At the end of 2012, the Muskrat Falls project was sanctioned at an estimated capital cost of $6.2 billion, but that price tag didn’t last the year.
On Monday at the Muskrat Falls Inquiry, then-Finance minister Tom Marshall said he knew the cost might run higher. It was something the cabinet had been warned about by former Nalcor Energy president and CEO Ed Martin.
Marshall directed that he be notified of any material changes in cost. He also, “anxious” by the time, went looking for an update in 2013, only to be told Nov. 1 the original estimate still held.
Marshall testified that when financial agreements for the project were being signed, later in November 2013, he still believed the estimate was $6.2 billion.
He was wrong.
As far as he was aware, he testified, the cost estimate was changed from $6.2 billion to $6.99 billion in mid-2014, right before the public was given the same update. But the cost of the hydroelectric development had officially reached $6.5 billion over half a year earlier, at financial close.
“I don’t remember getting that information,” Marshall testified.
Lawyer after lawyer asked him about the $6.5-billion cost. There were additional, related questions about awareness, and about oversight.
“If my officials had it, it could very well have come up. I just don’t recall it,” Marshall said at one point.
He agreed his department would have reviewed the project finance agreements.
He said he learned from earlier inquiry testimony and evidence there apparently were — separate from the financial agreements — government staff with an updated cost by March 2014.
So why wouldn’t he — then premier — have seen an updated estimate before June?
“I can’t answer that. I wonder that myself,” he said. “I know that number came over from Nalcor to Finance in March and that was budget time.”
His update came from Martin, he reiterated, who briefed the cabinet in June 2014.
At a couple of points in questioning, Marshall was asked by lawyers about an email on Nov. 8, 2013, from his deputy minister at the time, Donna Brewer, stating an updated cost estimate for the project was expected before financial close. He said it was during a series of discussions about the cost overrun escrow account (COREA, a feature of the financial arrangements). He said he believed Brewer would have informed him immediately of any material change in the capital cost.
Stepping back even earlier, Marshall was asked about the work of the independent engineer, MWH, and information flowing to the province. He was asked about a transcript from the House of Assembly from March 2013. It recorded NDP MHA Lorraine Michael asking if then-premier Kathy Dunderdale had access to reports of the independent engineer, who was working on behalf of the Government of Canada.
Marshall took the question.
“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,” he said.
At the inquiry, Marshall acknowledged he made “incorrect” statements at the time about the independent engineer’s role.
“It’s possible I didn’t have a really deep appreciation for the role of the independent engineer,” he said.
He was asked if anyone in the government, elected officials or bureaucrats, corrected him at the time.
“I don’t recall,” he said, adding if he was corrected, he would have wanted to go back and correct his statements on the floor of the House of Assembly at the earliest opportunity.
Both former premiers Marshall and Dunderdale were scheduled to be on the stand at the inquiry on Monday. Marshall’s questioning took longer than expected, so Commissioner Richard LeBlanc ordered Dunderdale be called Tuesday morning instead (beginning at 9 a.m. NT). The schedule is to be adjusted later this week as needed.
Former Nalcor Energy employees Mark Turpin and John Mulcahy are also scheduled to appear on Tuesday.