Top News

Editorial: Numbers game

The Muskrat Falls generation dam's spillway and powerhouse are shown in this in this October 2017 photo supplied by Nalcor Energy. Auditors testified Friday that Nalcor Energy didn’t adequately investigate energy alternatives before going ahead with the Muskrat Falls option.
The Muskrat Falls generation dam’s spillway and powerhouse, October 2017. — Photo courtesy of Nalcor Energy

The unexamined budget isn’t worth funding.

OK, that’s a fractured little riff on Socrates’ “The unexamined life is not worth living.”

And it’s something worth thinking about as the Muskrat Falls inquiry moves forward.

Economist Wade Locke was on the stand on Tuesday, and one of the questions asked by the inquiry counsel was whether Locke had independently checked Nalcor’s numbers when he prepared a public presentation saying Muskrat Falls was the right choice for the province.

That question is a recurring theme at the inquiry; former premier Danny Williams was asked the same thing when the inquiry raised the issue of why there apparently weren’t any reports and analysis prepared on the impact of the project on the province as a whole. Williams’ answer? Essentially, that when it came to energy projects, Nalcor’s staff were the specialists, and the province didn’t have greater expertise in the issue.

But what’s becoming abundantly clear is that everyone seems to have accepted Nalcor’s worldview.

Nalcor’s numbers may well end up being the crux of the entire inquiry. There’s already been the suggestion that the numbers were in some ways massaged; a forensic audit has suggested hundreds of millions of dollars of risk were assumed by the province and taken off the project costs, perhaps to make the project more attractive to Nova Scotian power regulators.

Still other questions have been raised about whether the Muskrat Falls option had its costs reduced on paper by accepting a broader standard of business risk than is usual for such projects.

But what’s becoming abundantly clear is that everyone seems to have accepted Nalcor’s worldview.

That very point was made by Manitoba Hydro International in 2012, when its review suggested that Muskrat Falls was right for this province.

MHI said, “The recommendations, opinions or findings stated in this report are based on circumstances and facts as they existed at the time MHI prepared the report. Any changes in circumstances and facts upon which this report is based may adversely affect any recommendations, opinions or findings contained in this report.”

More to the point: “With the assumptions and inputs provided by Nalcor to MHI, the Interconnected Island option remains the least cost option to meet the needs for capacity and energy to supply the forecasted load in Newfoundland and Labrador until 2067.”

The important part? “With the assumptions and inputs provided by Nalcor …”

The missing link right now seems to be not whether Nalcor was right or horribly wrong; that much is pretty much apparent. More important is whether the basic numbers and assumptions were ever questioned, and whether the failure to question those numbers was a crucial misstep by a government that had already convinced itself the project was the right one.

Here’s a saying about the process of crunching identical numbers through the same formula — unfortunately, it’s not from a philosopher as august as Socrates.

But it is succinct: “Garbage in, garbage out.”

Recent Stories