The public inquiry announced Nov. 20 is focused mainly on the cost of construction; it ignores the environmental impacts and impacts on average citizens through higher rates and cutbacks in public services. The terms of reference are focused on the mistakes of the past and do not address the flawed business model. It should be looking backward and forward, seeking the best business model for the project’s future operations, beyond 2020. The silence of the terms of reference on the post-construction operational phase assumes the problems will end once construction is completed.
Instead, the end of construction will be the beginning of a protracted period of tribulation during which we will have to service and repay huge debt. The cost of operating our electric utilities will rise from $700 million to $1.5 billion and rates will double immediately! Instead of injecting economic stimulus, the project will cause revenues to be vacuumed out of the economy.
The inquiry should be conducted in two phases, similar to the Ocean Ranger Inquiry. The first phase of that inquiry reported on events leading up to the sinking of the rig in February 1984. The second reported on the changes needed — better training, equipment and regulations — to reduce the risk of such disasters in the future.
The priority for the inquiry has to be to find alternatives to the flawed business model: 1) the illegitimate estimates prepared for sanction; 2) the take-or-pay power purchase agreement; 2) the ineffectual water management agreement; 3) the lopsided Emera deal that sees Nova Scotia take the majority of the power at a small fraction of the costs; 4) the inevitable collapse of demand, when rates double. Many options must be considered, including mothballing the assets.
There should be an interim report six to nine months into the inquiry to improve management practices for the completion of the project. Even though the project is reputed to be 85 per cent complete, it will be at least three years before full power, allowing time to make the project better.
The final report should deal with both the business model for the project’s operational phase, which will extend from 2020 to 2070 and beyond, as well as with the past failure of due process in decision-making and divergences from best practice in project management. We cannot change the past but we can reshape the future with a more realistic business plan.
It has been suggested that other matters, such as environmental impact, can be addressed by the commissioner under the residual clauses in the terms of reference. This is misleading. The environmental impact has been marginalized from the outset, as reflected in the disdainful treatment of the joint panel report recommendations by both the federal and provincial governments in 2012. This marginalization of environmental impacts continues in these terms of reference.
The commission should be explicitly mandated to review the environmental assessment process, along with the environmental oversight undertaken by the province. The risks arising from the North Spur and methylmercury cannot be ignored. Nor can the commission ignore the need for an ombudsman or independent dispute resolution process where grievances concerning such risks can be heard. The omission of any reference to the environment is a clear signal to the commissioner that this subject is outside of his mandate.
Government would have been well-advised to undertake consultations with the public, rather than rely on the public service to write the terms of reference. Their tone suggests an effort to deflect responsibility from governments past and present, and to make Nalcor the scapegoat. At the same time the language suggests a singular reliance upon Nalcor as principal adviser to governments past and present, and a disdain toward the views of ordinary citizens, whose warnings continue to be ignored.
The biggest failure of Muskrat Falls is the failure of the democratic process, which allowed all the warning signs to be ignored. The reports of the joint panel and the PUB both raised red flags. Many knowledgeable people and institutions, including Newfoundland Power, remained silent. Why?
And why are the terms of reference silent on the failure of democracy in Newfoundland and Labrador?