Muskrat Falls problems already spelled out

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The only complete and credible analysis of the Muskrat Falls project, as proposed by Nalcor, was delivered by a provincial-federal joint review panel that reported its findings in August of last year.

It is extraordinary that this report, which severely questions many of the project’s main elements, has been virtually ignored by both the Dunderdale and Harper administrations that commissioned it. In much the same way the provincial Public Utilities Board, which might be said to have a statutory duty to advise/rule on this project, has been effectively shunted aside as irrelevant and unimportant.

Most Newfoundlanders are probably unaware that the panel “did not accept” — its words — that developing the hydroelectric potential of the lower Churchill River is a “need.” Or that Nalcor’s analysis showing Muskrat as the best and least-cost way to meet domestic demand requirements was “inadequate.”

Therefore, the panel called for “a new, independent analysis based on economic, energy and environmental considerations” to address “domestic demand projections, conservation and demand management, alternate on-island energy sources, the role of power from Churchill Falls and Nalcor’s cost  estimates and assumptions.”

Having to ask these questions and more besides demonstrates the gross inadequacy of the information provided by Nalcor in support of the project and its huge $6.2-billion expenditure requirement.

The panel also wanted the new independent analysis — which, if it were done, would be carried our by competent consultants completely divorced from Nalor and its contractors — to consider “the possible use of offshore gas as a fuel” for Holyrood, a huge issue where alternatives to Muskrat are concerned.

A detailed gas proposal that could reduce government borrowing to the tune of serveral billion dollars was advanced by Stephen Bruneau of Memorial University, but in the House of Assembly on March 29, it was rejected out of hand.

When Liberal Leader Dwight Ball recalled that in 2007 the government’s energy plan required that companies applying for offshore permits provide a “detailed landing-in-the-province option for natural gas,” and revealed that compressed gas experts (the Enersea company of Houston, Texas) were hired the same year to do a natural gas study, very surprisingly Natural Resources Minister Jerome Kennedy replied, “I am not aware of the study ...”

Are we to believe that perhaps it has been kept from the minister, thus impairing his ability to adequately deal with the file?

The provincial-federal panel called, as well, for cash flow projections for Muskrat Falls and an examination of the implications of the project for the province’s ratepayers and its regulatory systems. These are pressing matters.

Exactly how much money has the province put out, and will it be required to put out in future, for this project? How will this affect the province’s ability to meet all the various needs of our people and the public debt? What really will be the effect on electricity rates in Newfoundland and Labrador? Are the dark hints of energy shortfalls, brown-outs and black-outs, reality or merely fear-mongering on the part of government ministers to help push the project through?

When the premier demands, as she did on the radio recently, “What’s wrong with Nalcor’s numbers ... somebody show us,” the findings of the joint review panel are her answer. It is high time that she acknowledged that fact and acted accordingly.


William R. Callahan writes from St. John’s.

Organizations: Public Utilities Board

Geographic location: Muskrat, Churchill River, Houston, Texas Newfoundland and Labrador

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Recent comments

  • Jack
    May 31, 2012 - 10:38

    Since Alderon is not an independent company anymore as Altius Minerals owns it, they have no right to sue Sierra Club or Brad Cabana. Therefore, this civil suit will likely be dismissed as Alderon no longer exists as an independent company.

  • William Daniels
    May 30, 2012 - 20:11

    Just read a story on the CBC website regarding Alderon (Danny is on Board) is considering suing the Sierra Club and Brad Cabana for defamation! I guess Alderon really needs the MF Project to really go ahead even though originally they were no getting any of the power. Minister Kennedy let the cat out of the bag on that one a little while ago. Tobacco lawsuit deals, real estate deals, MF deal. I guess there is more to life than hockey.

  • Jason
    May 30, 2012 - 17:21

    why can't they just be more open with the process and whats going on? this could be the best deal ever as john smith obviously believes. or it could be a disaster as the ever present and punctuation-happy Maurice obviously believes. but if its so good and so necessary like our *cough* esteemed premier and lap dog kennedy seem to believe then why not release all the hard facts that prove it to everyone? I'm not prone to paranoid delusions but it seems that the players involved either have something to gain personally (kickbacks, patronage appointments post-MHA, etc) or Danny is blackmailing them in to it or something. I dunno but it just smells so fishy and they're handling it so badly that I just can't be on board...

  • winston adams
    May 30, 2012 - 15:08

    John Smith- What do you think of my numbers for potential reduction in demand and energy, some 423 Mw for domestic heating reduction and 600mw or more when adding in hot water and small commercial- because our present old technology of using our electricity wastes 50 percent or more. Did you read my presentation at the PUB? And the solution is very cost effective , like one fifth of the cost of Muskrat Falls Power

  • William Daniels
    May 30, 2012 - 14:47

    This is already the biggest finacial boondoggle NL will ever see. We don't even know how much Nalcor has recieved/spent. The AG isn't allowed in. We can only assume is is reaching around a billion. In the end Harper will renege on the laon guarentee and his revenge on Danny Williams and Premier Dunderdale will be complete. NL will be left on it's knees. The last one out turn out the lights.

  • Willi Makit
    May 30, 2012 - 09:07

    Natural gas needs to be examined much more closely than the cursory glance that it has been given. Muskrat Falls is a one trick pony, and an expensive one at that. There's more to gas than electricity, The trend in the U.S. transportation industry is converting diesel to natural gas, and in other parts of the world the coversion is well underway. The cost savings are tremendous, and the green benefit of removing dirty diesel is significant..Our government and NALCOR have not even bothered to look at the broader implicastions of their choice. We may be forced to build the natural gas infrastructure regardless. Perhaps one of our great economists would liek to build on their previous work examining the equation and incorporate the broader picture. Now is not the time for myopic thinking.

  • Your commentary NALCOR HUNTERS need to be read, you have read matters correctly.
    May 30, 2012 - 08:45

    NALCOR HUNTERS, I am very much afraid everything you have spoken of in your commentary is 100 per cent correct. Everyone should read your commentary. In every aspect of this deal I sense CORRUPTION. Somebody from Government needs to intervene before we are annihilated with a back breaking debt, in a time when everything is falling down around the ankles of the World's Economies. We already know the reason for the collapse of the World's economies in 2008 which still hasn't been fixed. It was all orchestrated by those who ran the Governments, the Financial Institutions and the Corporations. The World's Wealth is now congregated in the hands of those Government leaders, Financial CEOs and the Corporations, while the rest of the people are left in a situation where they don't know where to turn. It is so preposterous to think that now everything depends on the upcoming Greek June Elections, since last month's election failed to form a government in Greece and God Only knows how that is going to turn out. I know one thing though if the next restructuring of the World's 21 False Great Economies economies, that we have been intertwined with over the past 30 plus years is patterned on the same template, it won't take very long before everything collapses again. Please Stop the Muskrat Falls Project, it is not going to be viable the way that it is structured where it is supposed to supply cheap energy to another province and the Mining Projects in our province that are scheduled to come on stream, since none of the entities wants to pay the cost per kilowatt hour that it will cost our taxpayers to generate this hydro energy.

    • John Smith
      May 30, 2012 - 10:14 you guys crack me up...keep it laugh i've had in days...really very funny...

    • Eli
      May 30, 2012 - 11:08

      Ditto MUDDERL

  • Same old same old
    May 30, 2012 - 07:58

    Yaaawnnn, nothing new here.

  • John Smith
    May 30, 2012 - 07:43

    Here we go again. What's wrong with Nalcor's numbers?...I agree. What's wrong with Navigant's numbers? What's wrong with MHI's numbers? What's wrong with Wade locke's numbers? Thats a lot of numbers that come out saying that Muskrat will be the lowest cost option. As well, Nalcor, and the province will not be paying 6.3 billion for the project as Mr. Callahan asserts. Emera will pay almost 2 billion of that amount. the province has come out and stated that we will be paying 16.5 cents a KWH at soldiers pond. The whole gas idea is a load. I heard Mr. Breauneau's comments. There are numerous holes in the concept, and he left out billions in needed infrastructure. All you have to do is look at the sable gas installation, the problems and costs associated with that development are enormous, and cost billions of dollars.Why would anyone want to burn hydro carbons when we could use water that flows to the sea? It makes no sense. The dam at muskrat will cost about 3 billion to build, about as much as we spend on healthcare every year in this province, the transmission lines, and stations will make up the rest. It is a very good, clean, renewable source of energy, that will never run out or pollute the air. We will have a connection to the mainland which will allow us to sell excess energy, and to persue wind and other alternatives. We will get off burning oil, we will stableize rates forever. It is by far the best answer to our future energy needs.

    • Holden
      May 30, 2012 - 08:23

      The problem is they are the same numbers from the same source. It is indeed sad they you can't understand that!

    • John Smith
      May 30, 2012 - 08:43

      No...what is sad, really very, very sad, is that people are using this project to further their own agendas. The numbers do not lie. There is no such thing as Nalcor's numbers, and other numbers...there are only one set of facts. The energy usage we will need in the future, and what will be the best plan to supply that energy. No magic, no mystery...just plain facts. The PUB could not reach a conclusion because they said they did not have decision gate three numbers, they had the numbers right up to 6 months before the review...yet that wasn't good enough? Total BS, just like all the make believe crap that the naysayers keep spewing. Like I said before, and I will say again...there is not one rational argument against this project...not one.

  • Cold Future
    May 30, 2012 - 07:31

    Its time to bury this would be fiasco before it becomes a huge embarrisment which eclipses that of the Upper Churchill. The government's continuing insistence that it will be a significant source of revenue for the government is an indication that it would become a large burden/tax on the people, many of whom presently require subsidies for energy. The economics of this venture is not verified to any acceptable measure. We need to follow a plan to produce the lowest cost energy and prepare for the return of the Upper Churchill power to the province in 2041. Drop the white elephant and get on with producing the cheapest energy source.

  • Nalcor Hunters
    May 30, 2012 - 07:26

    When oil ain't enough. When the PUB were asking for more infomation and nalcor couldn't provide, that shows that they didn't have their homework done and its being pushed and rushed. Dunderdale, martin and kennedy, are just following thru what the former premier set up, and who's now lobbying for the companies looking for a discount on a give away. Nalcor has become a swiss bank account for this government, who are now searching through the couchs for more money to hide in nalcor to try and help them pay for their re-election promsies of standiums and firetrucks. We are giving nalcor all these billions so they can build a dam are charge us the highest prices in north america...that we own? They are sending our people over a hill that we don't need, with no chance of finanicial benefits for the people paying for it. We can't afford The premier to fly on seat of her pants on this one.

  • Maurice E. Adams
    May 30, 2012 - 07:06

    A few more facts: Minister Kennedy said in the House on May 3rd: "When Holyrood gets to its full rate of capacity, Mr. Speaker, it burns 18,000 barrels of oil a day. Holyrood is used at its full rate of capacity in the wintertime. That is when we need the energy in this Province."....... We have all heard that, time and time again, not only by Minister Kennedy, but by Nalcor's Gilbert Bennett and by Minister Tom Marshall........The facts:------ Holyrood provides about 10-12% of our energy needs. Even in winter (Jan, Feb, Mar) over the last 8 years Holyrood needed to operate on average at only 50% capacity, over the last 6 years that is down to 44% capacity, and in 2011? ------ Holyrood was not needed to operate at capacity in winter AT ALL or any time throughout the year....... Furthermore, Nalcor plans, with or without Muskrat to increase our net capacity by 50 MW around 2014, so that so-called capacity deficit by 2015, even using Nalcor's totally unreliable forecasts (that have over the last 10 years overforecast our demand by 100%) would not now be reached until 2020m and using our actual historical rate of growth --- not until AFTER 2041.