Governments run State Owned Enterprises (SEOS) the public have a right to be
confident they will be operated professionally. 
There are many ways to measure credibility, including Nalcor’s.

One might be
to count the number of residential style generators installed since
DARKNL. Just recently, I saw one group of workmen lift a monster version onto a
concrete platform for a private dwelling. 
It was attached to a 146 gal. fuel tank!  Is this the low point of confidence in Nalcor? I pondered the question doubtfully.

benchmark might require the evaluation of how Nalcor’s senior management treats
the public. Are they respectful? Do they treat the public like the the
shareholders they truly are? 

Off the top,
I suggest SEOS should be more than non-partisan; any politics ought to be
minimal. In the same way you never
hear of the CEO of the Newfoundland Liquor Corporation bolster any but the
policies of that Agency, so, too, has that been the case for CEOs of
Newfoundland Hydro; until now. 

Photo Credit: CBC
Nalcor CEO Ed
Martin likes to ‘gild the lily’; his style is less that of a bureaucratic Head of an SEO than
of a Cabinet Minister, an elected politician. He hasn’t learned the discretion
required of his role. Hubris may be the root cause; another possibility is that
he is compensating for politicians, who aren’t up to the job.

Certainly, former
Premier Dunderdale, Natural Resources Minister Jerome Kennedy, Premier Tom
Marshall and current Minister Derrick Dalley, deferred most questions on
Muskrat Falls to Nalcor.  Each one relied
upon scripted phrases like “we need the power” or “it’s the lowest cost
option”. Martin seems not to mind; he is content to meet the media and put unfettered
‘spin’ on his dialogue. 

Martin noted: “When
the Muskrat Falls Project was sanctioned…in December 2012, the estimated
capital cost of the development was $6.20 billion… (e)xternal market pressures,
combined with strategic investments to enhance system reliability, operation
and productivity throughout construction, have resulted in an updated capital
cost forecast for the project of $6.99 billion…..extremely competitive
construction industry locally, nationally and globally, have increased the
facilities capital costs on the project… Nalcor has also made several design
enhancements to improve system quality and reliability…”
What is wrong
with that narrative?  

In the first place,
the $6.99 billion figure is incorrect. The amount of $1.2 billion must be added
to reflect ‘interest costs during construction’. 

the media often repeats Martin’s assertions without qualification.  In so doing, they assist him in perpetuating “untruths”
regarding the project. 

Of course, the
original construction figure, like the number $6.99 billion, had no independent
authentication either; the public and the press accept the numbers are ‘real’ because
Nalcor says so.  Were they compiled using
good engineering practice? Was the original figure just a ‘plug’ to facilitate project
sanction? Some very well placed people worry that is the case.

Martin never
explained why the “design enhancements” occurred so late in the design phase of
the project; the PUB warned him about an under-designed Labrador Island Link (LIL) at the DG-2 stage. Then,
too, he was warned by a good many critics of the cost pressures on all
megaprojects; that he was compounding local inflation by untimely adding to the
work at the Vale and Hebron projects, among a plethora of smaller ones.  The Nalcor politician does not get asked: why
has he not listened?

On April 15,
2014 the CBC quoted Martin saying “the hydroelectric mega-project also might
not deliver first electricity by 2017 as planned”.  The comment wasn’t squared with those of the
Emera CEO, Chris Huskilson, who a few weeks later who commented to the effect that Muskrat is still on schedule.  Nalcor simply concurred. When Ed Martin makes
a statement he is right; when he contradicts himself he is still right.  Ostensibly, when Martin is wrong, he is right.  Who would notice? Perhaps more people than you think.

The piece de
resistance was spoken on July 26th “Update” in this line of Nalcor’s
Press Release:

“Over the life of
the Muskrat Falls Project, significant value and cash flows in excess of $30
billion will be generated by the project. This will provide a substantial
benefit for all Newfoundlanders and Labradorians,”
said Martin.
Why, after just acknowledging project cost increases of $800 million would Martin raise the issue of “cash flow”, except to impress an
uninformed press that any cost increases are still good for the public?  It’s not as if “cash flow” is “profit” though
you are forced to wonder if such confusion was exactly what was intended.  Neither is it the case that a large share of
that “cash flow” will arise from the sale of power to the export market.

Exported power will be sold (to Nova Scotia) for a mere fraction of its
development and transmission cost.   

Hence, the
lion’s share of Muskrat “cash flow” is flowing out of island ratepayers’ pockets
and into Nalcor’s pocket, on its way to the Bondholders or to pay back the Province for supplying the increasing amount of borrowed equity required to fund the project. Are you feeling richer yet?

Martin says the $800 million represents only another $8 per month on residential power bills.  He offers no reminder that rates are artificially kept low in the early years following Muskrat’s commissioning.  He hopes you won’t mind that both you and your kids will get whacked later. 

It’s not a
good feeling watching electricians busily installing the domestic generators
that will make Nalcor’s management practices irksome rather than painful for
those who can afford a “back-up” power system. Then, too, when so much money
from the public purse is being used to fuel ‘bafflegab’, you know that Nalcor
ought to be headed, not by a PR man, but by someone who can keep the lights on.

Nalcor’s CEO
might get more respect if he were more candid and behaved less like he is
fighting the next election.

That shouldn’t be too much to expect; but it is.
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.


Bill left public life shortly after the signing of the Atlantic Accord and became a member of the Court of Appeal until his retirement in 2003. During his time on the court he was involved in a number of successful appeals which overturned wrongful convictions, for which he was recognized by Innocence Canada. Bill had a special place in his heart for the underdog.

Churchill Falls Explainer (Coles Notes version)

If CFLCo is required to maximize its profit, then CFLCo should sell its electricity to the highest bidder(s) on the most advantageous terms available.


This is the most important set of negotiations we have engaged in since the Atlantic Accord and Hibernia. Despite being a small jurisdiction we proved to be smart and nimble enough to negotiate good deals on both. They have stood the test of time and have resulted in billions of dollars in royalties and created an industry which represents over a quarter of our economy. Will we prove to be smart and nimble enough to do the same with the Upper Churchill?