Responsible development and oversight go hand in hand

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As the Chair of the boards of directors for Nalcor Energy and many of its subsidiary companies, I feel it’s important to address comments in recent opinion pieces by David Vardy and Ron Penney (“Time to lift the veil of secrecy over Muskrat Falls” — The Telegram March 29), and Ed Hearn and Dennis Browne (“Muskrat Falls oversight committee a sham” — The Telegram April 4.)

Having served for a decade on the boards of Nalcor and Newfoundland and Labrador Hydro, I’ve seen significant transition and growth of our energy company and provincial utility. I’m pleased to be part of this organization and a team that is driving to build a strong economic future for every Newfoundlander and Labradorian. This vision is driven by a competent and extremely capable team at Nalcor, led by CEO Ed Martin, and is complemented with broad expertise from members of our boards.

Nalcor is accountable to the provincial government and the people of our province. Boards of directors are in place and providing prudent and effective governance for Nalcor’s six lines of business and its subsidiary companies. In 2007, Nalcor’s board completed a comprehensive governance review and implemented recommendations.

Nalcor’s boards are comprised of independent directors with broad backgrounds, including lawyers, accountants, educators, business people and community members. In 2013, there were 63 meetings held by Nalcor’s boards and subcommittees. Detailed information on our corporate governance is provided in our annual reports.

Significant work completed since JRP

and PUB review

Vardy, Penney, Hearn and Browne made comments about previous reviews completed by the Joint Federal and Provincial Review Panel (JRP) and the Board of Commissioners of Public Utilities (PUB) in 2011. In the intervening years, significant analysis, engineering and design work, refinement of cost estimates and schedule, and labour relations work has been completed to achieve project sanction.

Environmental Assessment (EA) is undertaken early in a project’s development to allow the proponent to incorporate recommendations into its planning. This is precisely what Nalcor has completed, and the generation and transmission projects have been released from EA by both levels of government.

Additionally, while the PUB was not able to make a decision on the information it was provided in 2011, its independent and expert consultant, Manitoba Hydro International (MHI), found that “… the Muskrat Falls Generating Station and the Labrador-Island Link HVdc projects represent the least-cost option of the two alternatives, when considered together with the underlying assumptions and inputs provided by Nalcor.”

And I remind the authors of those letters, as they cling to these 2011 reports, that recommendations have been satisfied and the government of Canada provided a federal loan guarantee (FLG) for $5 billion in project funding in December 2013.

Independent validation completed

on Muskrat Falls

In their letter to the editor, Vardy and Penney wrote: “… the prudence of decisions on an energy megaproject of this magnitude needs to be subject to review by energy experts who have designed and built similar projects.”

I couldn’t agree more. That’s why the provincial government engaged MHI, the independent consultant previously engaged by the PUB, to complete a final review of the project prior to sanction in December 2012. It’s also why Nalcor, throughout this development, has sought independent reviews to ensure that we have “cold eyes” input into the project. This is a best-practice project-

development approach.

In accordance with the terms and conditions of the November 2012 FLG agreement, MWH Canada Inc. (MWH) was engaged as the independent engineer for the federal government to assist in its due diligence of the Muskrat Falls project. The role of the independent engineer is to review the principal aspects of the engineering design, cost and scheduling estimates, and the technical provisions in the principal project contracts and permits. Following its required technical review, MWH issued a report to the federal government in November 2013 to support financial close.

Prior to issuing the FLG, the federal government completed comprehensive due diligence. This effort was supported by experienced external legal advisers, financial advisers, and an independent insurance consultant, all engaged directly and independently by the federal government. Combined, these analyses gave the federal government validation of the project economics, the business case, financing structure and the engineering and execution capability of the project team.

Additional government oversight welcome

In addition to Nalcor’s regular government, public and regulatory reporting, additional oversight has been put in place for the Muskrat Falls project.

Recently, Premier Tom Marshall announced the establishment of a Muskrat Falls oversight committee. To strengthen and formalize the existing oversight for the construction phase of the project, a departmental committee of senior officials from Finance, Natural Resources and Justice, chaired by the clerk of the Executive Council, who is the province’s top civil servant, will focus on project costs, scheduling and overall project performance.

Following that announcement I was shocked to read comments by Messrs. Vardy and Penney, two former provincial government public servants, who are now criticizing the ability of public servants to provide appropriate oversight of the Muskrat Falls project and report on its progress. I believe this to be an insult to the integrity of the talented people who lead our province’s public service.

Transparency and accountability

is part of our business

Through all of Nalcor’s reporting processes and procedures, we are ensuring accountability and providing due diligence and oversight. As part of our regular business operations, there are many ways we report to the public, government and the PUB, such as:

    ‰annual transparency and accountability reports and Business and Financial reports;

    ‰ annual financial statements for Nalcor and each subsidiary are audited by an external independent public accounting firm;

    ‰ public annual general meeting that includes a question and answer session and is broadcast live online;

    ‰ responses to hundreds of public requests for information annually through email and regular mail;

    ‰ public information sessions, open houses and presentations throughout the province; and

    ‰ monthly Muskrat Falls project reports that provide detailed information on expenditures, employment, procurement and other construction activities.

The vast majority of the foregoing have been implemented within the past six years, and illustrates our commitment to public accountability.

Our government and regulatory interfaces include:

    ‰ Nalcor presents its capital and operating budgets to the premier, ministers of Natural Resources and Finance, and senior government officials for review and approval.

    ‰ the PUB has oversight of Hydro’s capital programs, general rate applications and other rate-

related filings. During these processes, Hydro responds to thousands of requests for information and questions from intervenors.

    ‰ Hydro has regular quarterly and annual reporting to the PUB as well as numerous other requested reports.

Also, contrary to statements by vocal critics, it’s important to note that today, government can audit Nalcor and its processes; as well, the auditor general has open access to Nalcor. Some wish the public to believe otherwise.

Shaping our future

Nalcor was created to support the development of Newfoundland and Labrador’s energy resources for the benefit of its people. And that is what we are doing.

We’ve brought together a team of highly-skilled professionals to construct and deliver the Muskrat Falls Project in the best manner possible and subject it to the high level of rigour required for any investment of this magnitude. This is a team with world-class expertise in large-scale energy projects, including Newfoundlanders and Labradorians who have worked around the world managing and constructing projects of this magnitude. They have sharpened their skills around the world and we’re proud of the work they’re doing right here at home, using industry best practices and proven processes for hydroelectric developments.

And, we’re building a historic project that every Newfoundlander and Labradorian can be proud of; a project that will provide benefit to this province, our people, our children and their children. Nalcor, as part of its vision, puts Newfoundland and Labrador first. I encourage people to join in and let’s work positively to create a province that leads this country and provides a proud and strong legacy for future generations.

Ken Marshall is president (Atlantic Region)

of Rogers Communications Inc.,

and Chair of the Nalcor Energy

board of directors.

Organizations: Newfoundland and Labrador Hydro, Manitoba Hydro International, MWH Canada Joint Federal and Provincial Review Panel Board of Commissioners of Public Utilities Muskrat Falls Generating Station Labrador-Island Link HVdc Muskrat Falls oversight committee Executive Council Rogers Communications Inc. Nalcor Energyboard

Geographic location: Canada, Newfoundland and Labrador

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Recent comments

  • Darren
    April 16, 2014 - 23:15

    And the previous Chair of the Nalcor Board? He was let go why? Did he lack the experience of which you boast? Was he unable to execute the weak oversight of which you describe? Was he not even able to play effective puppet to the PC strategy? Are you more qualified on these points then? I guess you did write a letter. Of little substance. But it is a letter.

  • Dwayne
    April 16, 2014 - 23:02

    The Chair doth protest too much, methinks.

  • Maurice E. Adams
    April 12, 2014 - 13:37

    Readers may also want to go to and link to the article "Hydro is blinkered by history".

  • Corporate Psycho
    April 12, 2014 - 12:32

    Another one of Danny's cronies.

  • Cyril Rogers
    April 12, 2014 - 12:08

    Mr. Marshall, I do not know you personally and would never impugn your motives…. but your arguments for Muskrat Falls are based on faulty assumptions and flawed analyses. The only people who will benefit from this are the rich contractors and wealthy individuals who reap the profits from excessive rates that will need to be foisted on the gullible rate payers of the province. That it could seriously impair the economic stability of the province….especially when the cost over runs become clear….and they will…has that ever been discussed by your directors, sir? That it is designed, not for stability, but for the shifting of assets from the ordinary person to the wealthy…has your Board of Directors had that debate, sir? Mr. Vardy and Mr. Penney are reputable and respected individuals who have contributed much to this province over the years….why would they malign a project that made economic sense? They are not questioning the integrity of the public servants who will try to provide some over sight………. but rather the dubious manner in which the decision was made to continue on with this project, in light of numerous red flags. People of integrity are standing up to the underhanded and secretive manner in which NALCOR and the provincial government have continued to baffle us with the same trite and, I would submit, flawed and blinkered analysis, to predetermine the outcome. When other alternatives and a full analysis is stymied by severely restricting a body like the PUB…..that is supposed to serve the public interest….naturally people begin to question the merits of such a project. You can trot out all kinds of "expertise" but if these "experts" are wearing blinders…what other outcome could be expected? The day will come, sir, when you and all of the other proponents of this scheme will have to answer for their lack of due diligence

  • Maurice E. Adams
    April 12, 2014 - 09:49

    "...we’re building a historic project that every Newfoundlander and Labradorian can be proud of; a project that will provide benefit to this province, our people, our children and their children."........... Is that so?..... Of the $20 billion in revenue that Premier Marshall speaks of that will accrue to Nalcor over the "life of the project", ALL $20 billion will come out of the pockets of NL ratepayers in the first place --- shared between NL Power, NL Hydro, Nalcor, and Emera..... Now add to that a further $15 billion in debt servicing and operating costs (also right out of NL ratepayers pockets)................ In all ---- $35 billion over 50 years ($140,000 per household).... That is really something that low and middle income ratepayers will surely be proud of --- most of it shifted off to our children and grand children (otherwise today's ratepayers would have revolted)..... Now consider this..... Over the same time frame, Premier Marshall has also said that revenue from surplus Muskrat power will bring in a further $4 billion (about $10,000 per Nova Scotia household) ---- for the same amount of power -- 40% of Muskrat. ........NL ratepayers (per household) pay about 14 times as much as Nova Scotia for the same amount of power (and 90% of the so-called Nalcor/government total revenue is right out of the pockets of NL ratepayers in the first place --- and 10% from Nova Scotia)...... Something to be really proud of, no doubt..... Take it right out of mine, yours and our children's pockets and give it to Nalcor and Nova Scotia. WHAT VISION. Only something that "cable company" barons like, Rogers, Danny and Gilbert Bennett can dream off ---- after all, they do know all about how to fleece "captive" ratepayers --- be they cable television or electricity customers. All they needed was a monopoly --- delivered to Nalcor by our friendly neighbourhood provincial government. What a day to be a proud Newfoundland and Labradorian. And Ken Marshall expects me to buy into this bullshit? ----- He may not know it, but Joey's delusional-type thinking has long ago outlived its usefulness.

    • Not only concerned but scared!
      April 12, 2014 - 22:17

      A Great recap Maurice of who will benefit from the Billions of dollars that will be paid out by the tax-payers and hydro-consumers of the province of Newfoundland and Labrador. It is quite apparent that this project will not benefit the ordinary citizens and the province of Newfoundland and Labrador in any way. The only winners it appears will be the orchestrators of this project and the province of Nova Scotia. Good Heavens how many times do the poor trusting people of Newfoundland and Labrador have to be hoodwinked by the politicians we elect? It has been on-going since 1949, we have been promised so many times that prosperity was around the corner only to find out that we were again scammed out of another of our coveted natural resources. When are we going to put a stop to this injustice?

  • Maurice E. Adams
    April 12, 2014 - 07:43

    What a pile of nonsense.......... I could make a dozen comments, but will remind readers that Manitoba Hydro International (MHI), found that the Muskrat Falls Generating Station and the Labrador-Island Link HVdc projects represented the least-cost option of two alternatives, both of which were the only two options they were allowed to consider, and both were carefully crafted by Nalcor itself ---- to ensure a predetermined result)..... These options were considered together with the underlying assumptions and inputs "...provided by Nalcor.” .... In other words --- MHI was allowed to check the math, not much more...... Who do this man think he is bullshitting? ............. MHI was corralled into only one conclusion --- Government also tried (unsuccessfully) to do the same with the PUB (by way of a Terms of Reference crafted BY NALCOR to produce but one result). ..........However, the PUB had the wisdom to avoid the trap. This man cannot even be honest when he says the PUB did not make a decision. The PUB made a decision ---- just not the one Nalcor wanted.

  • concerned
    April 12, 2014 - 06:32

    This is a collection of platitudes, similar arguements and personal attacks which Nalcor and the Government has employed since the beginning to counter critics. Well Done. Lets talk about real transparency. Tell us what the current cost estimates are on Muskrat Falls. Tell us what the incremental cost of energy for Muskrat Falls will be (based even on DG3 which has never been released). Tell us how much of the contingency has been used to date. Tell us about the impact of the weakening Canadian dollar will ultimately have on our power rates. Tell us how much power (In MW) Muskrat Falls will deliver in the winter months. This is real transparancy. As President of Rogers you should realise that there is no publically traded company that would be able to withhold this information from their shareholders. I am sure Nalcor are sharing this with the Provincial Government. The Government are not sharing it with us. Therein lies the problem. I believe the letters from Vardy, Penney, Browne, and Hearn had more concern with what the Provincial Government was doing. There is no way you (or anyone) can spin the withholding of this critical information from the public as being acceptable.

    • Not only concerned but also scared!
      April 12, 2014 - 08:59

      Great Reply Concerned! Mr. Marshall please listen to those who will be responsible for paying off this monstrosity that has very little energy behind it to be sold, just 800 mega watts in the raw state, the amount will be up to 20 per cent lower during and after transmission. All we, the electorate/hydro consumer, want is transparency to monitor that there are no kick backs and trumped up prices for services to the Muskrat Falls contract that will make it impossible for most of us hydro consumers to pay our electrical bills down the road. The government and NALCOR have made this project so non-transparent with Bill 29 and advisements to politicians to confuse the matter, we do not know what to expect in the end product.