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Pam Frampton: Muskrat Falls — it’s long term all right

Then premier Kathy Dunderdale (centre) officially announces the sanctioning of the Muskrat Falls hydroelectric development in the lobby of the Confederation Building in St. John’s, December 2012. Then Nalcor Energy president and chief executive officer Ed Martin (left) and Natural Resources Minister Jerome Kennedy (right) applaud following the announcement.
Premier Kathy Dunderdale (centre) officially sanctions the Muskrat Falls hydroelectric development in the lobby of Confederation Building in St. John’s, December 2012, as then Nalcor chief executive officer Ed Martin (left), and Natural Resources Minister Jerome Kennedy (right) and other members of the Progressive Conservative caucus applaud. — Telegram file photo

In a news release issued last week saluting a Muskrat Falls milestone — the flow of power from the Upper Churchill River in Labrador to Soldiers Pond on the Avalon Peninsula — former Nalcor CEO Ed Martin praised the long-term benefits of the project, adding, “I said throughout my tenure at Nalcor that this project was never about the short term.”

 

Well, it’s true that in many ways Muskrat Falls was predicated on the long view.

But things change, and crystal balls are often flawed.

And gambling billions of taxpayers’ dollars based on assumptions stretching five decades or more into the future is not always a safe bet.

Muskrat Falls was reliant on a couple of factors that time has shown were faulty. One, that demand for electricity would steadily increase, and two, that the price of oil might climb steadily higher.

The demand for power, the price of oil, these are things that ebb and flow based on many variables. Hitching our wagon to a star that could potentially turn into a black hole over the course of decades is something no government should do.

And yet ours did and was so sure it was justified that it promoted the project to the people as one that would be done in less time and at half the cost than actually turned out to be the case.

Ed Martin may have been thinking long term, but neither he nor members of the Progressive Conservative government seemed able to even see five years down the road — the time it took for the cost of Muskrat Falls to more than double, from $6.2 billion to $12.7 billion.

They tried to mollify public concerns by saying the project was easily “financeable,” as Martin told The Telegram in 2011, insisting that cost estimates were very precise, and should be very accurate.

“We understand the business from top to bottom,” he said.

The provincial government’s shortsightedness was also evident when it trotted out its online “electricity bill calculator” in 2012 in response to public demands to know precisely how much they would be paying for Muskrat Falls power.

Martin insisted the calculator was the only tool consumers needed, while acknowledging electricity rates are complex to calculate and perhaps beyond the ken of the average ratepayer.

“I encourage people to go on to that rate calculator, punch in your information, and you will know exactly what your monthly bill is going to be from now until whatever time frame you want to pick,” he said at a news conference in November 2012. “Other than that, we’re only confusing people with different types of numbers and blended rates.”

The provincial government’s shortsightedness was also evident when it trotted out its online “electricity bill calculator” in 2012 in response to public demands to know precisely how much they would be paying for Muskrat Falls power.

In fact, given the variables at play, The Telegram reported at the time that it was “impossible for Martin to say ‘exactly’ what the electricity rates will be in 2017” — let alone in “whatever time frame you want to pick.”

“Electricity rates are set by the Public Utilities Board and take into account factors beyond Nalcor’s costs for the Lower Churchill — maintenance done on existing infrastructure by Newfoundland Hydro, for example,” The Telegram noted.

The Dunderdale government should never have offered up an online “tool” with all the prescient knowledge of a Magic 8 ball in order to placate critics.

Then New Democrat Leader Lorraine Michael seemed closer to the money with her adroit observation: “I think the calculator is a game to help people feel that, you know, they know what's going on, and giving them wrong information.”

Alas, the point is moot now, at any rate.

Look online for the omniscient electricity bill calculator these days at https://powerinourhands.ca/ and you’ll find that it disappeared more than a year ago, and that the domain name has been assumed by a site that aggregates seemingly randomly generated financial, health and travel information, including a piece entitled “Consolidate Your Debt And Gain Some Money.”

Come to think of it, that might be the kind of sound, long-term advice folks in this province could use once Muskrat Falls power prices kick in.

Pam Frampton is a columnist whose work is published in The Western Star and The Telegram. Email pamela.frampton@thetelegram.com. Twitter: pam_frampton

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