Don't tinker with Nalcor yet, says Stan Marshall
Restructuring Nalcor and regulating its business would be a mistake, says CEO
Nalcor CEO Stan Marshall vigorously defended the Crown corporation's organizational structure during an appearance before the Public Utilities Board on Tuesday, saying the province risked becoming the butt of a "Newfie joke" if a shakeup occurred.
It was just one of many highlights as Marshall gave a wide-ranging presentation to the board about everything from his own future and secret talks with Quebec, to challenges with Labrador power transmission and serious gaps at the very senior ranks of Nalcor.
But it was the potential of a shakeup at the government-owned corporation that agitated Marshall.
He said the province is blessed with tremendous hydroelectric opportunity.
"If we lose focus on that, Newfoundlanders will be another Newfie joke as far as I'm concerned. A bunch of idiots. There's a lot on the go here."
Marshall was responding to a recommendation from a consulting firm called Liberty that would see Nalcor's power supply division merged with one of its subsidiaries, Newfoundland and Labrador Hydro, and all of its operations regulated by the PUB.
Liberty also recommended dozens of job cuts at the senior management level, and the establishment of a new Crown corporation to spearhead new energy development.
Keeping rates affordable
The company was hired by the PUB to present options for keeping electricity rates affordable in the Muskrat Falls era.
But Marshall took strong exception to the prospect of a shakeup at Nalcor, especially when Muskrat is nearing completion and with so much work underway behind the scenes to develop more of the province's energy resources.
He said the prospect of rolling all of Nalcor's unregulated assets, including Muskrat and the iconic Upper Churchill, into Hydro "is having the tail wag the dog."
Under the current structure, Hydro operations are regulated by the PUB, while Nalcor's power supply and generation development divisions are exempt from the PUB.
He said they were "different businesses substantially."
Marshall said Nalcor was given the mandate by government to develop the Churchill River's hydro assets, and that should not change.
There's a growing market for clean hydro power, Marshall said, with plans by Nova Scotia and New Brunswick to shut down 2,000 megawatts of coal-fired generating stations within the next decade, and New York City also snooping around for cleaner power.
"We have to be seizing that," said Marshall, adding that Nalcor and Nova Scotia's Emera have made a proposal to New York.
Developing Gull Island
He predicted that Gull Island, another highly touted hydro prospect on the Churchill, will be developed within the next decade, and said there's also potential to expand the Upper Churchill.
But unlike with Muskrat Falls, he said ratepayers in Newfoundland and Labrador will not pay for it.
"It will be developed, if at all, for export, and other people involved will have to take the risk, not the Newfoundland consumer," he said.
And in the longer term, the one-sided deal with Hydro-Quebec for power from the Upper Churchill will expire in 2041, and Marshall hinted that discussions are already underway on a renewed contract.
"We're doing a lot of work on it," he said, without elaborating on what that work is.
Marshall on his way out
Marshall took over the top post at Nalcor in 2016, at a time when the Muskrat project was in crisis as costs ballooned and schedule projections were collapsing.
But with construction nearing completion, cost estimates stabilized at $12.7 billion, and first-power scheduled for later this year, Marshall said he plans to leave the job next spring.
However, he said, the challenges are far from over.
Nalcor wants to use its new transmission lines to bring cheap power from the Upper Churchill in Labrador to the island of Newfoundland in order to displace costly oil-fired generation at Holyrood.
But the company hired to develop the computer software to operate the lines, General Electric, is struggling to fulfil its contract.
Marshall said he hopes a temporary solution can be found in the next few months, but he admitted there still a lot of work to do.
"It's going to take two to three years before this gets to a state where everybody is happy with it," said Marshall.
"All the functionality has been demonstrated, bugs worked out. It's a very complex system."
Meanwhile, Marshall painted a bleak picture of the situation within Nalcor. In addition to completing one of the world's largest major projects, he said senior leaders have been contending with a public inquiry into Muskrat Falls, and now a power rate review by the utility regulator.
"The stress has been extreme," said Marshall, explaining that two of the five executive vice-presidents at Nalcor have left, while a third is on leave.
"I doubt he will be back," said Marshall.