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Muskrat Falls report ‘reassuring’: Coady

Consultant recommends Nalcor, province remain focused on risk management


Published on August 31, 2017

The Muskrat Falls hydroelectric project site in Labrador.

©File photo

EY states the Liberal government has improved oversight and reporting on the Muskrat Falls project since April 2016, while recommending some further improvements.

“The project, Nalcor and the provincial government will need to maintain a relentless focus on risk management given the project’s high level of inherent risk,” reads the consultant’s latest report, released Thursday.

Natural Resources Minister Siobhan Coady took questions as the report was issued, emphasizing the repeated references to “substantial progress” by the government on project oversight and reporting since the point where the project’s early cost estimates were officially declared blown.

“That’s important. As we move forward, that’s very important. We want to make sure that we’re going in the right direction, because we certainly could be going in the wrong one,” she said.

Coady said the report provides reassurance to the government.

“It was good to hear from an independent source that things are progressing and there has been substantive progress,” she said.

The document notes changes since the Liberals have taken power, including: new project oversight committee appointments, a new Nalcor Energy board of directors, a new president and CEO at Nalcor Energy (Stan Marshall), progress with settling commercial disputes and new forecasts on cost and timeline being put through an updated risk-assessment process.

The June estimate of a $12.7-billion project cost and the timeline to full power production were not reviewed by EY. The EY work also did not involve an engineering review or any validation of the construction process.

In terms of reporting and oversight, EY did consider and recommend standardizing the reporting to the Nalcor Energy board of directors and the independent oversight committee, documenting the internal risk modelling work by the project team completed each month and adding more frequent assessments of the project timeline.

The consultant also suggested having a process to retire, strike from the budget, untapped contingency as work is completed.

In late 2015, the new Liberal government originally tasked EY to determine if the Muskrat Falls project’s cost and timeline forecasts were reasonable. In what is now called the EY interim report, issued in April 2016, the consultant stated they weren’t reasonable and issued a series of recommendations for improving project oversight.

This final report is focused on the response to the recommendations at that time and is estimated to have cost at least $258,000 (the price stated is suggested by invoices to date, but a final total has yet to be confirmed). It brings the total cost for EY’s work on reviewing Muskrat Falls oversight to roughly $2.2 million.

NDP Leader Earle McCurdy said some of the big questions outstanding for the public now — relating to the North Spur and any risk of dam failure, and to the planned approach to methylmercury mitigation — remain unanswered.

“When they say that they’re more confident in the estimates, well 78 per cent of the work is done,” McCurdy said. “It’s normal that as you get to the end of any project, you’re building a house or something, you have a lot more confidence in the costs when it’s practically done than you do at the beginning with all the uncertainties.”

McCurdy added he was disappointed there was no provision of the EY report to the NDP and Progressive Conservatives prior to the afternoon media event, held at the Natural Resources building on Elizabeth Avenue in St. John’s.