Government not talking to independent Muskrat Falls watchdog

Refuses to release report due to ‘commercially sensitive’ info

James McLeod
Published on February 24, 2014
Muskrat Falls on the Churchill River in Labrador.
— Telegram file photo

The provincial government isn’t talking to an independent agent who’s responsible for keeping an eye on the Muskrat Falls project during construction, according to an access-to-information request filed by The Telegram.

According to the Department of Natural Resources, it has had absolutely no correspondence with the independent engineer assigned to do oversight and monitoring of the Muskrat Falls project while construction is underway.

When The Telegram got the response to an access to information request Thursday, Natural Resources also told The Telegram it had not received any reports from the independent engineer.

But one day later, on Friday, Nalcor said it just received a copy of the report from the independent engineer — and forwarded it on to Natural Resources — but a spokesperson said Nalcor would not make it public, because it contains “commercially sensitive information.”

When the federal government agreed in principle to provide a loan guarantee for the Muskrat Falls project in the fall of 2012, it placed a raft of conditions on deal.

One of those terms was that an independent engineering firm had to be appointed to go over Nalcor’s numbers and do due diligence to satisfy Ottawa, as the guarantor, and the lenders who would be putting up the money.

Engineering firm MWH Canada was hired to do the job. In June of 2013 The Telegram reported that its independent review was underway.

It’s unclear exactly what MWH concluded about the project — no one from either the federal or provincial government was available to speak to The Telegram for this story.

Presumably the company gave Muskrat Falls a thumbs-up, because this fall Nalcor went to the financial markets and borrowed $5 billion based on the finalized federal loan guarantee.

With that first report done, MWH Canada is also responsible for ongoing oversight on behalf of the federal government and the lenders as the Muskrat Falls construction continues.

Early in February, The Telegram filed an access to information request for “any reports, documents or other communications sent to the Department of Natural Resources from the Muskrat Falls independent engineer.”

Last week, the department said it had no documents whatsoever that meet that description.

That might come as news to Premier Tom Marshall. Last spring, when he was Natural Resources Minister, he responded to a question from NDP Leader Lorraine Michael about the independent engineer in the House of Assembly, and seemed to believe that the government would be getting reports.

“The independent engineer will make sure on behalf of the people of the province and on behalf of the government of the province that this project proceeds in a robust, fair, economically feasible, and fiscally feasible manner,” Marshall said on March 21.

In response to a followup question, Marshall promised total transparency around the Muskrat Falls project.

“We have been completely open and transparent about this project,” he said. “We will continue to do so because it is right for the people of Newfoundland and Labrador. It creates the lowest rates for ratepayers. It creates thousands of jobs for Newfoundlanders and Labradorians, something the NDP clearly does not support.”

A spokeswoman for Nalcor, meanwhile, said that it had just received a copy of the independent engineer’s report on Friday — even though the report would have been completed months ago to satisfy the conditions of the federal loan guarantee.

“We just received the Government of Canada’s independent engineer report this afternoon,” Nalcor spokeswoman Karen O’Neill wrote Friday. “We have not yet reviewed this report; however, due to the commercially sensitive information contained in reports of this nature it is not normal practice for such reports to be released publicly.”


If the Department of Natural Resources isn’t talking to the independent engineer, it’s unclear who — if anybody — is doing independent oversight on the Muskrat Falls project during construction.

The Nova Scotia energy regulator — the Utilities and Review Board — deemed the independent engineer reports sufficiently important that Nova Scotia utility Emera is required to file all reports with the board.

One of its regulatory decisions specifically said, “independent engineering reports will be critical to keeping the Board informed.”

Natural Resources Minister Derrick Dalley was unavailable to do an interview, but a spokeswoman sent a statement on his behalf to The Telegram, saying the provincial government is keeping a close eye on the Muskrat Falls project and Nalcor.

The provincial government is the sole owner of Nalcor.

“As shareholder, the Provincial Government has close relationship with Nalcor and has processes in place to ensure the corporation remains accountable to the people of the province,” the statement from Dalley said. “At each phase of the Muskrat Falls Project, from sanction, to financing, construction and finally operation, the Provincial Government has had direct oversight of Nalcor.

“The Departments of Finance and Natural Resources work in close collaboration with Nalcor Energy and have regular meetings and exchanges of information; and cabinet is updated regularly by the CEO of Nalcor on its business operations.”

The statement from Dalley also said after Nalcor got a copy of the independent engineer’s report Friday afternoon, it was passed along to the provincial government — one day after The Telegram was told (Thursday) that the province did not have a copy of the report.

“Nalcor has advised that the Government of Canada’s independent engineer report was received late Friday afternoon. The Provincial Government will be reviewing that report, and any future reports, with Nalcor.”