Cost overruns, by nature, are unforeseen

Russell
Russell Wangersky
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Natural Resources Minister Jerome Kennedy was back on the airwaves over the weekend, extolling the virtues of Nalcor and the Muskrat Falls project. It’s clear at this point that the decision is basically made: there will the window-dressing of a legislative debate, but, listening to Kennedy, there’s no way to not recognize that the die is cast.

Kennedy was on air to refute concerns raised by Tom Adams, an energy analyst, who suggested that Muskrat Falls supporters should look at the massive cost overruns of the just-opened Wuswatkim project in Manitoba.

Kennedy’s riposte was that there will not be significant overruns and that, while there are already cost increases, he feels comfortable that Nalcor knows what it is doing and knows what its costs will be.

Manitoba Hydro’s Wuswatkim project was budgeted at $900 million, but wound up costing $1.69 billion.

It’s worth looking at the review of the Wuswatkim project by  the Manitoba Clean Environment Commission (CEC) in 2004, which said, in part: “Uncertainties in project construction variables were incorporated into the estimates through a range-estimating cost-risk analysis performed by Decision Science Corporation. Manitoba Hydro

(MH) used the range-estimating approach for the generation project, which represents over 80 per cent of the overall project costs. Uncertainties in costs were accounted for by assigning a cost range to each of the major and key cost components. The estimates indicated that, with a 90 per cent confidence level, costs will be within -8 per cent to +9 per cent of the estimated cost.

“In March 2002, MH retained Both Belle Robb Limited (BBR), a consulting firm, to conduct an independent overview of the range-estimating process, assumptions and major inputs used to arrive at the generation project cost estimates. BBR concluded that the range-estimating approach used by MH to prepare the estimate was consistent with prudent estimating practice. The method of risk analysis has determined a contingency amount that is consistent with traditional rule-of-thumb methods. In addition, the risk analysis method reduced subjectivity in the estimating process. BBR indicated that the basic mitigation compensation expense might be underestimated. However, BBR also found that the amount of contingency determined in that analysis should be sufficient to accommodate variations in the cost factors that might be experienced.”

The CEC’s forecast, obviously, was woefully inaccurate.

If you were to change things around a little, replacing Manitoba Hydro in the above paragraphs with Nalcor, and replacing Both Belle Robb with Manitoba Hydro International or that of Nalcor’s earlier consultants, Navigant, it would be pretty clear that the language used and the confidence in each project is similar.

Kennedy’s other assertion? That rising costs for Muskrat Falls are immaterial, because the costs for any other source of power are likely to rise in exactly the same way and at the same rate. That is one heck of an assumption

The biggest concern in the Muskrat Falls equation?

That forecasts for how much power we’ll need are actually wrong. The Muskrat Falls deal is structured in a way that requires this province’s consumers to buy power from the project even if we don’t need it — and to buy that power at a fixed price that will cover the project’s full construction and financing costs.

That being said, no one should doubt that Nalcor has skilled, experienced staff and the highest of intentions for the people of the province.

That doesn’t mean they are guaranteed to make all the right decisions, regardless of their honesty or conviction.

Manitoba Hydro officials were no doubt just as sure, just as professional and just as committed to making the right choice for residents of that province.

For years, public inquiries have asked a simple question in cases of wrongful conviction: why do police sometimes target particular individuals early in an investigation, accepting all evidence that suggests the individual is guilty, while discounting anything that suggests innocence?

The police call it tunnel vision.

What we have to be careful of is developing dam vision. Skilled professionals can still make bad decisions with the best of intentions.

We are not insulated from that, any more than Manitoba was.

Russell Wangersky is the editorial page

editor of The Telegram. He can be reached by email at rwanger@thetelegram.com.

Organizations: Manitoba Hydro International, CEC, Manitoba Clean Environment Commission Decision Science Both Belle Robb The Telegram

Geographic location: Muskrat Falls, Manitoba

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Recent comments

  • Winston Adams
    August 10, 2012 - 08:09

    John Smith, where's your response to the fact stated to you? And other critics must have facts too. But I guess they're wait until until you admit this fact first, and admit you're error, I assume.

  • Derrick
    August 09, 2012 - 14:01

    NL power gen last 30 years stats can Table 8.2-4 Page 122 Large file:http://www.statcan.gc.ca/pub/57-601-x/57-601-x2012001-eng.pdf Not sure we need more power

  • Winston Adams
    August 09, 2012 - 12:13

    Now fact is truth, is it not? Has this one bit of truth put to John Smith silenced him? The same fact had been put to Ed Martins leadership blog, and Nalcor did not dispute in in their response( see item 'analyzong our options for new power' and you must select all 14 responces to find it) That should be further proof for John. Do I sense John may admit his error? I call on Maurice, Maggie and other critics to prompt John to reply.

  • Winston Adams
    August 09, 2012 - 08:58

    John Smith, I'm still waiting your acknowledgement of the fact you asked for.

  • JOHN SMITH NEEDS TO GIVE THE OPPOSING FACTS IF THERE ARE, INDEED, ANY.
    August 08, 2012 - 11:50

    For God's Sake John Smith Please Stop your childish bullying with no facts from the opposing side (your side), that the Muskrat Falls Project isn't going to put our province into bankruptcy. If you want to keep on ranting on this and other sites, yes, please give the opposing facts from your side to those of us who see the Muskrat Falls Project as a calamity waiting to happen, given the following facts we are aware of: (a) there are no customers awaiting for the energy who will pay what it will cost to produce the energy. (b) from what we are told about cost overruns, this Project could balloon our province's debt twice as high as it ever was in our province's history, (c) the fact that there are only 850 mega watts of energy, with 25 per cent of it being promised to Nova Scotia and talk of the proposed Mine developments in Labrador having to be satisfied with cheap energy, without little mention of Holyrood's needs being satisfied, the raison' d'etre for the development of the proposed Muskrat Falls Project in the first place. (d) And everyone, including you, John Smith, must be aware that our province has an above average aging population demographic in Canada, on fixed pension incomes, not indexed to inflation, so where will the extra income come from to to satisfy their electrical bills which are expected to have rate increases added to them annually on a compounded basis? Come on John Smith, please give us the opposing facts that will cancel out our side's fact to make this Muskrat Falls Project into a viable one.

  • Winston Adams
    August 08, 2012 - 11:10

    To Cold Future. Some of your facts are opinion, thought they may in time be proven to be true. And I suggest you not overwhelm John. If he can agree that critics have at least one fact that he can acknowledge, he may not have a fully closed mind, and may then be open to acknowledge other facts. Lets try one fact at a time. If no one disputes it , its is highly reasonable it is a fact. So I'm waiting John's, or others to dispute my alledged fact put to John. If he is not swift to reply, he may be doing a bit of research. If he needs assistance as to the basis of my alledged fact, I'll assist him. The goal; arrive at the truth, no spinning please.

  • Cold Future
    August 08, 2012 - 10:33

    A few other facts (reasonable statements relevent to the Muskrat Development): 1. The going rate for hydro development is $3 billion capital cost for Muskrat to compare with Quebec's Romaine project. 2. A capital cost of $6 billion is $3 billion too much. 3. The NL ratepayer must pay extra to subsidize the power sales to the mainland because the mainland will only pay the going rate. 4. For anyone to consider Muskrat at $9 billion you would have to question how bright the light is or is the light on at all. 5. Dirty oil burned up the stacks at Holyrood is a smoke screen as a justification for Muskrat. Holyrood should be kept in service because it can be economically operated well into the future. 6.There are less risky projects like the isolated island. Develop with smaller projects as the province has done for the last 50 years. 7. It is doubtful that the children and grandchildren will be able to afford the high rates for electricity and will move out of the province to the cheaper mainland side. 8. This project will never be sent to the PUB again for review because it would be rejected. 9. This project will never be voted on in a referendum because it will be rejected. 10. This project could not proceed without the captive take or pay NL consumer on the hook to subsidize it. 11. The power is not required for NL because it is being developed to sell at discounted rates in the mainland markets. 12. It is doubtfull anyone in the PC government would listen to any of the above because this project cannot go ahead unless they keep their heads buried deeply in the sand.

  • Winston Adams
    August 08, 2012 - 09:47

    One fact John: Nalcor claims we can only achieve 2/10 of one percent is demand reduction from efficient technology. Other jurisdictions, Take Vermont , achieve more than 2 percent, more than 10 fold. Now does Nalcor not have the expertise to do as good or better? We can do as good or better. This last part is opinion, but can become fact if this was taken seriously. Fact is Nalcor doesn't see this as their mandate, and the government wants a vision of energy warehouse, so excludes this as a alternative , which many , many jurisdictions in the USA and Canada now invest heavily into to stabalize prices. But my first statement here is fact, do you you disagree? This is not the only facts put out there. You only asked for one. Lets see if you, I , and others can agree on some facts in this debate. Isn't facts truth? Facts are better than opinion. Nothing wrong with good opinion, if one can determine what good is.

  • Winston Adams
    August 08, 2012 - 08:39

    Good thing John Smith is relentless in his defense of MF, because it motivates others to express their opinions as well as facts that counter many of his same arguments. Now the name calling John probably started and some now follow his tactics, but even John has tampered down some on this. Always better to stick to facts and truth. I will give this to John; for the island needs, assuming Corner Brook mill keeps running, we will either need a small increase in yearly generation, about 1 percent per year or double that , about 2 percent per year in demand reduction as we need to reduce Holyrood oil use. This demand reduction is doable without MF, mostly with efficient heating systems. Of course John would disagree. But I think he hasn't given due consideration to the MF alternative. And he is fixed on long term- 50 year , where 10 and 20 year horizons is sufficient and prudent.

    • John Smith
      August 08, 2012 - 09:08

      Facts? what facts...I have yet to see one fact from any naysayer re. this project.

  • The proposed Muskrat Falls Project has us heading directly for Bankruptcy
    August 08, 2012 - 08:30

    I get it now, John Smith is Nalcor's prime source of expertise. After 550 years of being in existence in this Newfoundland and Labrador location, we are finally doomed as a people and our province is heading directly for bankruptcy! Somebody please stop this lunacy!!!!

  • Cold Future
    August 08, 2012 - 06:42

    Well said Maggy Carter. If John boy does not wake up and smell what he has been shovelling after that-he's brain dead. What is most disconcerting still about this whole affair is that the very ones who should be vigilant shepherds of our economy and the well being of our people have assumed that the majority government handed to them is license to fleece their constituents by promoting this great white loser elephant like door to door vacuum cleaner salespersons.

  • Maggy Carter
    August 08, 2012 - 01:52

    Government's sock-puppet John Smith has painted himself into a corner. No matter which way he turns he is confronted by overwhelming evidence - evidence which grows by the day - that Muskrat is not only unsound, unprofitable and uneconomic but that it could undermine the very fiscal integrity of this province for decades to come. His only comeback is to repeat ad-nauseum the now discredited talking points given him by NALCOR. When these falsehoods were unmasked one by one, he resorted to the defence of all scoundrels - that we should trust NALCOR and trust government because they are the 'experts', because they know what is best for us, and because there is no earthly reason for them to steer us in the wrong direction. Early on in the debate, his strategy was to belittle and smear the numerous professionals from all walks of life who expressed grave misgivings. More recently, and in response to calls for the public to have a larger say, he has taken a new tact - that of ridiculing the public itself. Smith's view is that the public is too 'stund' to be trusted with such weighty matters. Sure he says, why not "hand it over to billy bob from arm pit cove who has a grade six education" (assaulting not only Newfoundlanders in general but asserting that baymen are even more stund than townies). There are two problems with the 'trust' argument. The first is that, contrary to what Smitty would have you believe, the 'experts' - like weather forecasts - are more often wrong than right. Trust me, said Mayor Drapeau, "the Olympics can no more have a deficit than a man can have a baby". Our own provincial history is rife with one catastrophe after another because we placed too much trust in experts. No greater example of that, of course, than the Upper Churchill. Look where trusting the experts got us there. Trusting the experts even when those experts are well intentioned has shown to be a mug's game. But what happens when the proponents of such mega projects are not well intentioned? This province has a long history of political corruption. Does Smith suggest we should ignore that history and take it on faith that this project is squeaky clean? As you're so fond of asking Smitty, "Where's the proof for that?" Certainly not in the transparent, rigorous arms-length oversight of expenditures to date. Certainly not the coherence and consistency of the explanations given for why we need this much energy in the first place. Certainly not by the fact that the province's own regulatory agency threw up its hands in despair after being given the Muskrat mushroom treatment by NALCOR. And certainly not in the deliberate downgrading of our legislative protections for timely access to information on the eve of the single largest commitment of public monies ever contemplated by this province. If Smitty's trust argument does carry the day, then of course it will speak volumes of just how little we have evolved intellectually as a province over the past fifty years. It will say even more about the prospects for real democracy in this province. If this becomes a $12 Billion boondoggle, who will we blame this time? Whoever it is, the pseudonymous John Smith won't be among them. He will evaporate in the night like the aroma of manure downwind of Lester's Farm after the first fall of snow. And no Smitty, I'm not "just another octogenerian with an axe to grind". Like many of this project's detractors, and unlike you, I'm just another professional whose concern for the well-being of this province - especially that of our children and grandchildren - comes before any pecuniary benefit that I might otherwise reap by supporting it.

    • John Smith
      August 08, 2012 - 07:24

      So Maggy...what is it about the project that you find so distasteful? You call it a 12 billion dollar boondoggle? A project that will actually cost us 4 or 5 billion in reality...but who cares about reality eh Maggy? The point I was trying to make is that the people who work for Nalcor are experts in the field, they have indepth knowledge of these projects. Sure, they could be all out to get us, as you and Maurice would like us to believe, but I don't believe that. I believe they looked at all the ways to produce energy in the province, and came to the logical conclusion that a dam at Muskrat would be the best answer. Many others agree. What I would like is for you to explain to me why this is a bad project, because I have not seen that explanation in any of your posts. Show us Maggy, explain without using the usual hyperbole like 12 billion dollars and backroom dealmaking...show us why the project is the wrong way to go. Then show us the right way to provide electricity. I await your learned answer. Oh, and by the way arm pit cove is in Mt. Pearl, and yes...we are way to stunned to make a decision like this.

    • Not John Smith
      August 08, 2012 - 07:43

      To John Smith: you talk about Nalcor's "experts in the field, they have indepth knowledge of these projects." Maybe you could tell us: how many projects have they built of any scale, let alone this one? What experience and "indepth knowledge" do they actually have? What project experience gave them that knowledge? Maybe you could name a project or two... or maybe not.

    • John Smith
      August 08, 2012 - 08:43

      Well, I don't have the resumes on hand of the people who work there, however I do know that several people there worked on the Cat arm project, and the Bay D'Espoir project, and Ed Martin oversaw the 7 billion dollar Hibernia project....so I would have to say these guys know a little more than Maggy and Maurice....

    • Not John Smith
      August 08, 2012 - 09:04

      To John Smith: Close, but no cigar. Cat Arm was brought into service in 1985, so you might have a point there - if someone started work at Newfoundland Hydro in 1982-83 for design work or planning at the age of 24 right out of engineering school, they'd now be 54 - unlikely they would have held a major role in the project at 24, though. As for Baie D'Espoir, it was completed in 1964, so anyone still at Hydro, provided they had an engineering degree, would now be 72 - unlikely to still be at Hydro, hey? And, just to add icing to the cake, engineering, design and construction at Baie D'Espoir was done by an outside contractor, Shawmont Newfoundland. So you really are just blowing smoke, right?

    • John Smith
      August 08, 2012 - 10:20

      actually Bay d'espoir wasn't completed untill 1968, and it just underwent a very major upgrade in 2010. But I guess you are right...no one at Nalcor has any expertise...they are just a group of bumbling idiots, and we should disguard all those engineers and PHDs and instead listen to Maggy and Maurice...yep that makes lots of sense.

  • Matt Foley
    August 07, 2012 - 18:09

    hitler had good people working for him too! Look what happened there! Our former premier was a bussiness man and we know that only the CEO's benifit from crap like this shame of a deal. Leaving the rest of us to do the dirty work...which is to pay for the deal and something WE DON'T NEED ylou smucks!!!!!!

  • Winston Adams
    August 07, 2012 - 15:11

    Russell, as the TAKE CHARGE energy saving ad on line grabs my attention alongside your article, I must bring this to the attention of your readers. The TAKE CHARGE SITE has a quiz as to ways to optimize energy savings for a house. First understand that efficient lights and fridges and such produce less heat, and use less energy and save a little during the 2 months of summer we get. But for the other 10 months, because they these efficient items produce less heat, our baseboard heaters must stay on longer to compensate. So this is very misleading. Yes , down south where air conditioning is needed year round , a compact light can save 65 percent compared to a regular light , Here expect to save 5 percent compared to a regular light . Now given that lighting is only 4 percent of the total domestic load, .05x.04 gives .002= 2/10 of 1 percent. That's in line with Nalcor's projection generallly for energy savings from efficient technology. At that rate the average consumer can expect to save 1.37 per year total from efficient lights / fridges etc. Make no wonder the consumer is not anxious to invest in efficient technology. My review of their quiz shows 5 out of 13 tips are misleading like this; the misleading one being 1,3,5,6,7. ,for 38 percent being misleading. Now if one follows all of their recommendation the quiz says "you're really taking charge of your energy costs". Funny( sad really) that they don,t mention at all the use of heatpumps, which can reduce heating and hot water energy by 60 percent. So whose interests are served by this misleading information. I pointed this out to the PUB. The consumer advocate is aware of it. Yet it continues. Wonder what John Smith thinks of this, coming from what he calls world class professionals. If my assessment is wrong , can someone kindly point out my error.

  • Winston Adams
    August 07, 2012 - 14:25

    MF started off being 824 MW capacity. It was then learned that on average it was only 570 Mw. Now little has been said on tranmission losses. Ever notice that you get less less power to a electric lawn mower or saw on a long extension cord? Or the pressure drops off when you connect two water hoses together? The same thing happens when transmitting electricity long distances. You get resistance in the conductors. So what you generate at the site is not what you get on the far end at St. John's. The Loss is about 10 percent. If operating in winter, assuming there was enough water to allow full 824 MW, then 82 MW is lost. Since some of this power may go to Nova Scotia (free of charge) and New England ( at a loss), because of the longer distance, the transmission loss on that portion would be greater still; Maybe close to 15 percent on the Nova Scotian portion and approaching 20 percent by the time it arrives Boston. That's a lot of Megawatts lost. Now maybe this is allowed for in the financial end of it? But you can't sell and get paid for these transmission losses. As a consumer you pay for power delivered to your meter. Now our present generation from the south coast has a smaller percentage transmission loss because of the shorter distance the electricity has to travel. But my point is 1. that in revenue we can't count in revenue this power that is lost and 2. that when you discount the size of MF for average power output and transmision losses, is it not that big given the huge cost. And has Nalcor put a spin on the size and capacity of MF? Interestingly, through efficiency, when we reduce our local load, it helps reduce the transmission losses from our south coast generation. Same thing with local wind: in general the closer the load to the generation the better. These transmission losses costs plenty. If this project wasn't so marginal in terms of forecast load and high cost, this transmission loss issue would be less of a factor. But it shouldn't be ignored given the risks.

  • Alec Campbell
    August 07, 2012 - 14:00

    Cost overruns exist within any capital works project - Water treatment plant in St. John's $90 million budget $150 million actual cost. Muskrat Falls cost overruns are at least $62 million per 1% cost increase. Alternative energy sources construction costs (Natural gas) will be billions less then Muskrat. Hence natural gas plant overruns will be paltry V Muskrat overruns. Natural gas infrastructure will take up to 2 years to be constructed whereas Muskrat will take 5-6 years from now. Will NLs credit rating be the same with running hundreds of millions in annual deficits? Lending rates won't change in a 55 year period. 2% annual Muskrat power increase equates to +0.5 cents kWh on our power bills per year. Cost overruns increasing the base cost + 2% compound escalating rates will curb demand all together(Nalcor has figured this into their energy demand projections right?). Nalcor's 12% return remains even with cost overruns factored in? How many billions does Nalcor have tucked away already for Muskrat? Use that money for natural gas infrastructure making the fuel costs the only variable cost. Pipelines from the Grand Banks to the Island can be used in the future for natural gas export, more then justifying their initial cost. But alas like many are thinking MF is a done deal with window dressing 'debate' where only cabinet will vote on? Backbenches and democracy must like being overlooked for Muskrat. It would almost be hypocritical if backbenches defended MF will all their might in the media yet were regulated to the kiddy table when the vote occurs.

  • Maurice E. Adams
    August 07, 2012 - 12:10

    JOHN, what MHI actually said is that what is termed our 'domestic' energy needs was forecast by Nalcor as within the industry accuracy rate of plus or minus 1% annually, and that while Nalcor did underforecast that portion, it did so only within the + or - error rate of 1% annually........ The key point that MHI made was that 'domestic' energy only makes up 50 % of our "total island energy demand' and Muskrat Falls is predicated, not on 50% of our forecast needs, but on the 100% --- our 'total island demand' --- and on our 'total demand', Nalcor OVERFORECAST that about double the industry standard of + or - 1% annually.........PERIOD. That equates to a FORECAST ERROR over 50 years much more that the total output of Muskrat Falls. Those are the facts and can be seen in MHI's report. Like everything else, the 1% underforecast that makes up only HALF our demand (and was within standard) is being improperly (as Pam says, 'carefully crafted') to mislead, misinform and pull the wool over the eyes of ratepayers. Since Muskrat depends on total island demand only, and total island demand (not domestic demand) is SIGNIFICANTLY OVERFORECAST, what kind of rational basis exists therefore to go BILLIONS in debt?

    • John Smith
      August 07, 2012 - 13:03

      Oh...that's right Maurice, I forgot how Nalcor and the government are only in this to con the rate paying public. I forgot how it's all a big conspiracy, with Navigant, MHI, Wade Locke, and others all getting together to lie and cheat and are out to get us all. We don't need any electricity..it's all a big lie to provide big corporations with free power from NL....right...now I see...now I understand...LOL

  • Cold Future
    August 07, 2012 - 11:52

    This whole Muskrat affair boils down to a very risky and likely bad decision for the ratepayers of NL. The most disturbing thing about it is that the very ones who should be digging into every part of it to make sure we do the right thing (protecting the economy and the people) are the ones promoting it like it has to be done regardless of what hardship it places on the NL consumer.

  • Winston Adams
    August 07, 2012 - 10:39

    Nalcor forecast s 1 percent in domestic load growth. We are now pay 50 percent more than Manitoba, B.C. , and Quebec for our power. When MF comes on stream our power costs will be double those other provinces. Nalcor and John calls this stabilization. What a price to pay for a forecast 1 percent load growth. Much easier and cheaper to knock the load growth to negative 2 percent, as this can really stabalize our costs close to present rates and reduce oil consumption. I have read that in recent decades the GDP of the USA has tripled with reduced use of energy. Its through efficiency and higer productivity. The idea that more energy is essential to grow the economy is outdated.

  • Cyril Rogers
    August 07, 2012 - 10:33

    Despite all evidence to the contrary, KD and her minions have decided to proceed with this project. No matter what certain supporters say, there is, no doubt, fierce lobbying by large groups with vested interests and millions to lose if they don't get a piece of the pie that is Muskrat Falls. The fact that the taxpayers, or more precisely, the ratepayers of this province will enrich these individuals and corporations is beside the point. Corporate welfare bums, indeed! But, they would be the same group decrying some poor Joe who collects EI for a period of time! Our government is controlled by their "corporate welfare bum" partners and lobbyists while we are the ones getting shafted. Isn't that just like countries where dictators determine that what is good for them is good for all? Again, the only fair way to determine if this project should proceed is to put it to a referendum. It is too crucial to our long-term future to be left to these idiots who think they know best, or are being manipulated by their corporate benefactors. If we're going to make a bad decision......... LET IT BE A DECISION MADE BY THE PEOPLE OF NEWFOUNDLAND AND LABRADOR!!

    • John Smith
      August 07, 2012 - 10:46

      Brilliant! let's take the decision for a multi billion dollar project out of the hands of the experts who we pay to do the job, and are the best in the field, and hand it over to billy bob from arm pit cove who has a grade six education...yep, sounds about right...give me a break... we already had a refferendum, it was less than a year ago...the PCs won by a landslide running with muskrat as one of the biggest parts of their platform.

  • Maurice E. Adams
    August 07, 2012 - 09:16

    JOHN, the onus was and is on Nalcor to show that the island needs the power, not, as you say, that the Tely and ratepayers must prove otherwise. And the only two (2) independent reports to date say that Nalcor has not proven its case. PERIOD...... No profit potential from outside sales, no profit potential from sales to mining companies (only HUGE LOSSES, paid for by island ratepayers)---- not even a solid case for island demand. See Nalcor's 10-year (deeply flawed) track record at www.vision2041.com

    • John Smith
      August 07, 2012 - 10:40

      Maurice you know full well that both MHI and Navigant have come out to say that Nalcor has underestimated our future needs...that is a known fact. As well, the numbers for Muskrat have never included the sale of power, the loan guarantee, or anything else...it satnds alone. But hey...why let the truth get in the way...eh Maurice?

  • Cold Future
    August 07, 2012 - 09:07

    Muskrat Falls project would be ecomonical and compare with Quebec's Romaine River project if it could be built for $3 billion. It is a risky money loser at $6 billion and the NL consumer will pick up the cost to carry the $3 billion by which it falls short of being economically viable. To proceed with the potential of that cost ballooning to $9 billion is totally absurd. A little common sense should be expected from government leaders -apparently common sense is not all that common. How can a clear thinking individual say that to jump into this major risky project is better than procceeding piecemeal which has stood us well for the past 50 years of developing our electricity system. A prudent piecemeal plan will never suffer the cost escalation that this warehouse for the mainland benefit will suffer.

  • Maurice E. Adams
    August 07, 2012 - 08:17

    I think it is clear, that no matter how well intended, Nalcor's 'best interest' is NOT THE SAME as the ratepayers' 'best interest'......... Nalcor officials, no matter how well intentioned, cannot separate themselves from that ----- but our elected officials (our premier, our cabinet ministers, our MHAs) are expected to (able, and in the position to) DO JUST THAT.......... If they did that, they would not sanction Muskrat Falls at this time. They would defer it........... In 2005 this same government's pre-feasibility study concluded that a tunnel under the Strait of Belle Isle could link Labrador and the island and carry both people and power for only $1.7 billion in 2004$ (much LESS THAN a dam/generation plant)..... This same government was so encouraged by that pre-fessibility study that it said it would do a full Feasibility Study "IN 2011"....... WHERE IS IT?........BILLIONS COULD BE SAVED and we would then have a real alternative route (and even now, a partial market) for NEAR-ZERO COST Upper Churchill........ We are getting next to nothing for the sale of existing re-call power, so bring it here and buy a little more, if needed, for 5 cents/KWh from Quebec. .... RESULT ???? ......... REDUCED COST, REDUCED DEBT, REDUCED RISK, INCREASED REVENUE, NO DEPENDENCE ON ISLAND DEMAND, NO DEPENDENCE ON HIGH OIL PRICES, NO DEPENDENCE ON 50 YEAR OIL FORECAST, NO DEPENDENCE ON 50 YEAR DEMAND FORECAST ------- REAL ECONOMIC DEVELOPMENT DRIVER........... SO, Let's do that Feasibility Study (and a comparative benefit/cost analysis) of a tunnel accessing Upper Churchill power versus an unneeded, uneconomic Muskrat Falls dam/generation plant (and do it BEFORE making a sanction/no sanction Muskrat Falls decision). See www.vision2041.com

  • Before I would give my sanction to the Muskrat Falls Project I would want pertinent questions answered.
    August 07, 2012 - 07:53

    The rumors I hear are that the Muskrat Falls Project is being developed to satisfy the Canadian East West Energy Grid. It will give Nova Scotia easy access to cheap power to run its $32 Billion Shipbuilding Industry allotted to it by the Canadian Government. Also I have heard that the proposed Mine development for Labrador has the involvement of 2 former Canadian Prime Ministers and 2 former Newfoundland and Labrador Premiers, the ore from the proposed mines will be shipped out to markets in the raw state and the mines will be supplied with cheap energy from the 'Muskrat Falls Project. If the allegations are true and there are former politicians involved why did they not develop these mines for the benefit of the province when the politicians were in active politics? Before I would give my sanction to this Project I would want these questions answered to my satisfaction on why, if the allegations are true, is the province of Newfoundland and Labrador having to provide cheap energy and its natural resources, again in the raw state, to the World without providing an economy firstly for itself? I thought we had learned the lesson years ago that we have to stop giving away the province's natural resources in the raw state without creating the economy that the geographically strategic province of Newfoundland and Labrador deserves.

  • John Smith
    August 07, 2012 - 07:49

    These are two very different projects. The Wuswatkim project was the first(and last) time that Manitoba hydro entered in to a 50/50 deal with the Manitoba cree nation to develop the project. As well, it was first said to cost 900 million, and ended up costing just shy of 2 billion. It was designed to supply power to outside markets, not for domestic use. Nalcor has already factored in 20% into the cost of the project for overuns. Navigant has said that this is a prudent business practice. It was the PUB who first went to MHI for advice and guidance, not Nalcor or the government. Oh, and how is it a big jump to think that if Muskrat increases in price the alternatives will also increase? Of course they will.Manitoba hydro international has overseen many hydro projects alll over the world, very successful projects. One independant goof from Ont. cites this one in Manitoba and the media jumps all over i? I expected nothing less.The two questios are...do we need the power? is muskrat the lowest cost option? The only answer is yes to both questions...it is up to the Tely and the naysayers to prove otherwise....I'd love to see the proof. Like this dupe coldfuture...always says how bad the project is...yet strangely can't say why it is a bad deal. Keeps saying that this deal is about subsidizing power for the mainland...the new mantra for the natsayers this week LOL. Muskrat was, and is the answer to our domestic use here in NL...not anywhere else. Forget completely about the emera deal, and we would still be going ahead with muskrat, and the link to Labrador. While boobs like coldfuture might be OK to sit back and collect welfare and sit on the end of the wharf for the next 35 years waiting for power from the upper churchill, the rest of us who want to develop our resources, stableize our rates, and grow our economy do not want that lifestyle. Muskrat falls is a well thought out, well planned answer to our coming energy needs...we will need the power, and this is by far the best way to provide it.

  • Derrick
    August 07, 2012 - 07:28

    Nalcor is a government dept. same as Eastern Health or Transport, so do not expect any different results on there activities. They have never made a dime with out government rules, they are supported by tax dollars up front or in hidden costs.

  • Maggy Carter
    August 07, 2012 - 07:27

    Yes, sadly, the die is cast. This train wreck is predictable and yet unstoppable. Wangersky asks why ostensibly intelligent people like those within NALCOR and government are prone to making bad decisions - decisions that can have catastrophic consequences for the financial integrity of the province. Muskrat stands today as the inevitable outcome of a perfect storm of factors that gave rise to it in the first place. A hurried, rash decision by Williams looking for his third in the triple crown of accomplishments as he prepared to bolt from politics. An inexperienced, naive, and easily manipulated - if well intentioned - successor who declined her opportunity to re-evaluate the project from scratch upon Williams' departure. An organization in NALCOR that has grown far too fast with far too few controls, behaving as do most large organizations in a manner designed - consciously or otherwise - to grow even larger and to assume as much power as possible. Meeting the province's energy requirements is of secondary importance to the prime objective - growth for its own sake. Then there are the carpetbaggers. These are the assorted back room corporate boys from the engineering, construction and banking industries that insinuate themselves as early as possible into the megaproject planning process. They lobby intensely for a piece of the action - a piece that is only made possible of course if the final decision is a go. Finally there is the concept of 'risky shift'. That is a phenomena wherein a group of people - say a board, a committee, a cabinet, etc - gravitate toward riskier positions than would be the case if they were making such decisions on their own. More simply put, if something goes wrong there are more people to blame and hence the blame attaching to individuals is diminished. These were all factors at play in the run-up to the Upper Churchill and - notwithstanding the horrendous consequences of that decision - they are all at play again in the Muskrat decision. Those who ignore history are doomed to repeat it.

    • John Smith
      August 07, 2012 - 08:04

      Maggy, I didn't read where Wangersky said that Nalcor are prone to making bad decisions. A hurried decision? They have been working on this development since 1967...over 40 years. Mr Williams' minister of natural resources during the time when this deal came to fruition was Ms. Dunderdale. She was intimately involved in the process for years before she became Premier. Do you have a shred of eveidence to back up all the back room conspiracy theories you espouse? Of course you don't. Oh, and this project is not like the upper churchill in any way. If we had gone with Roger Grimes plan, then it would have been just like the UC. Where we have greedy, private companies in charge, and we sign the whole thing over to Quebec Hydro. This time the people of NL are in charge, we, Nalcor, you and me Maggy are in control, not QH. So basiclly everything in your rant is a lie, hence you are a liar. But why? What do you have to gain? Who are you really Maggy? Do you work for QH? or are you just another octogenerian with an axe to grind? Doesn't matter, because no one listens to or gives creedence to anything you say. I don't know whether to laugh at you, or feel sorry for you...maybe both. You really should stop reading those suspense novels though, starting to get a little creepy...LOL

  • Cold Future
    August 07, 2012 - 07:00

    While the puppets and baggers have been lined up like ducks in a row to vote for this seriously flawed project, it is the unsuspecting NL consumer who will pay through the nose for this giveaway.The day will come soon when Joey Smallwood can rest having made a very lucrative deal for Newfounland when compared to the take or pay cushion provided to grateful mainland consumers on the backs of NL consumers with this present plan. Less risky and practical options like isolated island, wait and prepare for the free 3500MW from Upper Churchill, recall power and buy from Quebec if Holyroon can be taken out of service are all being overlooked. The only parties who need this power are on the mainland and they cannot afford to pay the full price for it. Why do it for them? We don't owe them anything? It is never too late to realize you've made a serious mistake. The time to shut Muskrat down is now.