The Muskrat Falls inquiry is nearly over. The $12.7-billion debt lies ahead. It will burden several generations to come. No doubt the inquiry will duly determine that it was all so confusing. Math is hard. Everyone will be proceed with exquisite caution so as not to say anything that might upset one of the main players.
Newfoundland brought lawyers to an economists’ fight and as a result no one will grasp the subtleties because they don’t know what questions they should have asked and they wouldn’t know what to do with the answers anyway.
Muskrat was a demand-forecasting decision. Measured against Newfoundland’s own 70-year history of incremental micro-projects to add to capacity, Muskrat would have failed any comparison.
This is why Nalcor could never allow Muskrat to be compared to simply incremental micro-projects. Such a simple thing as introducing a 50-year-ahead cost model would do the trick for Nalcor. If the decision was Muskrat versus 50 years of expensive and unnecessary cross current control transformer (CCCT) generators representing the isolated island scenario, then, just barely, Muskrat gets in under the wire. Why not throw in a few more CCCT generators on the isolated scenario just for good measure? Now we have our Muskrat as “least cost.” Now we sanction.
Newfoundland brought lawyers to an economists’ fight and as a result no one will grasp the subtleties because they don’t know what questions they should have asked and they wouldn’t know what to do with the answers anyway.
But why is a 50-year-ahead cost assessment wrong? One reason is that technology and costs change so radically over 50 years, that estimating a CCCT construction 50 years from today is an absurdity. What inference should the inquiry draw from this 50-year-ahead Nalcor modelling choice?
The inference is that an absurd modelling method was intentionally chosen by Nalcor in order to artificially create the least-cost result. The inquiry will probably not draw this inference because Commissioner Richard LeBlanc will probably say he did not hear any expert evidence on this point.
An unbiased electricity producer, operating on non-government imperatives, would have gone on adding to megawatt capacity incrementally as Newfoundland had been doing for 50 years before; incremental micro-projects as needed at a rate of 25 to 50 new megawatts per year.
Oh? What’s that? Micro-projects were prohibited in 2006 as the government was trying to figure out how to justify Muskrat as “least-cost” electricity.
What inference should the inquiry draw from that fact? Or are these more facts that are not part of the inquiry and so not to be spoken to?
Edward C. Conway
Ottawa
