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No change in Muskrat Falls cost and schedule … yet, Marshall says

Nalcor Energy CEO Stan Marshall speaks to reporters Thursday in the executive boardroom at the Crown corporation's headquarters in St. John’s.
Nalcor Energy CEO Stan Marshall speaks to reporters Thursday in the executive boardroom at the Crown corporation's headquarters in St. John’s. - Joe Gibbons

CEO says there remains plenty of risk before project completion

ST. JOHN'S, N.L. —

Nalcor Energy CEO Stan Marshall says he’s sticking with the $12.7-billion estimated cost of the Muskrat Falls project, but there’s still plenty of risk between now and the completion of the hydroelectric project. 

Speaking with reporters on Thursday, Marshall said despite having to kick Astaldi Canada off the worksite, the ongoing issues with the Labrador-Island Link and some delays at Soldier’s Pond, he’s sticking with the July 2017 cost and schedule for the beleaguered project.

“When there’s reason to give an update, I’ll give an update. At this point in time, they’re telling me that software will be available at the end of 2019, so when we get to 2020 we’ll resolve the issues there. So, I have no reason at this point in time to change anything,” said Marshall. 

But an update to the cost of the project could be inching nearer. According to the July 2019 report by the Muskrat Falls Oversight Committee, the contingency reserve built into the $12.7-billion cost estimate is down to $140 million. The report also notes $835-million worth of risk with the project as it stands. 

Marshall says the information from the committee comes from Nalcor in the first place, so Nalcor is aware of that number.

There is always uncertainty with estimates, Marshall said.

“I can give no absolute assurances now, than I could in 2016-17. All I know is that’s the best estimate I have right now. I don’t have other estimates. A lot of the things we had in contingencies we had in the contract. We work with them. We’re still within our budget,” said Marshall. 

“For example, if there’s arbitration with Astaldi, they’re claiming something like $400 million — who knows where that’s going to go. I don’t think they’re entitled to anything, so there’s uncertainty with all this stuff. All I can say to you is the best information I have right now, on the most reasonable basis, I have no reason to change the number.”

When it comes to the Labrador-Island Link (LIL), software concerns still remain. General Electric continues to work on the software, which was due to be completed in August. 

Marshall said he expects to have basic software available to Nalcor to operate the link by the end of the year, but after that comes troubleshooting for bugs.

“When Microsoft develops a new Windows, there’s always going to be bugs there. They might not appear for years. What you want is an operational system. It should be able to get there fairly quickly,” he said.

“I’d say all the controls have to provide for all kinds of eventualities. The more common ones, you recognize fairly quickly. Within months, you should have an operational system. But then you’re trying to work through the more detailed ones, the more complex ones. I’d say in a couple of years you should have a pretty reliable system.”

"I’d say in a couple of years you should have a pretty reliable system.” — Stan Marshall

As for future development on the Churchill River, Marshall says the Gull Island project remains in the mandate of Nalcor Energy. Despite the well-documented issues with the Muskrat Falls project, there’s still great potential in even more hydroelectric developments on the Churchill River, Marshall said. 

“Don’t be scared now, just because you made a mistake over here, that you can’t pursue opportunities. You have to have a vision. You have to understand risk,” he said. 

Ultimately, a Gull Island project would be meant for exporting and selling electricity exclusively, so it would not be developed under the same agreements that led to Muskrat Falls, Marshall said. 

As it stands, there are no conversations happening with Hydro-Québec that could mean an extension of the Churchill Falls contract beyond 2041, Marshall said, adding that he would be speculating to say for certain that no changes to the length of that contract are possible. 

“I deal with my counterpart all the time. I have a coffee, we have a discussion about a whole slew of things,” he said. 

“Is there anything serious or immediate? No. If there was, I couldn’t talk to you about it.” 


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