Whether or not Bennett and the Liberals break some of their election promises (no layoffs; no privatization in the health-care system), it’s a fairly safe guess she and her assistant, Dwight Ball, won’t do the two things that would most aid the province financially: kill the Muskrat Falls hydroelectric project, and disband Nalcor Energy.
There’s no need to rely on anything the so-called “naysayers” have long said about this multibillion-dollar money pit — instead, tune in to the critique of internationally renowned accountancy firm Ernst & Young (EY).
This week, the provincial government released EY’s interim report into the progress at the sinkhole in Labrador.
In the section titled “Review of Project Cost, Schedule and Related Risks,” the only thing EY reports going up fast, predictably, is the cost.
Nalcor Energy told the public in September 2015 that the revised estimate for the final, total cost of Muskrat Falls had gone up, to $7.65 billion.
Not so, EY says in its April review of the project. It will be more.
“The overall conclusion of the Review is that the September 2015 Forecast is not reasonable,” EY’s report states.
“Not reasonable” is a diplomatic way of saying “wrong.”
Nalcor Energy was wrong. Muskrat Falls will cost more than the currently claimed $7.65 billion. EY says so, and they know a bit about counting dollars.
How much more will the dam thing cost? EY doesn’t specify, but the report doesn’t hold much hope for optimism: “… in the course of conducting the Review, EY has observed that certain elements of governance and reporting arrangements have not been effective in respect of the Project’s costs and schedule forecasts to date. There is a need to strengthen Project governance and reporting to provide more effective oversight and constructive challenge to Project performance and execution, key decisions and forecasting.”
That’s the viewpoint of professional accountants.
The viewpoint of ratepayers, however, must be shorter and more pointed: “I thought we were paying Ed Martin $685,000 a year to do that.”
As is common in these types of reports, EY uses soft diplomatic language so as not to offend or castigate.
“Project governance and independent oversight should be re-evaluated by the Provincial Government and strengthened at the Project, Nalcor Board and Provincial Government levels.”
Translation into common language: “Some people aren’t doing their jobs, and they must be made to do them.”
Which naturally brings us back to Nalcor president and CEO Ed Martin and his annual salary that is more than three times that of the premier.
No one at Nalcor will ever say, “The buck stops here,” because the Crown corporation’s attitude — along with the Tory and then Liberal provincial government — has always been that whatever costs arise, the ratepayers will be good for it.
That is why, a mere couple of years after Muskrat juice begins to flow, your monthly power bills are forecast to go up about 50 per cent. And they will keep going up for 50 years. It almost makes you nostalgic for the wisdom of the Upper Churchill deal.
As has been the case all along, the naysayers are a step ahead of the professionals. They said the project’s costs would go up. EY eventually proved them right.
Some of the naysayers have advanced to suggesting the Muskrat Falls project should be killed. The cliché “throwing good money after bad” comes to mind. It’s better to cut our $4-billion loss than to carry on and double our losses, and keep paying for our foolishness for a half-century.
Ed Martin would disagree. A guy who makes $685,000 a year must know what he’s talking about.
Brian Jones is a copy editor at The Telegram. He can be reached at [email protected].
