other possibility is that you are simply a mindless shill.

  • Eli
    June 06, 2013 - 07:47

    Mafia run. The Godfather being the NL PC Government.