Canadian Manufacturing

Inquiry into huge cost overruns at Muskrat Falls megaproject to begin in January

The hydro project has almost doubled in cost since it was approved five years ago. Power production is not expected before 2020, two years behind schedule

November 20, 2017  by Sue Bailey, The Canadian Press

An aerial view of the spillway at the Muskrat Falls hydro site. PHOTO: Nalcor Energy

ST. JOHN’S, N.L.—A public inquiry into how the Muskrat Falls hydro project in Labrador went billions of dollars over budget will report by Dec. 31, 2019—just after the next provincial election.

Interim NDP Leader Lorraine Michael said Monday the governing Liberals had other options.

“A forensic audit in and of itself can get an awful lot of answers much more quickly than this full review,” she said after Premier Dwight Ball announced hearings will start in January.

“I don’t know why from the beginning they’ve refused to do that.”


Ball said Richard LeBlanc, the provincial Supreme Court judge who will lead the independent inquiry, deemed the timeline necessary. No price tag for the process was available Monday.

LeBlanc has the power to order a forensic audit if he sees fit but his terms of reference are much broader, Ball told a news conference.

“While we cannot undo the past we can learn from it,” he said. “Muskrat Falls is on the minds of all Newfoundlanders and Labradorians, deservedly so. Today marks the start of getting the answers.”

The $12.7-billion project—which will also provide energy to Nova Scotia through the underwater Maritime Link—has almost doubled in cost with financing since it was approved five years ago.

Full power is not expected until 2020, about two years behind schedule. Electricity rates are expected to double for consumers by 2022, which Ball says is an “unacceptable” burden he’s working to mitigate.

The inquiry will examine how the Labrador project was approved and executed, and why it was exempt from oversight by the Public Utilities Board.

LeBlanc is to make recommendations but will not make findings of criminal or civil responsibility.

Ball said Monday the governing Liberals inherited the project from the previous Progressive Conservative government which approved it.

Former premier Danny Williams announced it with fanfare in 2010 before leaving politics to resume his business career.

“This is the legacy of a former PC government,” Ball said. “At the time, the decision was made not to put money into a legacy fund but into a legacy project.”

Williams has continued to defend Muskrat Falls as an asset that will pay dividends over the next 50 years.

“It is my hope that not only will the project’s alleged deficiencies be carefully examined but also that we might see the positive aspects highlighted for a complete and balanced picture,” he said Monday in a statement.

Ball said LeBlanc can compel evidence and subpoena witnesses. The premier also said he’ll provide his government’s cabinet documents, but it remains to be seen if efforts to analyse previous Tory government confidential records are challenged.

“We have nothing to hide,” said Opposition House Leader Keith Hutchings, who served in the Williams government. “What we did was (in) … good faith and the recommendation and information that was made available to us.”

Ball noted his government named Stan Marshall as the new CEO of Nalcor Energy, the Crown corporation overseeing Muskrat Falls, in April 2016.

Marshall has described the development, now 86 per cent complete, as an outsized “boondoggle” that should never have been built. He has also said initial cost forecasts were drastically low-balled but he hopes to correct course and finish strong.

The project near Happy Valley-Goose Bay is backed by a federal loan guarantee first approved under former prime minister Stephen Harper.

Ball said inquiry terms allow for input from Indigenous residents who’ve faced arrest and jail time for peacefully protesting potential methylmercury contamination of fish and other crucial wild foods. Many people living downstream are also concerned about the stability of the North Spur, a jut of sand and clay that will make up a key part of the dam.

Ball said an independent expert advisory committee has worked with aboriginal leaders on those issues.

Michael chided those efforts as too little, too late.

“Aboriginal voices have not been listened to,” she told reporters.