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Right decision was made, Kathy Dunderdale tells Muskrat Falls Inquiry

Former premier Kathy Dunderdale at the Muskrat Falls Inquiry in St. John’s Thursday.
Former premier Kathy Dunderdale at the Muskrat Falls Inquiry in St. John’s Thursday. - Joe Gibbons

Former premier says, in hindsight, she would insist on different approach to cost estimates

Former premier Kathy Dunderdale maintains that at the time the decision was made the Muskrat Falls project was the right project for meeting the province’s power needs.

She does not approve of the current $12.7-billion price tag (including financing and interest). But that was also not the project she approved, she told the Muskrat Falls Inquiry.

Dunderdale was the last witness for the first phase of the inquiry and finished her testimony Thursday. Throughout her time on the stand, since Monday, she was unflappable and defended the work of the public servants active within the government under her watch, as well as the work of Crown corporation Nalcor Energy.

She said the corporation gave her the options and, with review, there was a clear preference.

"It definitely happened,” she said, when pressed by lawyer John Hogan (for the Consumer Advocate) on how the project cost has increased so dramatically from the original $6.2-billion estimate (not including financing).

Hogan challenged her in response, saying there were no guarantees the final price would be $6.2 billion — as Dunderdale acknowledged more than once — and ratepayers were locked in to paying for the project.

She said she saw — and still sees — some possible relief for ratepayers in the sacrifice of an internal return on equity, or returns from excess power sales from the project. She testified she didn’t want to direct at the start where those benefits would go, so as not to tie the hands of future governments.

As for any barriers in the mitigation ideas inside the standing commercial contracts around Muskrat Falls? She said she couldn’t speak to the exact legalities, but she believes it can be done.

“Governments can do a lot,” she told Hogan.

What it possibly means for the government was not a topic of great discussion.

Later in the day, Commissioner Richard LeBlanc asked the former premier to consider the work he has ahead of him, including making possible recommendations on how the province should approach any megaprojects in future.

Asked about P factors, or probability factors, Dunderdale said — stipulating it to be only in hindsight — she would not approve a project now on a P50 level of confidence, but demand a P75- to P90-level estimate instead. That level of confidence would increase the cost estimate.

Throughout, Dunderdale denied any suggestions that she was being led along by her predecessor at any point, or by Nalcor Energy, or by its president and CEO Ed Martin, in getting to the final approval for Muskrat Falls.

Consumer Advocate Dennis Browne told reporters he believes Nalcor Energy did have undue influence, acknowledging it is something LeBlanc will have the final say on.

Browne insists Muskrat Falls power is not the lowest-cost power, but also was not the lowest-cost power at the time of its approval. He questioned reliability in the project plans, citing testimony from Newfoundland Power president Peter Alteen earlier this week.

Browne said he believes there was an “unholy alliance” between Nalcor and the government.

“They were successful in getting their (project) sanction, but what they tried to produce hasn’t been realized and cannot be realized,” he said.

— Dennis Browne, Consumer Advocate

As was noted during Dunderdale’s testimony, even the most conservative estimates for the project put to her or executives at Nalcor Energy before sanctioning would not have met the current level of cost estimated on the project.

Phase 2 hearings for the inquiry will begin in February, and will take a closer look at what actually drove up the costs to the current level as construction progressed. The project’s current estimate includes a capital cost of $10.1 billion, reaching $12.7 billion with financing costs and interest.

The inquiry will have a Phase 3 in 2019, looking at potential systemic matters and public policy, with final submissions scheduled to finish in August 2019.

LeBlanc’s report to the government is due at the end of 2019.

Twitter: @TeleFitz

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The Muskrat Falls Inquiry

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