On Muskrat Falls, Fortis fails to live up to its name

(The following Essay, written by Uncle Gnarley scribe, was published in The Telegram 30/08/2012 and is provided here for Blog readers.  To date, neither Fortis Inc. nor its subsidiary, Newfoundland Power Co. Ltd., have offered an explanation for their complete silence on the Muskrat Falls project eventhough it will have a significant negative impact on their 227,000 captive customers in Newfoundland.  Their customers deserve better.)

A few weeks ago, I took a phone call from a well-spoken
young lady from Newfoundland Power.  Her
purpose was to inform me that electrical power rates, beginning July 1, 2012,
would increase by 7%.  She could not have
known my thoughts at that time.  I did
not want to seem ungracious, so I thanked her and ended the brief
conversation. 

Perhaps, it was good PR. 
The power utility wanted to save me, and other commercial customers ‘rate
shock’; it thought a little advance warning was necessary.  The caller was an able representative of her
company.  Yet, I could not help thinking
that Stan Marshall, President and CEO of Fortis Inc., parent company of
Newfoundland Power Co. Ltd. (NP) was really the person with whom I wished to
speak.  Why?  It was not because of this shock, but because
of all the rate shocks that are pending, for both commercial and residential
customers, as a result of the Muskrat Falls project.


NP distributes virtually all the power required by on island
consumers.  As the regulated power utility,
it profits from that service. That’s fine. 
The company’s shareholders have a right to a return on their investment.

However, corporations, like Fortis (and through it, NP),
also have a civic responsibility, no differently than individuals do. They
benefit from our laws and institutions; they pay taxes, but they have the
protection of operating within a modern and civilized society; hence, they have
an obligation to contribute to it, even when their Boards and CEOs feel
uncomfortable being at odds with the government. 

Because NP has accounts with virtually every household in
the Province and is a regulated utility, it is different from most other
companies; implicitly, it bears some of the burden of price and consumer
protection, insofar as the consumption of electricity is concerned. 

Accordingly, NP has a fundamental role to play in the
Muskrat Falls project. Its corporate interests and those of its customers are
more directly aligned than those of most service providers.  Therefore, it has a social responsibility, to
take a position in the Muskrat Falls debate.

Fortis Inc. boasts expertise in hydro-electric facilities in
the U.S., Alberta, B.C., as well as in this province and has built
hydro-electric facilities in western Canada and Belize.   It is a successful company with homespun
roots; it has comfortably made good profits here.

It is all very well that the corporate leadership prefers to
escape the prospect of offending the politicians who have the ability to make
life difficult for companies exposed to their whims, their ignorance and  bad public policies.  But Newfoundland and Labrador is not Belize,
or anywhere else Fortis may have been treated poorly.  Fortis Inc. owes its customers and the public
generally, the benefit of its substantial experience, expertise and guidance.

Fortis decided not to present before the PUB on Muskrat; a
serious omission, not lost on many observers. 
It chose to leave the matter to a plethora of individuals who did not
have the advantage of the funding, experience or research found at Fortis.  Inside the corporate boardroom, Directors were
likely impressed by the contributions of several individuals, who clearly had
an impact on the PUB.  They must have
jeered at the premature and poorly articulated conclusions of the province’s Consumer
Advocate.  Yet, the company stayed
silent, even as one individual ratepayer, preferring to remain anonymous, saw
fit to submit a 165 page Report to the PUB; such was his concern as to its
prospect for failure.  Fortis did not
lift a finger to engage the process.  It
chose to hide.  

Indeed, if Fortis Inc. supports Muskrat Falls, as a
necessary and viable concept and the best option for replacing Holyrood, its
CEO should say so.   Clarity is always favoured
over silence. But it requires more courage, too.

Fortis enjoys significant political clout in this Province and
is able to articulate its own interests, as it did, last year, when it weighed
in on the City regulations governing the height of its downtown office tower.  The CEO of Fortis Inc. enjoys the reputation of
not being a shrinking violet on behalf of shareholders.  Regretfully, when courage is demanded by its customers,
the same CEO chooses to cower rather than tell government, or a concerned
public, what he really thinks.

Corporate social responsibility is not just about
contributing part of its profits to worthy causes; nor is it only about
operating sound profitable companies. 
Fortis does both very well. But a good corporate citizen will also be
prepared to ruffle some egos, if necessary, and advise those in positions of
power that the standards that apply to government decisions should not stray
too far from those expected of private corporations. 

Fortis Inc. has an opportunity to be a social force, to
reflect the qualities of courage and strength which its very name implies.  It can speak out, with knowledge and
authority and with a genuine concern for its customers; on this rarest of occasions,
such corporate interference in a public policy issue, was and is clearly justified.  The company has failed, so far, at least, its
most important test, ever.


If Muskrat Falls is the boondoggle, as many believe it to be,
we will think of the senior executives of Fortis Inc. and Newfoundland Power.  But not kindly.

Des Sullivan
Des Sullivan
St. John's, Newfoundland and Labrador, Canada Uncle Gnarley is hosted by Des Sullivan, of St. John's. He is a businessman engaged over three decades in real estate management and development companies and in retail. He is currently a Director of Dorset Investments Limited and Donovan Holdings Limited. During his early career he served as Executive Assistant to Premier's Frank D. Moores (1975-1979) and Brian Peckford (1979-1985). He also served as a Part-Time Board Member on the Canada-Newfoundland Labrador Offshore Petroleum Board (C-NLOPB). Uncle Gnarley appears on the masthead representing serious and unambiguous positions on NL politics and public policy. Uncle Gnarley is a fiscal conservative possessing distinctly liberal values and a non-partisan persusasion. Those values and opinions underlie this writer's views on NL's politics, economy and society. Uncle Gnarley publishes Monday mornings and more often when events warrant.

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1 COMMENT

  1. Nfld Power, together with Nfld Hydro,both mislead its customers in energy savings and energy efficiency issues in the Take Charge program.This is to the benefit of their parent companies, Fortis and Nalcor. Surely the CEOs know this or should this. And the consumer advocate, Johnson turns a blind eye to this as well. I pointed this out as to the false claims of savings with compact bulbs ( my presentation to the PUB). But this applies to many of their recommendations for energy savings, and even more so by major energy savers that the consumers is not being informed about. No wonder Fortis is silent. And if Muskrat Falls fails and is eventually sold to another party, wouldn't Fortis make a bid? Winston Adams