Our leaders are assuming too much, too fast on Gull Island
Why are N.L.'s leaders rushing into another hydroelectric project so soon after Muskrat Falls?
This column is an opinion by Lori Lee Oates, a lecturer at Memorial University.
This column might more appropriately be called "I cannot believe I have to say this, but here we are again." Our leadership is rushing to judgment on another hydroelectric project.
The Official Opposition has raised questions in the House of Assembly about emails from an Australian company regarding a commercial agreement on Gull Island, and another email on memorandum-of-understanding negotiations with the Innu Nation.
While Muskrat Falls was an abject failure, it is also part of a pattern of failures of dam projects in Canada. The others were in British Columbia and Manitoba. The Western world has largely moved away from dam projects.
Newfoundland and Labrador, however, seems to be doubling down on another dam project: Gull Island, the undeveloped and long-proposed megaproject on the lower Churchill River.
Premier Andrew Furey says there have been a lot of lessons learned from Muskrat Falls but he never says what those lessons are, and media have never pressed him on it.
Renewables such as wind and solar are now the cheapest form of energy in most of the world. They produce far less emissions and their costs have been falling quickly.
Meanwhile, in Newfoundland and Labrador there is a triangle of secrecy around Gull Island, rate mitigation and what's been called the Atlantic Loop.
Notably, there was no reference to transparency and accountability in the 2021 Red Book, the campaign platform of the provincial Liberals. This government did not even pretend to promise it.
About those 'highly skilled' people
On June 23 in the House of Assembly, the premier was asked about Gull Island. While he said "there are no current discussions with respect to Gull Island," he indicated he is keen to develop "an incredible asset."
He added, "The most important thing is to make sure we have the expertise and the appropriate people in place [so] that when — if we do, and we should consider doing a deal on Gull Island."
Earlier in the day, Industry, Energy and Technology Minister Andrew Parsons stated, "The volume of expertise built up within Nalcor over the Muskrat Falls era has been a silver lining to that project, and if the province wants to pursue future hydroelectric projects those human resources will be needed."
This echoed comments by former Nalcor Energy CEO Stan Marshall at his final AGM, when he said, "If you want to do GulI Island, now's the time to do it. We have all these highly skilled people available to us."
Marshall said he had advised the premier of this. Apparently, that advice is being taken.
Clearly, there is a rush to get the Gull Island project done, based on the argument that we are going to lose the human resources capital if we do not move fast.
This is a frequent argument in engineering circles: that we need to get another project going before the people on the last project leave.
If those people are so highly skilled, why does Muskrat Falls continue to be so far over budget and so far behind schedule?
We have been here before
The executive summary of the Muskrat Falls Inquiry report said, "Although it had publicly professed that a business case for the project would have to be established, in effect [the government of Newfoundland and Labrador] had predetermined that the project would proceed. In so acting, GNL failed in its duty to ensure that the best interests of the province's residents were safeguarded."
Professor Brent Flybvjerg provided a report and presentation to the inquiry, which showed that during the process of analyzing hydroelectric projects, a process called "optimism bias" takes over. Those assessing the project become more optimistic than they should that they can effectively execute the project.
A guest post on the Uncle Gnarley political blog analyzed Muskrat Falls, and claimed that "on the balance of probabilities, competent project finance professionals would have found in 2012 and would again find in 2021 that consistent positive cash flows coming from the Muskrat Falls project were unlikely."
The Atlantic Loop also seems to be proceeding, even though no politician has explained to the populace of Atlantic Canada what the Atlantic Loop will look like.
There are certainly no consultations taking place on what it should look like. There are no consultations on what the energy future of the country should be.
What is the Official Opposition's great contribution to this? They argue the province should "commit to a worldwide, open call for proposals on Gull Island development."
Newfoundland and Labrador Hydro has not identified markets for the Muskrat Falls energy yet. We are dependent on rate mitigation to make the last project economical.
There is an expectation that electricity demand will increase as the world moves to electric vehicles to address climate change. However, those electricity projections have not been shared with the public, probably because it is too early to accurately project.
Why is another dam project even on the table for either party?
The Muskrat Falls Inquiry Report was referred to the police. Charges could potentially still be laid. Is it even an open file for the police anymore? Citizens deserve to know.
Where is the business case that Gull Island can work? If Muskrat Falls was never going to be economical, how can Gull Island be economical?
These are questions that citizens deserve to have answered. Voters want to know.