Muskrat Falls Hydro Project, Labrador , Province of Newfoundland and Labrador
I wrote a small book in 1982. It was entitled ‘The Past in the Present.’This title was suggested to me by Doreen Cuff of St. John’s . It was her husband’s publishing company ,Harry Cuff Publications , that published the book and Doreen had read the drafts of the book.
Of course, it was an apt title, given that the book describes Newfoundland’s attempts at economic development and how we had largely failed , and highlights my frustration in the early 1980’s with trying to deal with an uncooperative Federal Government.
From early days of illegal settlement , to later days in the mid 1800’s in the fight for representative and responsible Government, on to the hopes of developing the island interior , to the unfortunate railway deal ( many concessions of land etc) of the late 1800’s , life has been a struggle. The fishery was a boom or bust exercise and the merchant / fisherman relationship did not enhance its orderly development compounded by the natural location of many isolated fishing communities . Sir Robert Bond , one of our few heroes, struck a trade deal with the Americans , only to be struck down by England and Canada. Two forestry enterprises arose, one in central Newfoundland and the other in western Newfoundland , both made possible by large land concessions to the developers. ( In a tragic twist of historic irony , in the past few years Premier Williams expropriated the now defunct central Newfoundland property from the owners only to have a US Canada Free Trade Panel rule against him and cost the Canadian taxpayer $160 million. )
Things ebbed and flowed through the early 1900’s , good fishery years and bad years , but with a still precarious economic outlook. We fought hard for the mother country in the Great War and lost many of our native sons . Governance of our place deteriorated with Sir Richard Squires being the most notable and the seeds of the industrialize or perish syndrome reared its ugly head , later to be embraced by Smallwood after Confederation. With the world wide depression, our own governance weaknesses, and a largely one industry economy , we succumbed , and from 1933 to 1948 were under a UK appointed Commission but promised a return to our own Government as it had been.
This did not occur . Rather through a National Convention the promised return to our own Government got turned on its head , to a movement to confederate with Canada. Much has been written on this . For the purposes of this essay suffice it to say through Joseph Smallwood with help from Ottawa and London , we joined Canada through referendum , by our own hand. And our largest industry was largely transferred to Ottawa.
A lot changed on the social and infrastructure front. Family allowance, old age pension and later unemployment insurance and equalization. Roads, electricity, more schools, more hospitals etc.
But, but, economically, the fishery was ignored , and industrialize and perish ruled the day, many industries began and perished. And then the resource giveaways , culminating in the Upper Churchill Contract , a massive giveaway of $1.80 a barrel oil equivalent for 65 years , the price falling in the last 25 years to $1.20 a barrel equivalent .
In the seventies and eighties we thought it could never happen again and we fought for the Atlantic Accord , to among other things , ensure a deal that was the opposite of the Upper Churchill , and the concession approach; that even being defeated in the courts from having the power to levy royalties, we fought as if we had won , and actually we are receiving the royalties in St. John’s this very hour and have a developed industry.
We reversed our history. We did not concede to others.
But then it happened . A return to the past.
The Muskrat Falls Hydro Project .
On the very same river as the Upper Churchill Project .
The power comes from southern Labrador across to the island. Some provided to Newfoundland , the rest off by cable across the Cabot Strait to Nova Scotia.
And wouldn’t you know , more of the past haunted us.
The original deal did not meet the requirements for Nova Scotia so it had to be amended to provide terms more favourable to Nova Scotia and less favourable to Newfoundland. I am told Nova Scotians will get this power cheaper than will Newfoundlanders.
A further point is that there is a Quebec initiated court action concerning the Water Management Agreement of the Churchill river that could impact the Muskrat Project . This risk seems to have been completely discounted.
No one knows the final cost . A newly minted ‘review ‘( interim, final in a few months ) by Ernst Young , while being overly diplomatic, one could say soft, nevertheless describes a very troubled project : over budget , behind schedule , obviously badly mismanaged , with a defective civil contract which has elements that are almost a cost plus for the contractor.
Over $ 7 billion without counting interest during construction. Over $9 billion with interest —-and counting . The Federal Provincial Environmental Panel Review of August 2011 had the capital cost at $2.5 billion . No doubt that is what they were told by Nalcor , the Provincial Crown Corporation charged with developing the project.
The infamous Upper Churchill capacity is 5424 mega watts, the now infamous Muskrat Falls Project 824 mega watts. The Upper Project cost $974 million 1974 dollars , converted to today’s dollars would be approximately $ 4.5 billion.
There have been effective critics in the Province : Des Sullivan of Uncle Gnarley blog fame, Cabot Martin, Ronald Penney , David Vardy and Ed Hollett of Bond Papers blog, to name the better known . But , sadly, they have a big problem , except for Mr. Hollett. They had all worked for me.
You see without them and many others mentioned in my second book , that momentary reversal ? It would never have happened.
Sadly, if these people and the others who were senior people in the eighties , had not been so maligned but used , the Province ‘s present problems would not be near as serious as they presently are and the Province ‘s credibility would be much enhanced making it easier to manage the present Budget problems.