Monday, 29 May 2017


A bit of an odd story by CBC’s Terry Roberts, entitled No formal talks for ‘energy transactions’ with Nova Scotia says Nalcor (May 22nd), was seemingly intended to recognize the opportunity afforded Newfoundland by the impending completion of the Maritime Link (ML).

Roberts found Emera’s Rick Janega and Nalcor’s Stan Marshall in a celebratory mood about the savings opportunity available from “displacing costly Holyrood power by importing electricity from the Maritimes”.
The CBC story caught my attention because it has some understated and missing pieces.
The completion of the ML might result in some short-term savings for just three or four months. But by year's end, the Labrador Island Link (LIL) will be also be ready, if Stan Marshall is to be believed. This event will allow transmission to the Island of the unused portion of the Recall power from the Upper Churchill. But the commissioning will also trigger a levy on ratepayers for a large portion of the debt raised to build the Muskrat Falls project.

Tuesday, 23 May 2017


Some critics of the Muskrat Falls project, including this scribe, had hoped that the Auditor-General (A-G) might review the activities of Nalcor several years ago. Confronted directly on the issue, during a presentation on the province’s fiscal position at Memorial, the A-G excused his Office based upon a limited budget and a shortage of resources.

Then in November, 2016 Terry Paddon – with no evident change in those resources - suddenly got energized. He told the media he now planned “to take a look at Nalcor Energy (and) possibly Muskrat Falls."

The focus of the A-G has to be sharp and precise. In this instance to investigate the allegations of estimate falsification of Muskrat Falls.

In its Mission Statement the A-G’s Office states:

"As legislative auditors, we audit financial statements and other accountability documents, evaluate management practices and control systems, and determine compliance with legislative and other authorities.

Our purpose is to promote accountability and encourage positive change in the stewardship, management and use of public resources".

Contrary to the stated “Mission” there has not been any response from the Office of the A-G on anything.

Thursday, 18 May 2017


The CBC report of an anonymous senior Nalcor engineer - who claims that low-balled estimates were used to obtain sanction for the Muskrat Falls project - has, again, shed light on a Crown Corporation that, sometime after 2009, went rogue.

The engineer’s allegations are now well-known, but Nalcor’s response – specifically Anthony Germain's interview – finds a retirement-minded CEO indicating casual indifference to what can only be described as the most serious accusations ever leveled at the government since Confederation. 

The CBC quoted the senior engineer using the words “absurdly low” to describe the estimates. In my Blog Post of February 2017, the same engineer used the word “falsification”.

Nalcor CEO Stan Marshall described the estimates as “unrealistic”.

“Absurdly low”, “falsification” and “unrealistic” – any difference is fundamentally meaningless.

In this context it is important to remember that we are not discussing the replacement of a culvert in Bung Hole Tickle. Estimating a multi-billion dollar project is complex work. It also goes through multiple layers of review – each time by a group more senior. 

Monday, 15 May 2017



Close observers of things Muskrat are by now getting used to troubling news regarding this benighted project.

However, the most recent Uncle Gnarley posts building on revelations first made by a former Muskrat Falls project engineer (aka the Unknown Engineer) on UncleGnarley on January 30, 2017 must have shocked even the most cynical.

Seriously - are we talking about someone playing fast and easy with the numbers?

If true, would be big time shit.

Then came last Wednesday’s stellar CBC St. John’s Morning Show interview by Anthony Germain featuring the disguised voice of the “Unknown Engineer” repeating on the public airwaves his astounding assertions ending with a call for a “Forensic Audit” of the manner in which the Muskrat project costs were prepared.

The next day Mr. Germain followed up with an extended interview on the mechanics of a Forensic Audit with financial wiz Larry Short – all of which served to turn up the heat on this issue in dramatic fashion. 

Thursday, 11 May 2017


Guest Post by David Vardy and Ron Penney

Breaking news from the CBC casts new light on Muskrat Falls!

On January 30, 2017 Uncle Gnarley posted on the falsification of estimates, drawing upon allegations made by a Nalcor engineer, who said that

I could not put up with falsifying information anymore.To begin with, the original cost of $6.2 billion on which the project was approved was a complete falsification. The estimate was deliberately kept low — below $7 billion, so as to appear favourable relative to the cost of thermal power generation.

The likely costs were known about three years ago, but Nalcor Management kept it a secret, steadfastly denying that there were major schedule delays and cost overruns, until it was no longer possible to hide the true status with the election of a new Provincial Government.

Monday, 8 May 2017


First, I have to relate a little story which will provide some additional context to the purpose of this item. 

Back in October 2014, during the visit of Dr. Stig Bernander who came to the province to conduct field work along the Lower Churchill River, I woke up one morning to find the Association of Professional Engineers and Geoscientists of Newfoundland (APEGN) in pursuit of the Professor. The email read that APEGN was trying to contact Dr. Bernander so that the association could cite him for having used “P. Eng.” – the designation which is for the proprietary use of APEGN.

Evidently, APEGN had received a complaint from one of its members - following an advertisement I had posted in the Telegram. The advertisement was placed for the sole purpose of inviting the public to the Bernander Lecture scheduled for presentation at the LSPU Hall. The complaining engineer noted that Bernander had not registered with APEGN and was therefore unqualified to use the engineering designation.

Admittedly, I thought the email peculiar. After all, the octogenarian Professor had come here, pro bono, in response to an important public matter, the North Spur. I thought it rather ungracious – to say the least – that he should be tracked down so that a fee could be collected.

Thursday, 4 May 2017


Guest Post By James L. Gordon, P. Eng. (Ret'd) 
On May 1st, I read with mounting astonishment the aDB Engineering report dated April 20, 2017, on their investigations into the causes of the collapse, which occurred on 29th May, 2016.

The level of incompetence described in the report is so widespread that it brings into question the integrity of all other structures in the development. All staff, from carpenters to engineers are included within the ranks of the incompetent. The sub-standard construction was clearly visible to all, but nothing was done to rectify the errors.

The collapse occurred in the lower portion of the draft tube as shown on the following Figure1, copied from Figure 2 in the aDb report. In this area, the water passage changes from a vertical expanding cone to an almost horizontal expanding rectangle as shown in Figure 2. It is the most complex double-curved shape in the project and very difficult to build.
For small turbines, the shape is formed in timber, with an east coast shipwright engaged as the carpenter foreman. A shipwright carpenter is the only person capable of cutting and shaping the timber to the required complex shape.

Tuesday, 2 May 2017


The Bern Coffey debacle is mind-boggling. But it leaves two important facts exposed.

First, Ball approved the untenable arrangement with Coffey permitting him to continue his law practice. It is one thing to allow for a winding-up period, quite another for the Clerk of the Executive Council to be moonlighting - in a court of law where he would be obligated to argue against his employer.  

Second, just as the Government was taking some initiative to hold Nalcor to account, the brutally incompetent Crown Corporation has, again, been let off the hook as far as the MF Oversight Committee is concerned.

With Coffey’s intervention, the Committee had finally gotten two capable members. Likely, the appearance of three ‘naysayers’ on the Muskrat file was causing some people to sweat. Likely, Coffey was outed but he and Ball ought never to have afforded Nalcor - or the Opposition - that opportunity.

Now, the former Deputy Minister of Natural Resources under Dunderdale - who played messenger for Ed Martin, sending Nalcor's requisitions to Cabinet - is head of the Oversight Committee. Ball confirms, again, he is gutless.

Monday, 1 May 2017


Site C Hydro Project, B.C.
Hydro projects underway in British Columbia and Manitoba are making waves among observers, all drawing parallels with the Muskrat Falls project. While there are many similarities, the public should be careful in concluding that Muskrat is entirely their mirror image.

Each has origins inextricably tied to gung-ho engineers, compliant bureaucrats, and politicians unwilling to subject self-serving assumptions and overbearing risk to professional and objective review. This is bad enough, except Muskrat will be forever dogged by the deceit that underscored project sanction.

We’ll come back to that point, but others are also instructive.

Thursday, 27 April 2017


Nalcor V-P Gil Bennett
One worker was taken to hospital and seven others received first aid on May 29, 2016 when a major section of the formworks collapsed, during a concrete pour at the site of the powerhouse on the Muskrat Falls project. 

Nalcor V-P Gilbert Bennett promised a full investigation and report. One year later, Nalcor is still ragging the puck, although following some poking and prodding from this scribe there are signs that one is finally forthcoming.  

The report ought to have been on Gil Bennett's desk within at most 48 hours of the collapse. In the real world of construction not the one Gil inhabits, but certainly on the Hebron GPS (which reported no lost time accidents) real managers and their senior bosses demand no less. 

Monday, 24 April 2017


Just before Easter, the Minister of Finance and her officials laid out 65 pages of cuts to government expenditures. This was the result of a process known as "zero based budgeting" (ZBB), a process which requires justification for every individual expense. There is nothing inherently wrong with ZBB. Processes like this one have their place as long as their limitations are understood.

Anyone with a basic understanding of how government functions will recognize that it takes a great deal of work to perform ZBB on an $8 billion operation. While periodically necessary, if it is ill-timed it accomplishes little more than giving licence to the folks in the Treasury Board to "be busy being busy".

But it does give the public the appearance that the Minister has her "sleeves rolled up" — another euphemism for action with little purpose — and Bennett wants to create the impression that she is assiduously tackling the deficit.  

Thursday, 20 April 2017


The Ball Administration recently made four new appointments to the Muskrat Falls Oversight Committee. Two professional engineer Jason Muise and Memorial Economics Professor Dr. Jim Feehan are longstanding anti-Muskrateers, “naysayers” in the idiom of the Wiliams/Dunderdale era.

Now the Committee has three who tried their best to warn successive Tory administrations of Muskrat folly, including Bern Coffey the Clerk of the Executive Council, who is the Chair.

While those appointments seem a step in the right direction, for the present I am inclined to counsel caution that they actually represent a shift in the way oversight is performed.

Two others an accountant and a former bureaucrat were appointed along with Muise and Feehan.

The four joined the Deputy Ministers who have inhabited the Committee from the very beginning. Of course, the latter should only be ex-officio, available solely to give support to the independent members of the Committee.

Monday, 17 April 2017


How did 2.2 million m³ of sand and clay that lay atop the section of the lower Churchill Valley shown in the photo below disappear? The devastated one-square-kilometre site is located across from Edward's Island a short distance upstream from Muskrat Falls. Read on and you will find out.

Site of  landslide viewed across the Churchill River from Edward's Island
The North Spur stability problem specifically Nalcor’s refusal to submit its "fix" for independent review still rankles those who have followed the sad saga of the Muskrat Falls project. 

The current $11.7 billion price tag is its own testament to, among other issues, Nalcor’s incompetence. But its failure to take every precaution to ensure the dam’s integrity having been warned of the risks, having closed the door to expert analysis is another in its list of indictments.

The North Spur instability problem isn’t about money anymore that ship has sailed. But four years after project sanction, an independent assessment of Nalcor’s remediation plan still eludes. 

Thursday, 13 April 2017


Guest Post by James L. Gordon, P. Eng. (Ret'd)

I have mentioned several times that a review board is essential for the North Spur. 

Perhaps I should summarise the reasons particularly since the Owner’s engineering consultancy - Hatch - has made the same recommendation.

It is acknowledged that the North Spur natural dam is the first time a dam containing marine clay and founded on a deep deposit of marine clay has been used in a hydro dam. All major “firsts” always have a review board to add assurance to the design. I have worked on three dam “firsts” and all had review boards, and all benefited from their advice.

The first was at Duncan in BC, which is founded on a deep deposit of unconsolidated liquefiable silt. It holds the world record for settlement as predicted, at now over 6m. We had a 4-man review board which made significant changes to the project layout, adding to security.

The second was at Bighorn in Alberta, where the deepest (to date) cut-off through gravel and boulders was part of the dam. There we had a 2-man review board, including Dr. A. Casagrande from Harvard. He made a major change in the dam design which, on hindsight, avoided a possible dam failure.

Monday, 10 April 2017


The Jerry Earles of the world seem to be applauding their good fortune that the Ball Administration wimped out on the task of resolving our fiscal mess. Such prescience aligns completely with the agenda of the Tories and NDP. It remains a real and present danger to the province's ability to manage ourselves as a society. 

There are three fundamental problems with Cathy Bennett's second Budget. 

The first is that she has failed to tackle what she has described as a "culture of spending" which took root under the Tories.

Second, the Minister has aligned herself with the Great and Exalted Ditherer, the Premier, having used an all too tenuous increase in the price of oil to paper over a serious deficit and fast rising public debt. 

Third, having sidestepped any plan to rectify public sector mismanagement and bloat, the Minister reinforces a public view that the fiscal crisis is really not a problem - that the Tories were bad, but not all that bad. That is a dangerous proposition when the truth is otherwise.

Wednesday, 5 April 2017


Editor's Note: As the Liberal Government readies for their second budget, I would like to remind regular readers of the eight-part "Budget Colloquy”  posted by JM back in 2015. Although you can argue with some of JM’s recommendations, this series was well-researched and offers a solid analysis of the state of the province’s finances. JM now returns with an introductory post on the equalization issue. 

Guest Post by  "JM"

First, I must disclose that I am not an expert on equalization. It is a complicated federal program, which played a pivotal role in most of the history of the province. During the 90’s, equalization provided nearly 30% of the total revenue to the provincial government. The highest absolute contribution was $1.2 billion which occurred in 2001

In 1999 NL received over 12% of the total federal equalization allocation, for about 2% of the population of the country.  

By comparison, in 2016 we received no equalization and the province's combined revenue from other Federal sources ($702 Million) and from offshore royalties ($485 Million) was less than the 2001 equalization value alone, adjusted for inflation. 

As the second budget from the Ball government will likely attest, NL is in dire financial straits. After nearly a decade of hiatus, equalization is again back in the news. Dwight Ball wants to get back at the negotiating table for the next round of negotiations which occurs every five years. 

Monday, 3 April 2017


When the Ball government announced a cut of 93 positions in the health care system last week, for savings of $7.6 million, budget watchers expressed sympathy for the 56 employees actually let go but, otherwise, waited for the next shoe to drop.

And with good reason. 

Health care consumes 36% of an $8.5 billion operating account spending on the day-to-day operation of programs and services (source: Budget Update). $1.58B of that sum constitutes deficit the shortfall between cost and the revenues available to pay for them. The difference is financed by government’s borrowing program.

Health care’s proportionate share of the deficit this year alone amounts to $569 million. The sum is in addition to the borrowing done by the health Boards directly (several million) which only shows up on the government’s books in the “Total Debt”. And a full accounting of health care’s cost should include infrastructure the amount applied to the capital account. Putting those sources of health care deficit together you would discover a shortfall well in excess of $600 million per year. 

But, for the sake of clarity, we'll just stick with just the operating deficit.

It would seem sensible to assume that other sectors of government can’t absorb overspending by health care. So what does this mean for the health care system?

Thursday, 30 March 2017


Cartoon Credit: Anthony Rockel
Don’t waste your time reading the Liberal Government’s Speech from the Throne. It contains the ramblings of a group that can’t put one foot in front of the other.

That is unfortunate. If there was ever a time when the province needed a clear plan and someone with the ability to communicate it, it is now. In the last Speech from the Throne, the Government promised “decisive actions… with Budget 2016 followed by… medium and long term actions…” Those are still absent. Then, too, it has been a year in which fumbling from library closures to Ed Martin’s severance compounded by Ball's own incapacity for articulation, has left the government severely weakened.

This year it needed to be ready with a coherent document that presaged a Budget styled for crisis. It could muster no such a strategic focus.

Monday, 27 March 2017


Dr. Pat Parfrey
The number of people who turned out to hear well-known nephrologist (kidney specialist) and rugby coach, Dr. Pat Parfrey, kick off his lecture tour on behalf of a group called “Choosing Wisely NL” (CWNL) was far too small given that he had so many important things to say. 

CWNL, a program conducted by Memorial University's Faculty of Medicine in partnership with the Newfoundland and Labrador Medical Association, has been established to advance "the safe and appropriate use of health care resources," or what Parfey describes as the balance of benefits versus potential harms.

The small group of listeners belied the deepening concern over the financial crisis unfolding in our health care system, and its inescapable linkage with the even larger one facing the province. 

It is not often that the public, or even policy wonks, are treated to a blunt and politically unfettered chat about deep-seated problems and of an organized plan to fix some of them. But that is exactly what the long-practiced and straight-talking physician had on offer. Free of all the junk of professional ass-covering, the doctor’s frankness was refreshing.

Thursday, 23 March 2017


The sudden cancellation of Backtalk with Pete Soucy, one of VOCM’s much-heralded talk show hosts, represents a significant loss to the public affairs arena of this province.

At first one might think that the axing of the popular writer, actor, comedian, and teacher should be treated as just another change in the minutiae of operating a radio station, and that cancellation of one of three shows is not a matter for those outside of corporate media to bother their little heads over.

But that is not the case.

Underscoring this decision by Steele Communications, the radio station’s owner, is the huge void that exists in a province bereft of public affairs analysis. After all, VOCM does news as poorly as the other media.

Monday, 20 March 2017



Independent Dam Safety Review And Audit By Hatch
February, 2017

Guest Post by James L. Gordon, P. Eng. (Ret'd)

James L. Gordon, P. Eng.
I have read the "Hatch "Audit" released by Nalcor just a few days ago. The first issue that I noticed is that a company cannot “audit” its own work – it is a blaring conflict of interest, and I am surprised that Hatch accepted the assignment. Of course everything is perfect, why would Hatch say otherwise when commenting on their own work?

The second issue is that the report is limited to a review of the project management and operation – quote from slide 11 - “The objective of this presentation is to cover the results of a dam safety audit and overall review performed for the Muskrat Falls GS between January 29 – February 2, 2017” And – quote from slide 17 – “The review of the design of structures did not form part of this audit”.

So, the entire report can be deposited in File 13¹. Bearing this in mind – what is missing from the report? The immediate reply is no numbers! The entire report is based on the opinion of one geotechnical engineer, with no supporting documentation. I would have expected to see at least the following -

Thursday, 16 March 2017


When the incumbent Liberal government is less popular than the Tories – booted out of office just sixteen months ago - rumours that some key members of the Liberal caucus are looking for a new leader just makes sense.

The most recent Poll by Corporate Research Associates puts support for the P.C’s at 39% (up from 34%) compared with 33% for the Liberals – a drop of 9% since November 2016. The NDP benefitted from the Liberals' loss by 3%, raising their popular support to 26%.

The decline in Liberal fortunes is manifested by the poor grade given the Government’s performance. Now, a whopping 71% are dissatisfied on some level compared with 59% in the last quarter.  Personal support for the Premier rests at a mere 21% - down from 27%. Support for Davis also dropped by 2 points to 33% from 35%, though his intention to step down makes the number irrelevant.  NDP McCurdy's cold fire got icy as support declined to 26% from 28%.  

What are we to make of those new Poll numbers?

Monday, 13 March 2017


During the Budget Update in October 2016, the CBC quoted the Minister of Finance saying that "the seriousness of the fiscal situation remains and needs to be addressed". Bennett added that the government is still projecting a surplus for 2022-23.

The target assumes the eradication of a $1.58 billion deficit —  just on the current account.

The province is forecast to borrow $2.9 billion in the 2016-17 fiscal year alone. 

The figure may go higher when the $800 million settlement with Astaldi is accounted for.

Debt charges and other financial expenses are just under $1.0 billion this year and climbing fast  a matter to which I will return. Nalcor’s champagne taste is not a separate issue, as many pretend. Nor is the Capital Account.

Debt servicing and related expenditures  including deferred pension contributions  constitute the second largest expenditure of the government, following health care.  That is serious biz.

Last fall the Minister substituted the government’s promise of a “mini-budget” with blather. She should have invoked the challenge for which the Jewish religious leader Hillel is credited: “If not us, who? If not now, when?”

Thursday, 9 March 2017


Guest Post By David Vardy

The Liberty Group has just reported to the PUB dealing with reliability and supply issues prior to the connection with Muskrat Falls. In this report Liberty notes that NL Hydro has significantly reduced its load forecast over the past 18 months, leading to the conclusion that little if any additional capacity is needed. However, Liberty challenges the assessment of Hydro on its overly optimistic diagnosis of the operating condition of diesel and gas fired generation capacity on the Island and its readiness to provide reliable power up to the interconnection with Muskrat Falls. Liberty also poses the question as to whether we are ready in the event of a two year delay in completing the Muskrat Falls project to 2022-23.  

Monday, 6 March 2017


Guest Post by “JM”

“If you are ignorant of both your enemy and yourself, you are certain to be in peril”                  - Sun Tzu

One thing that is admirable about the original Upper Churchill contract is its efficient use of the English language.  The 1969 Power agreement is succinct, simple to follow, clear in its expectations of both parties, and enforceable - as has been demonstrated on multiple occasions – to our great loss.

It is the polar opposite of the agreements between Nalcor and Emera on the Muskrat Falls Project. Twenty-six separate legal agreements, constituting 5000 pages of legal language, are used to manage its vast array of terms. You won't find anything succinct in them. They are repetitive, are not simple to follow, nor clear in terms of expectations. 

My initial impression of the contracts, after their release in 2014, was that they were conceived by executives of regulated companies who were advised by lawyers working on reimbursable fee structures.  They were, and I expect will continue to be, the legal equivalent of a make-work project.

Thursday, 2 March 2017


Nothing more will happen with respect to the severance of former Nalcor CEO Ed Martin. 

Most people will just feel dismay over the role of the Premier and the former Nalcor Board in the affair. They will also let the Auditor General's Report compound their distress and chalk up to immature institutions those things they associate with poor public administration.

Still, Ed Martin’s severance and the handling of the issue by the Auditor General (A-G) deserve comment.

In the first place, the political furor that followed news of the payment forced Premier Ball to refer the issue to someone. It didn’t have to be the A-G.

Ball chose the accountant when someone schooled in the law preferably a Judge would have been a more appropriate adjudicator.

Monday, 27 February 2017


A Tale of Two Regulators

Guest Post by JM

The government of Clyde Wells introduced the Electrical Power Control Act in 1994. It was implemented to define electrical power policy in the province and to provide a means for the utilities to earn a return on their investment in the generation and delivery of the power.  Under the EPCA the Public Utilities Board (PUB) has broad powers to regulate and legislative responsibility for the planning of future power supply in the Province. 

It is worth reading the Act to truly understand the breath of powers which the PUB possesses in these areas. This did not occur by accident. On the contrary, the legislation received the very deliberate focus of the premier of the day.  When he introduced the Bill in the House of Assembly, Clyde Wells stated: 

Since June 2010, when the decision was made by Nalcor to develop the Muskrat Falls Project, the PUB should have had an integral role to ensure the project met the clear “Declaration of Power Policy” as outlined within Section 3 of the Electrical Power Control Act. 

The process of review ran counter to the intent of the 1994 legislative initiative.  Muskrat Falls was conceived in secrecy, and born under both delusion and deception

Thursday, 23 February 2017


Guest Post written by David Vardy

The 2015 movie Spotlight won a Best Picture Oscar for a story about investigative journalism. Spotlight is a story about how the Boston Globe, through its investigative reporting, directed the spotlight upon abuses in the care of children that had been covered up. In so doing the Boston Globe took on a monolithic institution which had hidden the truth about three cases of abuse, growing to 13 and ultimately to 90 Catholic priests who had abused their young charges.

The Boston Globe took on the perpetrators against all odds. They conducted intensive journalistic investigation and brought to light information about mass culpability which was known to many but not revealed to the public. The film focuses upon the process of investigative journalism. Where is investigative journalism in Newfoundland and Labrador, where the abuses at Mount Cashel were among the first to be exposed in what ultimately became a global phenomenon of sexual predation by Christian pastors, first brought to light by the Sunday Express?

Monday, 20 February 2017


The act of telling a lie is nothing new. In the English language the word “mendacity” has hardly changed from its ecclesiastical Latin origin, mendacitas or 'lying'.

Individuals lie. Often they are only fibs with harmless intent, like those that preserve innocence about belief in the Easter Bunny.   

Governments lie too, sometimes with minor consequences — to escape political accountability, to bolster popularity, or to avoid public retribution.  

There are different classes of mendacity. Society can tolerate political and bureaucratic lies, up to a point. But when the consequences are too injurious — that is to say, when the policy makers or their proxies are reckless enough to have “gambled” (to use Stan Marshall’s word) and lost, or worse, possibly having contrived the fundamentals going so far as to assure billions in profit— a minimum expectation is that the culprits will be held to account.