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Muskrat Falls Inquiry Week 2 Highlights

Monday Sept. 24

Nalcor Energy lawyer Dan Simmons questions Grant Thornton auditors David Malamed and Scott Shaffer regarding testimony Friday, Sept. 21, that there were “potential misstatements” by Nalcor in considering the province’s power options in the lead-up to the sanctioning of the Muskrat Falls hydroelectric project. He challenges the determination Nalcor Energy “may have inappropriately eliminated” two options for the supply of power.

The auditors say they relied on the testimony of experts; their findings offered observations as opposed to criticisms or value judgments on the decisions made.

Simmons brings up historical disputes and asks if it would have been reasonable at the time for Nalcor Energy to think the utility next door (Hydro-Québec) would sell power to this province for less than it might in another market. He asks about consideration of the “isolated Island” option for Newfoundland’s power grid. Simmons also asks if the auditors were aware of evidence provided by Halifax-based utility Emera on its own lack of ability to secure a long-term, fixed-price power commitment from Quebec.

“Our investigation was not about Emera,” is the response.

Another option for power reported by the auditors as possibly having been eliminated too soon was the option to hold out until 2041 and the expiry of the contract governing operation of the Churchill Falls hydro plant. Simmons said that station and related infrastructure is controlled by the Churchill Falls Labrador Corp. (CFLCo) and not wholly controlled by Nalcor Energy.

The auditors were asked how well they understood what would be possible for Newfoundland and Labrador in 2041.

“I believe the (power) contract ends. Then I don’t know what happens after the contract ends,” Malamed said.

Read full story: Nalcor confident in Muskrat Falls decision

Tuesday, Sept. 25

Questions for Grant Thornton auditors finish Tuesday with agreement by most interveners that the appropriate groundwork had been laid for the days ahead.

Lawyers for several parties, including Nalcor Energy and former CEO Ed Martin’s own lawyer, Harold Smith, pose questions that highlight the auditors were making observations not judgment calls on what should or should not have been done.

Harold Smith (left) speaks with his client, former Nalcor Energy president and CEO Ed Martin, during a break in the Muskrat Falls Inquiry proceedings Tuesday in Happy Valley-Goose Bay.
Harold Smith (left) speaks with his client, former Nalcor Energy president and CEO Ed Martin, during a break in the Muskrat Falls Inquiry proceedings Tuesday in Happy Valley-Goose Bay.

Des Sullivan of the Muskrat Falls Concerned Citizens Coalition and author of the blog Uncle Gnarley, says the basics set out by the auditors show key areas for further questions, particularly on the way Nalcor determined the risk of cost overruns. He says coalition members still feel the audit is vindication of their past comments and adds he expects “low-balling” of project risk in cost and schedule will become a major story from the inquiry. 

Evidence is entered on the use of a “P50” probability factor — a 50 per cent chance of cost overruns — in weighing contingency to be considered in cost estimates. By the end of questioning, it is noted other projects had used the P50 value in considering potential project costs, including reference to Manitoba Hydro.

Chris Peddigrew (right) with current Consumer Advocate Dennis Browne.
Chris Peddigrew (right) with current Consumer Advocate Dennis Browne.

“You have to get the full facts on the table and I thought that happened this week,” Ed Martin tells The Telegram as the inquiry prepares to move to its next witnesses.

Consumer Advocate Dennis Browne tells The Telegram the auditors’ report has provided context for the days to come. 

Questions relating to the PUB’s limited review of project options are cut off following an objection suggesting the auditors were not the appropriate witnesses to speak to that early review.

“We’ll have our chance,” to ask questions on another day, consumer advocate representative Chris Peddigrew says.

Bob Moulton and Auburn Warren of Nalcor Energy are called to the stand. Paul Stratton is absent due to illness. The group is set to continue testimony the next day.

Read full story: Questions for auditors wrap up at Muskrat Falls Inquiry

Wednesday, Sept. 26

Nalcor’s predictions are explored as three staffers are questioned on the demand forecasting, and power generation plan.

Paul Stratton, senior market analyst, addresses questions about forecasts of customer demand for power and the load forecasts he developed before the project’s sanctioning. He’s questioned on the 50-year load forecast he developed, covering to 2067 — 50 years from the original Muskrat Falls in-service of 2017. Stratton says he developed a 20-year forecast first and then extrapolated beyond the 20-year mark.

Ultimately, Stratton says he would not have approached his forecasting differently if given the chance to do it all over.

Bob Moulton, a system planning specialist with N.L. Hydro, talks about potential for power generation at facilities throughout the province, and the planning for the introduction of new sources of power.

Auburn Warren, Nalcor Energy’s general manager for commercial, treasury and risk, answers questions about financing costs and the consideration of those costs, including interest during construction.

The inquiry completes the cross-examination with the Nalcor panel and scheduled work in Labrador.

It returns to St. John’s to continue hearings on Monday.

Read full story: Nalcor’s predictions explored at Muskrat Falls Inquiry

Other highlights

Cost changes: During testimony at the Muskrat Falls Inquiry Wednesday, it is noted estimates for the regular operating and maintenance costs for the project have changed again.

The annual costs were originally estimated at $34 million. Stan Marshall in 2017 said costs stood at $109 million. But as reported to the Public Utilities Board, and noted in testimony at the Inquiry on Wednesday, the most recent estimate is $85 million a year.

Meanwhile, back on the island, a free Muskrat Falls symposium is scheduled at Memorial University in St. John’s Friday, Sept. 28 and Saturday, Sept. 29 is open to all. It is hosted by the faculty of humanities and social sciences at MUN who encourage members of the public to attend one or more of the free sessions.

Read full storyMuskrat Falls symposium at Memorial University open to all

Coming Up

Former premier Danny Williams is scheduled as the first witness on Monday.

Next on the witness schedule (subject to change) is a panel to speak to Indigenous consultations and related issues, with recall of president of the NunatuKavut Community Council, Todd Russell, Prote Poker representing the Innu Nation, and Aubrey Gover for the Government of Newfoundland and Labrador.

Carl McLean and Rodd Laing will appear on behalf of the Nunatsiavut Government, with Jean-Charles Piétacho, chief of Conseil des Innu de Ekuanitshit.

Other related stories:
Astaldi expected to complete Muskrat Falls work

Week 1 of Muskrat Falls Inquiry

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