Well, a company affiliated with Nalcor Energy has won one court battle — but it remains to be seen whether it will win this particular legal war. And whether we’ll all lose in the process.
It’s a case I first wrote about last May, when an electrical cable manufacturer was trying to have a lawsuit dismissed: the Labrador-Island Link Limited Partnership (LILP), the company building the power line across the island, was suing the cable manufacturer for $57.5 million in damages, and the manufacturer was complaining that the lawsuit should have been handled through a contractual dispute mechanism.
But an interesting part — like so many things in the world of Muskrat Falls — comes out of the details of the case.
When the LILP discovered there were problems with the cable, 170 kilometres of it were already on towers. The problem was “prouding,” where a strand or strands of a cable bulge out of shape, deforming the cable.
The LILP went back to the cable manufacturers, General Cable of Highland Heights, Kentucky, and asked for a fix. (The LILP should probably have caught the problem much earlier: in tests before the cable was even strung up, the LILP had determined that prouding was occurring. General Cable insisted they’d fixed the problem, but you’d think forewarned would be forearmed.)
Here’s where it gets interesting: General Cable said it could fix the problem by taking 150 reels of cable and modifying them by stripping off the outer layer of the cable and reapplying it. But not for free.
In the interests of keeping the project from falling behind schedule, not only did the LILP have General Cable fix the problem, the LILP agreed to issue a change order on the original contract and pay for the repair costs, but keep the option to seek restitution later.
An email from Jason Kean, a representative for the LILP, read, “Notwithstanding this, we are willing, in good faith, to attempt to proceed with the project without further delay, to pay you for the modification costs. However, we will not (and cannot be expected to) relinquish any of our potential rights or remedies associated with the original supply, especially since the technical investigation indicates that the originally supplied conductor is not in conformance with the requirements of Agreement PT0328. Consequently, the issue of liability will be set aside for the time being in order to proceed with the project.”
Still, if you think someone else made a mistake and you’re the one paying millions to fix it, it feels a little bit like adding insult to injury.
Think of it this way: you take your car to the garage for a new motor, but the one they install doesn’t work. They put in another motor to fix the problem. Not only do you agree to pay for installing the faulty motor, but for the new motor as well, and say, “That’s OK, we’ll fight about who is responsible later on. I need my car.”
Only, in this case, replacing the faulty motor cost $57.5 million.
You can understand that the LILP was over a barrel; the company had issued a stop-work order on stringing the faulty cable, and dealing with the problem in the courts could have dragged on for years. And work still needed to be done.
Still, if you think someone else made a mistake and you’re the one paying millions to fix it, it feels a little bit like adding insult to injury.
As I said at the start, the LILP has now won a small part of the battle: General Cable’s bid to have the LILP lawsuit thrown out because the LILP didn’t properly go through a contractual dispute mechanism has failed.
The rest, in due course, will go back to the courts, where hopefully, the LILP will be able to recover the money it spent to fix what it calls a “defective” product.
Otherwise, it will just get added to — wait for it — our tab, as electrical ratepayers.
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Russell Wangersky’s column appears in 36 SaltWire newspapers and websites in Atlantic Canada. He can be reached at [email protected] — Twitter: @wangersky.
