government of Premier Ball ran on a reform platform of “openness, transparency
and accountability”. It is time for them to show strong and decisive leadership
and assert immediate control over all aspects of energy policy, including
Nalcor and Muskrat Falls. By failing to do so, they have fallen into a
quicksand which is not of their making. The sordid severance mess was also the
creation of previous governments.
crown corporation which has become a law onto itself and which is building the
Muskrat Falls project, behind schedule and over budget. The new government
should be questioning the very existence of Nalcor rather than being held in
thrall by it.
of the CEO
responding to Ed Martin’s request for a meeting in mid-April the government
should instead, and much earlier, have called him in and dismissed him “with
cause”, not “without cause” as the Board of Nalcor is reported to have done.
action is unlikely to have triggered severance payments under the employment
contract with the former CEO. Surely the Muskrat Falls fiasco, combined with
“Dark NL” and the damning indictment of NL Hydro by the PUB over “imprudent”
spending of millions of dollars offer more than adequate “just cause”.
assertive action by the new government would have avoided the current
controversy over Ed Martin’s severance package. While it might have provoked
legal action it would have been acclaimed by the people of the province as both
necessary and appropriate.
appointed Ernst and Young (EY) to undertake a review of Muskrat Falls shortly after
its election, the government should have withheld the injection of $1.3 B in
equity for Nalcor, pending completion of the final EY report. This more
assertive action would have sent a stronger signal than the muted misgivings
expressed in the budget speech about Nalcor and its failure to return dividends
to the province. The interim report of EY, publicly released on April 12, 2016,
two days ahead of the April 14 budget, gives no support to continue a massive
injection of provincial funds. Indeed, the report sent a warning of escalating
costs and project delays.
budget speech the Minister of Finance also said that
administration allowed Nalcor’s organizational structure,
benefits packages to grow beyond what taxpayers would consider reasonable,
particularly given our current fiscal and economic circumstances.
statements in the budget prompted the Nalcor CEO to seek a meeting with the
Premier, one which led to announcements by the Premier and the CEO respectively
that Mr. Martin would be stepping down on his own volition. The Nalcor Board
has now announced that its CEO was terminated without cause, triggering a
payout of $6.1 million.
Auditor General determines that the severance component of $1.4 million was not
appropriate will government then call upon the Board to recover it? In the
meantime, Nalcor’s performance bonus plan should be placed under immediate
review, along with all of the supplementary executive retirement plans (SERPs)
and compensation practices at Nalcor.
of Nalcor far exceed those accorded to other crown corporations. The
compensation and benefits (including severance and supplemental executive
retirement plan, SERP) of its CEO and other senior executives are, similarly,
in a league to themselves. Government is required by law to ratify the contract
of employment with the CEO but, for those reporting to the CEO, Nalcor has absolute
discretion. The compensation package of the CEO comports with the grand
imperial vision of Nalcor. It is time for this to end. It is also time to
question the need for Nalcor.
government has been taken prisoner by the flawed policies of the previous
government, including a legacy of overspending and imprudent decisions. The
most imprudent decision of all was the decision to sanction Muskrat Falls, in
defiance of the advice from two panels, namely the PUB and the Joint
Federal-Provincial environmental panel.
On top of this, Muskrat Falls was
removed from the jurisdiction of the PUB, which would normally review the
project and protect the ratepayer by conducting oversight over the project, as
has happened in Nova Scotia. Instead Nalcor was allowed absolute and complete
control of the agenda. The new government has allowed this to continue for too
Nalcor means an end to the special powers and exemptions conveyed by
should begin with changes to, or revocation of, the Energy Corporation Act
(ECA). This was the legislation which created Nalcor. It also amended or
removed normal oversight provisions and placed Nalcor in a position of enhanced
authority and reduced accountability. The ECA includes exemptions from the
Corporations Act which remove the personal liability of members of the Board of
Directors. By the same token, amendments to the Electrical Power Control Act
remove Nalcor from oversight by the PUB and affirm its monopoly position. This
legislation forces electricity consumers to buy power only from Nalcor.
been setting its own public tendering and disclosure rules for Muskrat Falls.
Nalcor has not disclosed the value of contracts awarded or reported publicly on
change orders, which can vastly increase the final project cost. The public has
been left in the dark on the final cost and completion schedule for Muskrat
Falls. These practices cry out for reform.
including the undersigned, welcomed the appointment of Stan Marshall as the new
CEO this is only one of many steps required to bring this corporation under
control so that it serves the public interest and is not a law unto itself. We
look forward to the early appointment of a strong and independent Board of
For too long Nalcor has
operated with a small board without the breath and expertise of corporations
such as Fortis. For too long this weak board has been dominated by its CEO and
other executive officers.
to be the “energy warehouse” for the province. In creating Nalcor the previous
government created an entity which has usurped the policy role of government
and used extraordinary powers to advance its imperial agenda, which may no
longer be the agenda of the new government.
government is to reform Nalcor it must roll back the special legislation which
has weakened and eliminated normal oversight. All Muskrat Falls contracts and
change orders should be reviewed by the Auditor General. Government should
remove the monopoly-conferring amendments to the Electrical Power Control Act.
In addition government should act to compel compliance with public tendering
should also take decisive action to protect the environment. The previous
government allowed Nalcor too much influence in the environmental review
process, resulting in significant risks with methyl mercury and with the
underlying quick clay at the North Spur.
While government has been pre-occupied with the financial debacle
arising from Muskrat Falls the issues relating to health, safety, conservation
and environmental damage deserve urgent attention.
time to question the wisdom of the Muskrat Falls project through an open,
transparent and accountable reform process? Government must act upon its
commitment to “open the books” on Muskrat Falls. The new Nalcor CEO does indeed
have a mandate to examine options and report back to government. But it is
government which must ensure that the public are engaged in a search for the
right solutions. Government should conduct a full cost benefit analysis of the
option of shutting the project down, in whole or in part, compared with the
option of completing it.
the escalating costs, Muskrat Falls should not be completed unless there is
evidence to support the decision. It is not sufficient simply to tell us that
the commitments are too binding to be renegotiated and that the contracts with
construction companies and with Emera tie us in a Gordian Knot. The new
government should be seeking to distance itself from the flawed policies of
their predecessors rather than allowing these flawed policies to deflect them
from the course of “openness, transparency and accountability”.
platform called for a Cabinet Committee to plan for the end of the Churchill
Falls contract in 2041. Action on this important initiative should be expedited
and linked with the decision to continue or suspend the Muskrat Falls project.
In 2041, the full 5428 MW of low cost Churchill Falls will be available! In the
intervening 25 years and beyond, Muskrat Falls is likely to be a financial
should restore democratic oversight and affirm the role of the PUB. They should
review the need for the continuation of Nalcor but in the meantime they should
change the rules of the game, to place Nalcor in the same position as its
wholly owned subsidiary NL Hydro, which is a fully regulated public utility.
importantly, government should bring energy policy back into government and
remove it from an unaccountable crown corporation with illusions of imperial