Ed Smith: Bit by bit
One billionth of a billionth of a billionth of a second.
Is it wrong for Stan Marshall to have confirmed that Muskrat Falls is a boondoggle? A boondoggle is defined in the Oxford dictionary as a “wasteful, unnecessary, or fraudulent project.” And is he a buffoon, defined as “a silly person, a clown”?
Does Stan Marshall’s acceptance of the description of the Muskrat Falls project as a boondoggle make him an unfit CEO?
What should we look for in the CEO of a Crown corporation such as Nalcor? Do we want someone who will tell us that lucrative markets abound, that Muskrat Falls is the least cost power and that demand for power is growing exponentially? Or do we want the unvarnished truth?
We do not agree with everything that Stan Marshall has done. We are disappointed he has not changed his management team. Instead of bringing in a construction company with the capacity and international experience to manage this project, he has continued Nalcor’s lead role and retained those who have been in charge from the beginning, continuing to inflict the costs of Nalcor’s inexperience, and its inability to maintain quality control, upon the project.
We had urged him, when he took over the project, to undertake a basic comparison of the option of continuing with the transmission line alone and suspending work at the generation site. Both Nalcor and government refused to do this kind of stop/go analysis. And, as we expected, costs continue to escalate.
We have urged him to appoint an independent review panel to review the risks of the North Spur, which he has refused to do so far.
Having said this, we have to commend him on his honesty in describing the project in clear language without pulling punches. It is his responsibility to tell us the truth and not to mislead us.
Would we, as Nalcor’s shareholders, prefer our CEO to set aside the many risks described so vividly in the SNC Lavalin risk management report and tell us all is well, focusing on the strong equity position of Nalcor and minimizing the mushrooming costs, as the former CEO has done when he said there is “significant revenue available for rate mitigation”?
Remember, the equity invested in Nalcor and in the Muskrat Falls project comes from us, the people, and most of it is borrowed. When we are told that the 8.4 per cent return on equity is available, along with export revenues, to mitigate the doubling of electricity rates, we aren’t being told the truth. The equity comes from the province’s borrowing, on which interest must be paid. With the back-end loading of the project, any return on equity will occur very late in the 50-year amortization period, if ever. Export revenues will be minuscule. The 8.4 rate of return will be paid by us in our electricity bills.
The new CEO has dramatically reduced Nalcor’s load growth projections from those of his predecessor, showing demand for electricity by more realistically tracking the population trend forecasted by the Department of Finance. He has given us an honest accounting of energy demand.
What people want is the truth, nothing but the truth. What evidence exists to substantiate the claim that this project is “world class” in any sense other than a “world class boondoggle”?
Instead of attacking Marshall for telling the truth we should be commending him for being candid. We have had too much smoke and mirrors and spin-doctoring, which we continued to see recently from the former CEO.
It is an understatement to say the project is a “boondoggle.” It is much worse. Our energy policy should have focused on how we meet our energy needs until 2041, when the Upper Churchill contract comes to an end and we have a limitless source of cheap electricity. Instead, we embarked on a project which, as we predicted many years ago, is way over budget and behind schedule and may well impoverish both the province and all of us who choose to live here.
We know who the “buffoon” is, and who bears responsibility for this debacle, and it isn’t Stan Marshall.
What people want is the truth, nothing but the truth. What evidence exists to substantiate the claim that this project is 'world class’ in any sense other than a 'world class boondoggle’?
Ron Penney and David Vardy