Another Dam Christmas Carol: The Ghost of Muskrat Madness

The Ghost of Muskrat Madness, or what the Economist now calls “a dodgy dam in Canada’s east,” will be busy over Christmas.

Expect the Ghost to be visiting every NDP MLA and cabinet minister and showing them a chaotic future where the public interest is attacked and undermined by Crown agencies and politicians. They’ll see scenes of public anger, fiscal ruin, river destruction, First Nation litigation, ballooning provincial debt, outrageous hydro prices, calls for forensic audits — and then electoral defeat.   

By approving Site C, Premier John Horgan has guaranteed that every underpaid and overworked Bob Cratchit in B.C. will pay a heavy price for his bad governance and that First Nations will pay the heaviest price of all in the loss of land and sovereignty.

The Ghost of Muskrat Madness can explain the full tragedy just by describing the disastrous problems at a hydro mega-project in Newfoundland.

To pay for the dam, which is over budget and behind schedule, citizens of Newfoundland and Labrador will see their electricity rates rise to 23.4 cents per kilowatt hour by 2022. That is twice what the average Canadian now pays. The project, one academic warned, could push the indebted province into insolvency and even force a massive federal bailout.

The Muskrat Falls mega-project began with promises of prosperity and “clean energy” (remember that beguiling and popular Christy Clark mantra?) in 2010 when the Newfoundland government of Danny Williams approved the $6.2-billion project on the Lower Churchill River.

The idea was to send power from Labrador to Newfoundland then on to Nova Scotia using undersea transmission cables. A government Crown agency, Nalcor Energy, was given the job.

The Newfoundland government quickly exempted the mega-dam from full Public Utility Board review — the province’s version of the BC Utilities Commission — on the grounds that it was an export-only project.

The Ghost of Muskrat Falls will guide NDP MLAs through a graveyard of ignored warnings from a joint federal-provincial review panel and the Public Utilities Board.

The two groups raised several red flags. They warned that Muskrat Falls might never generate enough revenue to justify its $6.6-billion cost and presented a high fiscal risk for a small province with an aging population. The government was urged to take a rigorous look at alternatives.

In addition, they suggested Nalcor’s load forecasts were exaggerated, the same claims made by critics of Site C. They said that there was no guarantee that export markets would deliver a decent economic return or that undersea transmission cables would be secure or reliable.

Protectors of the public interest warned of potential cost overruns and the federal review panel noted that “Nalcor has not demonstrated the justification of the Project as a whole in energy and economic terms.”

A joint federal-provincial panel on Site C reached some of the same conclusions: given the dam’s high environmental costs, where was need for the power?

But just like former premier Christy Clark and Horgan, the Newfoundland government paid no attention to the concerns and approved the project in 2012. It ignored the best evidence and started to dig a big black hole in Labrador.

Then-prime minister Stephen Harper lifted the project off the ground by blessing the boondoggle with a multi-billion-dollar federal loan guarantee. (Trudeau later added to the pile of cash.)

As work progressed SNC Lavalin, the original contractor, came to consider Muskrat Falls a disaster in the making. With the project barely 20 per cent complete, SNC Lavalin sent a secret report to Nalcor’s executives.

The report detailed incompetence and a lack of technical and logistical readiness at the project.

SNC Lavalin identified 52 risks, including geotechnical deficiencies such as unstable slopes, and added that 90 per cent of them were rated “VERY HIGH,” which was “unusual for a project in execution.” It predicted cost overruns to be around 39 per cent and concluded the project would eventually cost $10 billion.  

That report should have killed the white elephant, but it was hidden from the public until 2017. By then, costs were estimated at $12.7 billion.

When the document finally surfaced earlier this year, Premier Dwight Ball said the Lavalin report reflected “a project that was poorly planned, a project that had no meaningful engagement, was ill-conceived, and reckless.”

In much more polite language, reports by Deloitte and the BC Utilities Commission said similar things about Site C this fall, but the Horgan government ignored these findings.

But the Ghost of Muskrat Falls has more to show the frightened MLAs as the scene now turns to the myth of reconciliation and how the Newfoundland government did not fulfill its duty to consult. 

The Ghost will fly over the protests and hunger strikes by Inuit concerned with the threat of methylmercury contamination. The MLAs will see hundreds of RCMP officers brought in to defend the project.

The NDP MLAs will even see a federal politician tweeting that Indigenous people should eat “less fish” if they were concerned about mercury contamination.

The Ghost will then explain the basic science. The flooding of soils and vegetation confirmed that the flooding of Muskrat Falls will double exposure to methylmercury among the Inuit who live downstream. Site C will also result in the increased levels of methylmercury, though on a smaller scale.

And the Ghost will show MLAs the failures of the Muskrat Falls oversight committee — like the one Horgan has established for Site C.

In 2014, as costs escalated and contractors squabbled, EY — the consulting firm formerly known as Ernst & Young — found that Nalcor wasn’t doing much right and recommended the government set up a project oversight committee because “Fully quantified risks or trends have not been documented.”

A year later the committee dutifully noted that the project was significantly behind schedule and the budget — then $7.65 billion — was “under review.”

In the next three years the oversight committee watched as the risks, costs and schedule went haywire and the budget climbed to $12 billion.

Despite the growing cost-over-runs and mercury protests and serious geotechnical concerns, the Oversight Committee kept on describing the project as cleanly impressive. Muskrat Falls, boasted one report, is the “Province’s largest and most important major capital projects. It will provide residents of the Province with clean, reliable energy at stable prices.”

And then the Ghost of Muskrat Falls will show the B.C. MLAs Uncle Gnarly, the blogging name of Des Sullivan, a former political aide and well-known real estate businessman in St John’s.

His popular and prophetic blog has documented the project’s problems and the undermining of the public interest in a way the national media largely failed to do between 2012 and 2017.

When an anonymous engineer resigned from Muskrat Madness a year ago, he didn’t go to the press, but explained his reasoning to Uncle Gnarly.  

“I could not put up with falsifying information anymore,” Sullivan quotes the engineer. “To begin with, the original cost of $6.2 billion on which the project was approved was a complete falsification. The estimate was deliberately kept low — below $7 billion, so as to appear favourable relative to the cost of thermal power generation.”

“The likely costs were known about three years ago, but Nalcor management kept it a secret, steadfastly denying that there were major schedule delays and cost overruns, until it was no longer possible to hide the true status with the election of a new Provincial Government,” the departing employee added.

The Ghost will show Uncle Gnarly warning of grave problems.

“Only the most partisan will not allow for the possibility that significant commercial crime has taken place with respect to Muskrat Falls,” he has written. “No society can bounce back and grow with a big question like ‘Was Justice Done on Muskrat?’ hanging over its head.”

Toward the end of his visitations, the Ghost will skip over risks of faulty transmission lines, unresolved geo-technical issues that could result in the flooding of Indigenous communities and other debacles.

He’ll show MLAs a press conference. In attendance is a guilty gaggle of cabinet ministers and the premier of Newfoundland, who announces a judicial inquiry into the project, now more than $6 billion over budget.

Before the Ghost of Muskrat Madness returns the MLAs to their beds, he will make one last stop at the Ontario offices of Tom Adams, an independent energy and environmental advisor.

The Ghost will show Adams writing about the rot in Ontario’s power system, the same rot corrupting arrogant utilities across the nation.

“We cannot operate a modern industrial economy without an effective power system. We’ve allowed our power system to drift into parasitism. It used to be that the purpose of the power system was to serve the customer. Now, that’s not the case. The remaining customer service component of the system is increasingly a smoke show to cover up what is really going on.”

After the haunting visitation by the Ghost of Muskrat Madness, not a single NDP MLA will have a good night.

Nor should they.