SNC-Lavalin has received approximately $120 million in direct award Site C dam contracts, obscuring the embattled engineering firm’s role in building the largest publicly funded infrastructure project in B.C.’s history.

For one contract, SNC-Lavalin provided BC Hydro with a “shadow estimate” — number-crunching to confirm BC Hydro’s figure — for its forecasted $8.335 billion price tag for the dam, The Narwhal found after reviewing Site C documents.

The estimate proved to be wildly wrong, missing the mark by $2 billion.

But that hasn’t stopped SNC-Lavalin — which has been banned from World Bank infrastructure contracts for 10 years following allegations of bribery schemes in Bangladesh — from reaping years of no-bid work on the Site C dam for engineering design services.

Direct award contracts allow BC Hydro and other public bodies to decide which companies or consultants get contracts, instead of going through a more transparent and competitive tender process.

On Wednesday, a Quebec judge ruled that SNC-Lavalin must stand trial on charges of fraud and corruption for allegedly paying $47.7 million in bribes to public officials in Libya between 2001 and 2011. The RCMP has also charged SNC-Lavalin, its construction division and a subsidiary with one charge each of fraud and corruption for allegedly swindling almost $130 million from various Libyan organizations.

There is enough evidence against SNC-Lavalin for the engineering corporation to be tried on fraud and bribery charges, a Quebec Court judge has ruled. https://t.co/eCI1z7M0HY @jonmontpetit

— CBC News (@CBCNews) May 29, 2019

Criminal proceedings against SNC-Lavalin began last fall after the company failed to obtain a deferred prosecution agreement that would have allowed it to pay a fine rather than proceed to a trial. Allegations of political inference to avoid a trial for SNC-Lavalin sparked a national furore and led to the resignation of federal Justice Minister Jody Wilson-Raybould, who declined to grant the company a deferred prosecution agreement.

SNC-Lavalin also grossly underestimated cost of Muskrat Falls dam

SNC-Lavalin also played a major role in the cost estimate for the hugely over-budget Muskrat Falls dam on the lower Churchill River in Labrador, now the subject of a two-year inquiry to determine why the project proceeded.

SNC-Lavalin supplied about 70 per cent of the information for Muskrat Falls’ base cost estimate of $6.2 billion, according to testimony at the inquiry.

The dam’s price tag subsequently swelled to $12.7 billion, leaving Newfoundlanders facing untenable hydro rate hikes unless the federal government steps in to bail out the cash-strapped province.

Muskrat Falls inquiry co-counsels have suggested to Paul Lemay, SNC-Lavalin’s lead estimator for the dam, that the project might not have been approved by Newfoundland politicians if SNC-Lavalin’s cost estimate had been too high.  

Normand Béchard, Muskrat Falls project manager for SNC-Lavalin, enters through security at the Muskrat Falls public inquiry in St. John’s, N.L., on March 27. Photo: Paul Daly / The Narwhal

A thumbs down from the province would have left SNC-Lavalin without “hundreds of millions of dollars” for Muskrat Falls engineering, procurement and construction management work it subsequently carried out for Nalcor, the province’s energy corporation, inquiry associate counsel Michael Collins recently suggested at the inquiry in St. John’s, Newfoundland.

“You don’t know what Nalcor’s budget was, but if you know that if your estimate was higher than the budget, the project wouldn’t go ahead,” Collins said.

“Well, it’s the same thing with any project, sir,” Lemay responded. “If you are going to produce an estimate that is beyond, you know, the budget that you had for it, the project will not take place. It’s normal.”

“So you did know that if your estimate was too high the project wouldn’t go ahead?” Collins asked.

“Well, of course,” Lemay responded, saying that Collins was “speculating.”

SNC-Lavalin’s Canadian track record: low-balling cost estimates

Dermod Travis, executive director of Integrity BC, a non-partisan organization working to ensure government integrity and accountability, said the Muskrat Falls and Site C dams are far from the first time that SNC-Lavalin has low-balled cost estimates for projects in Canada.

“SNC-Lavalin is not exactly renowned for cost estimates [that mirror … ] the final cost,” Travis said in an interview, noting that hospital projects, which are usually subject to more scrutiny, are often the exception.

“The Muskrat testimony speaks to that — in as far as if you don’t give the client what they want to hear, guess what? The client ain’t coming back to you again.”

BC Hydro says the John Hart Generating Station replacement on Vancouver Island — which SNC-Lavalin is designing, building, financing and maintaining — is on time and on budget, but Travis said the scope of the work has altered so much since SNC-Lavalin was awarded the contract in 2014 that it’s impossible to compare figures.

SNC-Lavalin’s direct award contracts for design services on the Site C dam include jointly designing the earthfill dam, river diversion works, major civil components of the generating station and “permanent excavations,” according to an email from BC Hydro spokesperson Mora Scott. 

BC Hydro said SNC-Lavalin also received “several” sole source contracts in the 1990s and 2000s for work on the Site C dam. Those contracts are not listed on BC Hydro’s website, which lists Site C’s competitive contract awards.

In total, SNC-Lavalin has received about $120 million in direct award Site C contracts, BC Hydro confirmed.

“Details of all commercial arrangements, including SNC contracts with the Site C project, remain confidential in order to manage contracts in the best interests of BC Hydro and its ratepayers,” BC Hydro said in an emailed response to questions from The Narwhal.

The federal government prohibits direct award contracts worth more than $25,000 unless there is a special justification such as a national emergency or national security interests, but there are no such rules in B.C.

SNC-Lavalin involved in Site C dam since 1988

SNC-Lavalin’s involvement in the Site C dam can be traced back to 1988, when the engineering firm Klohn Crippen Berger Ltd. and a predecessor company to SNC-Lavalin signed a contract with BC Hydro, following what Scott described as a “public competitive procurement process.”

“As part of the contract, both firms would familiarize themselves with the design, project parameters and other information relating to Site C,” Scott said in an emailed response to questions from The Narwhal.

The two companies provided Site C dam engineering design and consultancy services intermittently to BC Hydro from 1988 to 2010, according to Scott.

She said the direct award contracts to SNC-Lavalin and Klohn Crippen began after former Premier Gordon Campbell announced in 2010 that the Site C dam would proceed and BC Hydro determined that more engineering work was required.

“Due to the size and complexity of the project, along with Klohn Crippen Berger and SNC’s depth of knowledge and expertise of the project, it was determined that only these engineering firms had the expertise, experience and capacity to provide the engineering design services that were required for Site C,” Scott wrote.

“And they still believe in Santa Claus, don’t they?” commented Travis.

Travis pointed out that SNC-Lavalin lists its chief competitors in annual reports, and BC Hydro would only have had to look at those reports to gather names of other engineering firms capable of working on the Site C dam.

“You can’t claim that SNC Lavalin is the only company in Canada that can do that kind of work. It would be a complete fallacy. You can’t use that as an excuse for direct awards,” Travis said.

“It comes back to the idea of breaking out of these old boy’s networks, which is what has been going on with infrastructure projects in B.C. for far too long … It’s too cosy.”

The Boon family farm at Cache Creek in the Peace River valley, which will be flooded for the Site C dam. Photo: Garth Lenz

Ties to BC Liberal Party are well-documented

SNC-Lavalin’s ties to the BC Liberal Party, which held power until 2017, are well documented.

The firm donated almost $28,000 to the party between 2005 and 2010, according to the B.C. government’s donations database. It did not donate to the BC NDP or BC Green Party.

Gwyn Morgan, the former chair of SNC-Lavalin’s board, was former BC Premier Christy Clark’s top transition team advisor. Morgan donated close to $286,000 to the BC Liberal Party between 2009 and 2018, according to the database.

Klohn Crippen, for its part, donated almost $30,000 to the BC Liberal Party between 2005 and 2014, the database shows.

Scott said BC Hydro is committed to following rigorous standards for all of its procurement activities, and that contracts are awarded “following a comprehensive evaluation and due diligence process.”

“It is only under rare circumstances like this that we direct award contracts,” she said.

The Narwhal previously reported that BC Hydro awarded almost $90 million in Site C contracts during a recent 18-month period without asking for bids.

Two contracts worth close to $11 million went to a B.C. numbered company whose officers and directors were top executives of Petrowest, the Alberta company that went bankrupt and was fired from Site C’s main civil works consortium.

The largest of the contracts, for $10.1 million, was awarded to the numbered company in late July 2017 — just two weeks before Petrowest was dismissed from the consortium for insolvency, according to documents obtained through a Freedom of Information request.

Three numbered companies in total received contracts, according to the Freedom of Information response, while four companies that donated to the BC Liberal party also received direct award contracts totalling $11.5 million.

Ken Boon in the kitchen of his and his wife Arlene’s home. The Boons’ house and much of their third-generation farm was expropriated two years ago by the B.C. government but they have refused to leave. Photo: Garth Lenz / The Narwhal

BC Hydro says cost benefits result from direct award SNC-Lavalin contracts

Scott said the Site C direct award contracts to SNC-Lavalin build on the decades of project knowledge and experience held by the company and have resulted in additional project benefits “related to schedule, cost and quality.”

The Site C dam was announced by Campbell as a $6.6 billion project and approved by Clark in December 2014 as a $8.8 billion project (including a $440 million reserve).

In December 2017, Premier John Horgan greenlighted the Site C dam with a new price tag of $10.7 billion. A fast-tracked review by the watchdog BC Utilities Commission found the dam’s final cost could exceed $12.5 billion.

Scott said the decision to grant direct award contracts to SNC-Lavalin underwent “multiple levels of internal reviews and approvals,” as well as an external legal review to ensure the sole source award was consistent with interprovincial trade agreements.

The New West Partnership Trade Agreement among Canada’s western provinces mandates that any services or construction contract greater than $100,000 should be issued through open tender unless a public agency can prove an urgent or specialized need.

Site C dam construction on the Peace River in October 2018. Photo: BC Hydro

Public confidence in BC Hydro ‘eroded’

BC Green Party leader Andrew Weaver told The Narwhal that BC Hydro needs to be far more transparent about contracts and other issues. He pointed to unanswered questions about B.C.’s energy demand and supply and controversy surrounding the B.C. government’s recent report about independent power producers as examples of the need for more transparency.

Many of BC Hydro’s numbers have been challenged by external agencies, Weaver noted.

“Our concern is to what extent BC Hydro has really pushed the case for Site C beyond what I think is defensible in light of the prices of new supply that would come on from renewables.”

The lack of transparency has eroded public trust in BC Hydro, Weaver said.

“I think BC Hydro’s got a big job there to actually rebuild public trust. And I think the best way to rebuild public trust is to start by being fully transparent with contracts, with competitive pricing options, with respect to base load supply … .”

Lack of information about SNC-Lavalin’s work on Site C dam

Site C dam services provided by SNC-Lavalin prior to 2010 include a November 2005 “site reconnaissance” mission to scout out three potential sites for the Peace River dam.

According to one report, SNC-Lavalin engineer Alfred Hanna flew from Vancouver to Fort St. John with two BC Hydro engineers and John Nunn from Klohn Crippen. (Nunn went on to become both Site C’s chief project engineer and a member of the secretive Site C dam “project assurance board” set up by Horgan to oversee construction of the project.)

The quartet rented a helicopter and snapped aerial photographs of the Peace Valley’s notoriously unstable slopes, including the site of a 1989 Halfway River landslide that sent 3.6 million cubic metres of debris into the Peace River.

The report they produced from that two-day trip indicates that BC Hydro’s proposal to build the Site C dam was already well in motion at the time — the men checked on instrumentation and took photos of Peace River islands where test fill was to be placed, also documenting an exploration tunnel entrance.

Two years earlier, the two companies also produced a report for BC Hydro on the potential for a series of cascading dam structures instead of one large dam. The smaller series of dams would have spared the West Moberly River area — identified by Treaty 8 First Nations as containing some of the most important cultural and spiritual values in the valley — and caused far less flooding of farmland and habitat for bird, butterfly and mammal species that are vulnerable to extinction.

SNC-Lavalin and Klohn Crippen concluded the cascading dam structures would cost $3.6 billion, compared to a projected $2 billion cost for the Site C dam at the time.

West Moberly First Nation Chief Roland Willson has been a vocal opponent of the Site C dam. Photo: Jayce Hawkins / The Narwhal

SNC-Lavalin helped move Site C dam forward

Between 2005 and 2012, SNC-Lavalin and Klohn Crippen teamed up to produce at least five more reports that helped BC Hydro move the Site C dam forward. The reports included a 2012 reservoir filling plan and a 2009 report on relocating a provincial highway out of the flood zone.

According to BC Hydro financial documents, the public utility paid SNC-Lavalin more than $453 million between 2010 and 2018 for work on the Site C dam and other projects.

In the fiscal year ending March 31, 2018, the last year for which information is available, BC Hydro paid SNC-Lavalin more than $45 million for its services.

SNC-Lavalin’s website does not mention either the Site C or Muskrat Falls dam projects. The media relations contact form on the company’s website was broken when The Narwhal tried to use it, and an email to SNC-Lavalin’s office in Vancouver, forwarded to the company’s national media relations department, went unanswered.

Travis said a watchdog representative from civil society needs to be involved in publicly funded projects “all the way along,” from conception to ribbon-cutting, to make sure the public is getting the best deal.

“That person’s job has to be nothing but saying, ‘excuse me, I’m the one who’s going to be paying for this at the end of the day.’ ”

The Narwhal’s reporters are telling environment stories you won’t read about anywhere else. Stay in the loop by signing up for our free weekly dose of independent journalism.

This is part three of a three-part, reader-funded series on the Muskrat Falls dam inquiry.

The Muskrat Falls dam in Labrador and the Site C dam in B.C. are on opposite sides of the country yet share some startling similarities. Both projects are being built with public money and both are billions of dollars over-budget.

In Newfoundland and Labrador, a two-year inquiry is underway to find out why the province’s energy corporation, Nalcor, continued full-steam ahead with the Muskrat Falls dam on the lower Churchill River despite early warning signs that the project was uneconomical.

The Muskrat Falls price tag — originally set at $6.2 billion — has now jumped to $12.7 billion. Newfoundlanders are bracing themselves for at least 50 per cent hydro rate increases when full power from the dam comes on-line next year.

In B.C., the contentious Site C dam on B.C.’s Peace River is tentatively scheduled for completion in 2024.

The Site C dam’s $10.7 billion tab — up from $6.6 billion when the project was announced in 2010 — will come due only when the power comes on-line.

With so much at stake in B.C., The Narwhal is keeping tabs on the Muskrat Falls dam inquiry, which is hearing testimony from everyone from politicians and senior bureaucrats to SNC-Lavalin executives and Nalcor officials.

Here are nine things B.C. can learn from Newfoundland’s Muskrat Falls mistakes.

1) Don’t assume your Crown corporation will act in the public interest

The inquiry has revealed that Newfoundland politicians failed to rein in Nalcor, the publicly owned energy corporation that pushed the project forward despite internal knowledge of rising costs and increased project risks.

One government lawyer interviewed by inquiry co-counsels called Nalcor a “fiefdom” and a “runaway train.” In testimony at the inquiry, he said Nalcor “jealousy guarded access to its information.”

A number of Newfoundland politicians have testified that they trusted the information they received from top officials at Nalcor, leading inquiry co-counsel Barry Learmonth to call the politicians “naïve” and “blindly accepting” of Nalcor’s work.

“Government was simply accepting whatever Nalcor told you, with very little review. And I suggest to you that was a very risky decision to make.”

2) Don’t write a blank cheque from the provincial treasury

Newfoundland consumer advocate Dennis Browne told the inquiry last month that Nalcor received a “blank cheque” from the provincial treasury to build the boondoggle dam and its transmission lines.

Soaring costs for the Site C dam indicate that BC Hydro also has a blank cheque for the project.

Site C’s price tag had already risen to $7.9 billion by the time the project was examined by a federal-provincial panel.

Following that review, the price tag climbed by almost another billion dollars — to $8.8 billion — when former Premier Christy Clark granted final approval to the project in December 2014.

The independent B.C. Utilities Commission conducted a fast-tracked review in the fall of 2017 based on that price tag.

But only weeks after the commission delivered its final report, BC Hydro revealed that the dam’s cost had skyrocketed by almost another $2 billion, to $10.7 billion.

Despite having access to outdated budget information, the independent review concluded that the Site C dam’s final tab could exceed $12.5 billion.

“Who would build a house without asking the contractor, ‘What are the upper limits of the cost of this?’ ” Browne told media following his testimony. “No one out there who is reasonable would conduct themselves in such a fashion. But our government did.”

A tower crane is assembled on the south bank of the Peace River amid ongoing construction of the Site C dam in November 2018. Photo: BC Hydro

3) Restore independent oversight

Newfoundland’s Conservative government stripped the province’s public utilities board from deciding if the Muskrat Falls dam was in the public interest. The board was eventually asked to review the project, but it was given such limited terms of reference and outdated information from Nalcor that it said it was unable to reach any conclusions.

In B.C., much the same scenario unfolded. Determined to build the Site C dam, B.C.’s former Liberal government changed the law to remove the independent B.C. Utilities Commission (BCUC) from examining the project to determine if it was in the public interest.

The commission finally reviewed the Site C dam in the fall of 2017 but with limited terms of reference from a new NDP government and no power to recommend whether or not the project should go ahead. The commission was also given Site C dam budget information for its review that, just weeks later, was replaced by new numbers adding up to billions of dollars more for the final cost.

Normally the commission would have the power to scrutinize BC Hydro’s quarterly reports about Site C and to ask questions or for supporting documentation.

So far the NDP government has chosen not to reinstate the commission’s watchdog role in monitoring the Site C dam. BC Hydro files quarterly Site C reports to the commission, but it has no power to ask questions about the reports or to request supporting documentation.

Instead, the NDP government has set up a secretive Site C “project assurance board” whose members include six BC Hydro directors and a consultant who was commissioned by B.C.’s construction trade unions to write a report favourable to the project.

The findings of the “project assurance board” are not available to B.C. ratepayers who are paying for the Site C dam.

The Muskrat Falls inquiry led to an announcement from the Newfoundland government that it is restoring the “appropriate” role of the independent utilities board in providing project oversight.

The Muskrat Falls dam under construction in February 2019. Photo: Nalcor

4) Be prepared to toss your plan when your dam becomes uneconomical

Just as Nalcor planned for decades to construct the Muskrat Falls dam, BC Hydro planned for decades to construct the Site C dam.

Clark touted the Site C dam as a legacy project in keeping with a vision championed by populist premier W.A.C. Bennett, who constructed his namesake dam on the Peace River in the 1960s.

In Newfoundland, former Premier Danny Williams aimed to follow in the footsteps of legendary Premier Joey Smallwood, who constructed the behemoth Churchill Falls dam on its namesake river in the 1960s. (The dam became operational in 1971.)

But just because large hydro projects made economic sense in the 1960s and 1970s doesn’t mean they are viable now. The global energy market has shifted dramatically in the past decade and Canada’s publicly owned energy corporations haven’t kept up with the trends, according to energy experts.

Muskrat Falls energy will be sold to the U.S. for a pittance of what it costs to produce the power.

Site C’s hugely expensive power — destined for the U.S. spot market and B.C.’s already heavily subsidized LNG industry — will also never be sold for close to what it will cost to produce.

At $10.7 billion, the Site C dam is uneconomical, according to a 2019 report from the C.D. Howe Institute, which says it is in the best interests of BC ratepayers to cancel construction immediately. (In an email to The Narwhal, the B.C. energy ministry dismissed the report as “fundamentally flawed.”)

Power from uneconomical dams can’t be sold for what it costs to produce, leaving unsuspecting ratepayers to make up the difference.

The Muskrat Falls dam inquiry has highlighted opportunities when politicians could have stopped construction of the dam as costs rose and risks heightened.

5) Stop before taxpayers are on the hook for a big bailout

The cash-strapped government of Newfoundland and Labrador can’t afford to bail out Nalcor.

So it has to turn to the federal government for a Muskrat Falls bailout. That means federal taxpayers will help pay for the troubled project.

Like Nalcor, BC Hydro is deeply in debt. The B.C. government — which is in a far better financial position than the Newfoundland government — recently bailed out BC Hydro for $1.1 billion.

But the public utility is still $4.4 billion in the red even before the unsightly tab for the Site C dam comes due.

More taxpayer bailouts for BC Hydro are almost certain.

In December 2017, when explaining his decision to greenlight the Site C dam, Horgan warned that a BC Hydro bail out could lead to cuts to services and compromise the government’s ability to build schools and hospitals.

6) If you squander public money, beware

Newfoundland politicians, senior bureaucrats and Nalcor officials are all in the hot seat at the Muskrat Falls inquiry, which seeks to determine who was responsible for moving the boondoggle project forward.

The inquiry’s final report, due by the end of the year, is expected to point fingers. That could lead to charges against politicians and senior civil servants, as well as disciplinary hearings for members of professional organizations such as engineers and accountants.

James Meaney of Nalcor Energy prepares to take the stand at the Muskrat Falls Public Inquiry in St. John’s, N.L., on March 26, 2019. Photo: Paul Daly / The Narwhal

7) Secrecy doesn’t pay in the long-run

Like the Site C dam, the Muskrat Falls project was shrouded in secrecy until a public outcry forced an inquiry.

People like David Vardy, the retired chair of Newfoundland’s public utilities board, tried to get detailed information about the Muskrat Falls dam for years through access to information requests, often coming up empty-handed or with critical pages redacted. All the while, the Newfoundland government assured the public that everything was fine.

Now the previously secret reports are part of the inquiry testimony, available to the public. They paint a disturbing picture of a Crown corporation so determined to push forward with dam building that it withheld pertinent information from decision-makers, according to evidence presented at the inquiry.

The veil of secrecy surrounding the Site C dam was briefly lifted by the fast-tracked B.C. Utilities Commission review. But since then detailed information about the project’s cost, schedule and geotechnical problems have been kept secret.

8) Request a copy of any SNC-Lavalin risk assessment report

The embattled global engineering firm SNC-Lavalin was involved in cost estimates for both the Site C and Muskrat Falls dams.

In the fall of 2012, as questions about SNC-Lavalin’s global business practices made headlines, a new CEO came on board to steer the corporate ship away from the shoals.

Bob Card, an American engineering veteran who had served as the U.S. energy ministry undersecretary, replaced SNC-Lavalin CEO Pierre Duhaime, who had been arrested on fraud charges.

Card was tasked with putting a plan in place to show the World Bank, which had assigned a full-time monitor to SNC Lavalin, that “SNC was putting everything in place to avoid [being] caught in any future issue,” according to inquiry testimony from Normand Béchard, the Muskrat Falls project manager for SNC-Lavalin. That included reviewing and amending policies, and ensuring compliance, Béchard said.

Card brought best management practices with him, according to Béchard. And one of those best practices was to assess risks on large projects in which SNC was involved, in order “to better control the exposure of the company.” From then on, every big project would need to have a SNC-Lavalin corporate risk assessment, Béchard told the inquiry.

Béchard was tasked with the Muskrat Falls corporate risk assessment, a job he said took up to a month and a half to complete.

His risk assessment pegged the financial risk for the Muskrat Falls dam at $2.4 billion higher than Nalcor’s budget for the project.

Whether or not Nalcor ever saw the SNC-Lavalin report is a matter of dispute.

Jean-Daniel Tremblay, director of risk assessment services at SNC-Lavalin, recently testified at the inquiry that it was his understanding that Nalcor had seen the report but that the report needed “to not exist” because it could have been made public through an access to information request. (Former Nalcor CEO Ed Martin has said he never saw the report.)

Béchard’s testimony suggests that somewhere — as costs soar for the Site C dam — there may be a SNC-Lavalin internal risk assessment report that could provide valuable information about risks and related additional costs.

BC Hydro told The Narwhal it is not aware of any SNC-Lavalin internal risk assessment report for the Site C dam. SNC-Lavalin did not respond to a request for a brief interview.

9) Eventually a public outcry will ensue

The public outcry about the Muskrat Falls dam began when Newfoundland ratepayers realized their hydro rates were poised to soar to pay for the project.

B.C. ratepayers are already facing new hydro rate increases of at least eight per cent over the next five years even before they start paying for the Site C dam in 2024.

With almost no scrutiny from most of B.C.’s media, the Site C dam continues to fly beneath the public radar — for now.

The Narwhal’s reporters are telling environment stories you won’t read about anywhere else. Stay in the loop by signing up for our free weekly dose of independent journalism.

This is part one of a three-part, reader-funded series on the Muskrat Falls dam inquiry.

When Madonna Summers leaves a “Kettle is On” lunch for seniors at the MacMorran community centre in St. John’s, N.L., she pulls down her white hat and wraps a crocheted azure scarf around her neck.

It’s not just the outside chill, at the close of a harsh and windy winter, for which Summers prepares as she fastens her black winter coat and steps out of the cheery clapboard building on Brother McSheffrey Lane.

Her long-time family home is only a short stroll away on Ridge Road and it’s not very warm. Summers has turned off the baseboard heat in all but three rooms, wedged blankets across the bottom of doors and rolled tape along wooden window frames to keep out the draft. But her last monthly hydro bill was still $244.

“I can’t have the heat up the way I want it,” Summers, 70, tells The Narwhal. “I even wear a sweater to bed over my nightdress and I’ve got a lot of blankets on my bed.” If the hydro bill climbs any higher she says, “I’d have to cut back on groceries.”

Her friend, Teresa Boland, lives in nearby subsidized housing and pays a percentage of her heating bills. Yet Boland is still so worried about covering her share of hydro costs that she and her husband only keep the heat on in their kitchen, living room and hallway. Boland has to wrap a blanket around her legs when using the computer and her basement is “like a freezer,” she says.

“I’m so used to being cold now,” Boland says in an interview at the community centre, where she has just finished volunteering at the free Friday lunch and is wrapped in a chocolate brown fleece coat as she prepares to leave the dining hall. “My husband is always cold — he’s not well.”   

It’s a scenario becoming all too familiar to Kelly Heisz, executive director of the Seniors Resource Centre of Newfoundland and Labrador, which receives frequent calls from elderly people worried about balancing rising hydro bills with other household expenses.

“Some of them choose to turn the heat off during the day and go somewhere warm, whether it be a mall or community centre or someplace where they don’t have to spend the day in a cold house,” Heisz says.

“This winter was particularly cold and windy. Really cold. In homes that are not insulated so well the wind will whip right through your house.”

‘It was a gamble and it’s gone against us’

Boland and Summers have heard about the Muskrat Falls hydro dam but they don’t know much about the provincial inquiry taking place five kilometres away, on the third floor of a five-storey office building named after the Beothuk, Newfoundland’s Indigenous people who were driven to extinction in the 1800s.

The inquiry seeks to determine why the provincial government approved construction of the ill-conceived dam on Labrador’s lower Churchill River, which is nearing completion almost three years behind schedule and more than $6 billion over budget.

To pay for the $12.7 billion Muskrat Falls dam and its copious transmission lines, Newfoundland hydro rates are poised to jump by 50 per cent — in the best-case scenario, according to David Vardy, a Newfoundland economist and former head of the province’s public utilities board.

That rate hike would leave Summers holding a $366 bill for one month of winter hydro, a disquieting amount for the diabetic senior. Summers, who doesn’t stay home much during the day, says she has already turned down her thermostat “as low as it can go.”

With so much at stake, the “Commission of Inquiry Respecting the Muskrat Falls Project” is digging into why construction of the dam was approved in 2012 and why the provincial government didn’t shelve the project amidst early warning signs of its unaffordable price tag.

Led by Justice Richard LeBlanc, the two-year inquiry has a budget of $33.7 million and four detailed terms of reference from Newfoundland’s Liberal government, which inherited the partially constructed Muskrat Falls dam when it came to power in late 2015.

Among other questions, the inquiry will determine if Newfoundland’s government “employed appropriate measures to oversee” the Muskrat Falls project built by Nalcor Energy, the province’s publicly owned energy corporation.

It’s also looking into whether the government “was fully informed and was made aware of any risks or problems associated with the project, so that it had sufficient and accurate information” on which to base decisions.

Judge Richard LeBlanc, commissioner for the Muskrat Falls public inquiry in St. John’s, N.L., talks with a sheriff before he enters the room on March 27, 2019. Photo: Paul Daly / The Narwhal

Ultimately, the inquiry will determine which politicians, Nalcor officials, senior bureaucrats and contractors — companies that include the embattled SNC-Lavalin — were aware of heightened project risks and costs, when they knew about them, and why that information was withheld from the public, the de facto owners of the dam.

“We’ve spent so much money and compromised so many future generations.”

Even Nalcor’s current CEO Stan Marshall calls Muskrat Falls a “boondoggle” and says the dam should never have been built. “It was a gamble and it’s gone against us,” Marshall told reporters in 2016. “Muskrat Falls was not the right choice for the power needs of this province.”

LeBlanc can’t recommend criminal charges or judge professional misconduct. But his final report, due before the end of the year, is expected to point fingers at those responsible for building a project that current premier Dwight Ball describes as “the biggest economic mistake in Newfoundland and Labrador’s history.”

That could lead to charges against politicians and senior civil servants and disciplinary hearings for members of professional organizations, such as accountants and engineers.

“The best outcome would be to put a whole bunch of people in jail,” says Vardy, solemn and bespeckled. “We’ve spent so much money and compromised so many future generations.”

‘Naysayers and cranks’

On an overcast day at the tail end of March, Vardy arrives at the inquiry wearing a Greek fisherman’s hat and a knotted scarf. He nods hello to two sheriffs wearing regulation bullet proof vests and steps through a metal detector to the hearing room, where he has been a constant presence since the inquiry began hearing testimony last September.

Vardy is one of the “Three Muskrateers,” as family members call them — a trio of reputable St. John’s residents who sounded the alarm years ago about Muskrat Falls and were largely ignored.

“This was renewable energy, this was motherhood and apple pie,” says Vardy, who also served as the province’s deputy fisheries minister and its top civil servant.

“It’s only when you get into the details that it looks awful.”

The trio predicted the Muskrat Falls dam would cost $13 billion, not $6.2 billion. That’s in keeping with an Oxford university study that found the vast majority of large hydro dams are significantly over budget and uneconomical.

They also raised red flags about the project’s lack of transparency, especially given that it was almost impossible to get any detailed information about risks and rising costs. (The same holds true for the Site C dam currently under construction on B.C.’s Peace River, a project described by international hydro expert Harvey Elwin as unprecedented to him in its secrecy.)

“Nobody wanted to hear the other side of the story,” recalls Ron Penney, a lawyer and Newfoundland’s former deputy justice minister, former deputy health minister and former deputy minister of public works and services. “We were thought of as a bunch of naysayers and cranks.”

Along with Des Sullivan, a St. John’s businessman who was a former senior advisor to two Newfoundland premiers, Vardy and Penney formed the Muskrat Falls Concerned Citizens Coalition. The coalition — which goes by the slogan “seeking truth and demanding accountability” — was granted full standing at the inquiry.

Left to right: Vocal critics of the Muskrat Falls project from the beginning, economist and former Newfoundland Public Utilities Board chair David Vardy, former city manager and provincial deputy minister of public works Ronald Penney and Des Sullivan, producer of the Uncle Gnarley blog. Photo: Paul Daly / The Narwhal

Sullivan, who initially supported the Muskrat Falls dam, says he became suspicious when the Newfoundland government refused to allow a watchdog public utilities board to review the project to determine if it was in the best interests of ratepayers.

That decision, which mirrors a B.C. government decision to exclude the B.C. Utilities Commission from deciding if the Site C dam was in the public interest, is now under the microscope at the inquiry, with former politicians and premiers on the stand.

The Muskrat Falls project’s lack of transparency and a backlash against Vardy and Penney, who publicly called for an independent review, were other warning signs for the seasoned political advisor.

“The more I learned the more upset I became,” says Sullivan, who is now in real estate and writes a blog about provincial politics called Uncle Gnarley that has been a nexus for Muskrat Falls criticism (“opinions on Newfoundland politics that bite.”). “For people like Dave and Ron and others to be pilloried, for raising objections … just didn’t resonate.”

Muskrat Falls, according to Sullivan, is ultimately “about a group of people given access to a large public purse who wanted to do a large project.”

“They wanted another notch in their belt. And essentially they were prepared to do it even while deceiving the people of the province, in order to get licence to do it.”

The signs ignored

A forensic audit, undertaken as part of the inquiry, has revealed that Nalcor executives knew early on that Muskrat Falls capital cost estimates were wrong but chose to forge ahead with the project.

The audit found that Nalcor should have known shortly after the provincial government gave the green light to build Muskrat Falls — when there was still time to cancel the dam — that work was already half a year behind schedule and the project’s contingency fund had already been drained, sure signs of impending cost overruns.

The Muskrat Falls dam under construction in February 2019. Photo: Nalcor

Muskrat Falls transmission facility. Photo: Nalcor

Evidence has been presented that Nalcor intentionally kept information about the exhausted contingency fund from government officials.  

Nalcor also knew for months that costs were soaring but did not include that information in monthly construction reports to government, according to evidence presented at the inquiry.

“The conversation that Newfoundland is inevitably going to come to grips with is ‘how did the politicians of the day allow this Crown corporation to deceive the public, and why were they — the politicians — so willingly deceived?’ ” Sullivan reflects.

The art of the questionable deal

For Roberta Frampton Benefiel, the Muskrat Falls dam can be explained, at least in part, by a story about rotten onions.

The onions were in a bin in her local grocery store in the central Labrador town of Happy Valley-Goose Bay, 36 kilometres from Muskrat Falls.

Benefiel, who had just moved back to her hometown after three decades away, couldn’t spot a single mesh bag that didn’t have a pulpy mess inside. She found the store manager and demanded unspoiled onions, even if all the bags had to be torn open and their contents reassembled.

The friend shopping with her slunk away, embarrassed, but Benefiel eventually exited the store with onions she didn’t have to toss. “You walked away from this?” she said to her friend. “You should have been screaming long before I did.”

“We were way out of sight and out of mind. We didn’t exist …”

“Now, to be fair,” Benefiel tells The Narwhal, “had I lived there for the 30 years that I was gone I might have been in the same boat — thinking that I didn’t have a voice, thinking, ‘oh, that’s good enough.’ ”

In Benefiel’s view, Labradorians are far too accustomed to accepting questionable deals, especially from some of the corporations that dip into the honey pot of Labrador’s natural resources.

And no issue personifies that more for the 73-year-old great-grandmother than the Muskrat Falls dam, which takes its name from a natural waterfall, in turn named after the furry, semi-aquatic animal that populates wetlands the dam will flood.

“We didn’t have a voice,” Benefiel says. “We were way out of sight and out of mind. We didn’t exist, except to take Voisey Bay minerals and Lab City iron ore and, now, hydro power from our river … We’ve been used for years.”

Roberta Frampton Benefiel of the Labrador Land Protectors at the Muskrat Falls public inquiry in St. John’s, N.L., on March 27, 2019. Photo: Paul Daly / The Narwhal

Benefiel’s necklace bearing the logo of the Labrador Land Protectors. Photo: Paul Daly / The Narwhal

Benefiel holds her Labrador Land Protector necklace. “I’m a Labradorian. It’s my home and I don’t want to see it destroyed,” she told The Narwhal at the Muskrat Falls hearing. Photo: Paul Daly / The Narwhal

Nalcor is building the Muskrat Falls dam in Labrador when there’s a moratorium on building new dams in Newfoundland, Benefiel points out. She’s also keeping tabs on countries like Brazil, who are rethinking construction of new large dams due to their deep social and environmental footprints, which include emissions of methane and other potent greenhouse gases from reservoirs.

The Muskrat Falls dam is no exception to those well-documented impacts. The dam will flood the traditional homeland of the Innu, Inuit and southern Inuit, destroying more than 100 square kilometres of a sub-Arctic valley that has long provided Indigenous peoples with food and travel routes and is considered to be the most important cultural and environmental feature in all of Labrador.

Among other impacts, the dam will contaminate traditional Aboriginal foods — such as seals and land-locked salmon, known as ouananiche —with methylmercury and eliminate bird-breeding wetlands and habitat for at-risk species such as caribou, including for the highly endangered Red Wine Mountain caribou herd.

The great downturn

Central Labrador is no stranger to large dams. When the behemoth Churchill Falls dam, 300 kilometres upstream from Muskrat Falls, became operational in 1974, it flooded an area larger than Switzerland that had been the traditional hunting and trapping territory of the Labrador Innu.

But this time around, some of the weightiest consequences of dam construction will also be felt in Newfoundland, whose jagged northwest tip juts out into the Atlantic Ocean 17 kilometres from the southern shores of Labrador, across the foggy and gale-struck Strait of Belle Isle.

And those consequences will come at a time when Newfoundland can least afford them, as the province struggles to recover from the long-lingering effects of the 1992 cod fishery collapse and a faltering oil boom.

Signs of economic downturn are everywhere in St. John’s. The steep hills of the picturesque capital are dotted with ‘For Sale’ signs, including on a church hall, a union hall and the Bacalao restaurant, which offered “nouvelle Newfoundland cuisine” before it was shuttered.

At the Gathering Place, a non-profit service centre near the downtown, 350 people line up for a free home-cooked lunch every week day, according to executive director Joanne Thompson.

The facility, which also offers dental and medical care, showers, laundry facilities and a bright and warm place to spend the day, will soon open for dinner and on weekends to meet the growing demand, Thompson says.

The impact the Muskrat Falls dam will have on Newfoundland brings no cold comfort to Benefiel, who has seen her town’s streets churned up by heavy truck traffic, its small hospital become among the busiest in Canada per capita and bags of hazardous fly ash dumped in the unlined landfill during the past six years of dam construction — all before a 59-kilometre stretch of the valley is flooded.

“I’m a Labradorian. It’s my home and I don’t want to see it destroyed,” she says.

Benefiel arrives at the inquiry wearing a $7 trench coat she has just purchased at a Salvation Army thrift store and driving a borrowed white Mercedes. The only strip mall and clothing store in Happy Valley-Goose Bay has just burned down and her thick Labrador winter coat is too warm for St. John’s near-zero temperatures, she explains.

The Mercedes is on loan from a friend who has asked Benefiel, plasterer and painter by trade, to do a small favour and climb up a ladder to tar a stubborn leak in her roof. Benefiel, who had a knee replacement only a few months earlier, thinks she is ready for this. It’s less strenuous for her knee than running the Goose Bay Kritter Sitter boarding kennel out of the home she built herself with weekend help from friends.

“I’m here to keep track of what’s said and to catch any discrepancy — and we’ve caught a lot,” she says.

“We have been saying things all this time and these things are now coming out at the hearing … We said the costs at sanction [final approval] had been tampered with and that’s been borne out.”

Benefiel represents two Labrador-based groups that share partial standing at the inquiry, which shifts to an arts centre in Happy Valley-Goose Bay for two weeks at a time: the Grand Riverkeeper Labrador Inc., a non-profit organization dedicated to protecting the Churchill River and its estuaries, and the Labrador Land Protectors.

‘Danny’s project’

The land protectors are a group of Indigenous and non-Indigenous people who have been trying to stop Muskrat Falls — including, in some cases, through hunger strikes and civil disobedience — since they became aware that methylmercury would poison their food sources and learned about Nalcor’s decision to fortify a natural spit of land for the dam’s north spur.

The problem with the north spur, Benefiel explains, is that it’s built on “quick clay” prone to landslides. Failure could wipe out the downstream community of Mud Lake, accessible only by snowmobile or boat, and flood lower-lying areas of Happy Valley-Goose Bay, including her own home.

Nalcor maintains the north spur is perfectly safe. But the two Labrador groups — as well as a group of Newfoundland lawyers and the Concerned Citizens Coalition — are calling for an independent panel to assess its stability, much the way that local residents are calling for an independent safety assessment of the Site C dam in B.C.’s Peace River valley, also prone to landslides.

Benefiel was born in the Newfoundland fishing village of Little Catalina but grew up in Labrador after her family relocated when she was a baby. She raised her children in Tennessee and then went to university while in her 50s, earning a degree in environmental studies with a minor in geography while she painted houses for a living.

After falling off a ladder in Sackville, N.B., and breaking her leg, she hobbled back to Labrador and dropped in on her friend Clarice.

“I walked into her house and into the middle of a meeting and she said ‘you’re now a member of the Friends of Grand River.’ That’s how it all got started,” Benefiel remembers.

The meeting was about the Muskrat Falls dam and a far larger sister dam, the Gull Island dam, that Nalcor wanted to build further upstream.

Back then, it was common knowledge that Nalcor and the province’s premier Danny Williams were planning to build the two hydro projects. The plan was rumoured to have been hatched in St. John’s Guv’nor Inn, whose menu today features island fare like moose yorkies — Yorkshire puddings stuffed with moose meat — and cod tongues and scrunchions — tasty morsels of fried salted pork rind and fat. But nothing had been officially announced.

Williams seemed determined to build Muskrat Falls, much the way his legendary predecessor Joey Smallwood had championed construction of the Churchill Falls dam 40 years earlier and populist B.C. premier W.A.C. Bennett had built his namesake dam on the Peace River in the 1960s.

“It was Danny’s project … a legacy project,” says Penny, who also served as St. John’s city manager and the city solicitor.

Muskrat Falls was praised by politicians as “a good, sound financial project for Newfoundlanders.” The dam, to be constructed before the Gull Island dam, would “not increase net debt by a cent,” they promised.

Former Newfoundland premier Kathy Dunderdale, who granted final approval to the project in 2012 after Williams stepped down, called Muskrat Falls the “most cost-effective green energy solution for the demands of the people of Newfoundland and Labrador.”

In April, Dunderdale testified at the inquiry that she must have known about a $300 million jump in the project’s price tag — an issue only disclosed to the public through the inquiry — when financing arrangements were finalized in November 2013.

But some former cabinet ministers, including the ministers of finance and natural resources at the time, have testified they were not aware of the increase, and the inquiry has so far found no paper trail to back-up Dunderdale’s testimony that cabinet was fully informed.

Senior Newfoundland government officials were briefed about the jump in cost, but they may not have conveyed this information to politicians tasked with making the final decision, according to other evidence presented at the inquiry.

The ‘dupes’ of Nalcor?

The hearing room’s curtains hide a view of St. John’s striking harbour, its steep sides ringed with the winter’s last snow, and the copper-roofed provincial legislature known as the Confederation Building.

It’s in this building, inquiry co-counsel Barry Learmonth repeatedly suggests, that politicians should have engaged in far more rigorous oversight of the Muskrat Falls project. The government’s oversight of Nalcor was “weak, feeble and limited” and politicians were “dupes of Nalcor,” Learmonth has suggested.

In late March, a senior Nalcor official, James Meaney, is called back to the witness stand after testifying that even though he knew about significant cost escalations it was not up to him to disclose that information to the province.

That responsibility lay with Ed Martin, Nalcor’s CEO at the time, according to Meaney, who was Nalcor’s top financial official in charge of Muskrat Falls.

Dan Simmons, lawyer for Nalcor Energy, enters through security at the Muskrat Falls public inquiry in St. John’s, N.L. on March 26, 2019. He is followed by James Meaney of Nalcor Energy, who is prepared to go on the stand. Photo: Paul Daly / The Narwhal

As Meaney, with curly dark hair and a furrowed brow, takes his place in the black leather witness chair, his voice is steady and measured, almost a monotone. But his posture, with his left shoulder tilted higher than the right, and his restless hands, reaching for his water glass or twirling a pen, belies an inner agitation.

LeBlanc, framed by a large inquiry sign and the Newfoundland flag, scribbles note and weighs in occasionally as lawyers question Meaney.

Will Hiscock, counsel for the Concerned Citizens Coalition, asks Meaney about a Muskrat Falls cost increase from $6.9 billion to $7.5 billion that Nalcor sat on for many months.

“Were you ever refused permission to send something on to the independent engineer?” Hiscock asks, referring to MWH Global, the Colorado-based engineering firm hired to provide expert Muskrat Falls oversight for Ottawa and banks that lent billions of dollars to Nalcor for the project.

“I don’t recall a refusal,” Meaney says.

“There was a failure to provide information,” Hiscock clarifies a minute later. “You’re saying you weren’t refused but obviously permission wasn’t granted either to send stuff along. Was it just radio silence when you would reach out and say ‘we need to send something on to the government?’ ”

Meaney explains the information-sharing process, repeating that the Nalcor CEO Ed Martin needed to sign off, which prompts Hiscock to re-frame his line of inquiry.  

James Meaney of Nalcor Energy prepares to take the stand at the Muskrat Falls public inquiry in St. John’s, N.L., on March 26, 2019. Photo: Paul Daly / The Narwhal

“During the seven or eight months, when you knew you were sitting on old information — you had newer information there — did you ever say ‘can I send this to the government, can I send this to Canada, I’m going to flick this over to the oversight committee,’ whatever?’ “

Meaney says “there would have been lots of discussions in terms of trying to advance that information,” but he doesn’t answer yes or no.

Then Hiscock asks Meaney several times if the potential for Muskrat Falls cost increases was disclosed to Deloitte, the Crown corporation’s corporate auditors.

Meaney pauses. He purses his lips, frowns, jiggles his chair and tilts his head to one side.

“I expect they would have been aware that those are estimates and there is the potential for variation from those amounts, so there would have been discussion with Deloitte on that matter.”

“So that is a ‘yes, we did disclose the potential for cost overruns and the cost increases with Deloitte, our corporate auditors?’ ”

There would have been discussion with Deloitte “that those numbers could vary,” Meaney replies.

“And you wouldn’t have provided your corporate auditors with the out of date estimates? You would have been providing them with fresh, the best information you had — the $7.5 [billion] as soon as the $7.5 was available, the $6.9 [billion] as soon as the $6.9 was available, as they were your corporate auditors?”

Meaney says Deloitte would have been provided with updated costs estimates, but he doesn’t elaborate.

“I don’t believe it was in Deloitte’s mandate to look at the reasonableness of final forecast costs,” he says.

The details of SNC-Lavalin’s demotion

Vardy listens carefully to the testimony, conferring with Hiscock during the morning break and passing on questions that coalition members have been asking for years without response.

More than 100 thick white binders at the inquiry are labelled with names of witnesses called to the stand. They include former premiers, top civil servants, Nalcor officials and executives and senior employees from Muskrat Falls contractors like SNC-Lavalin.

Inside the binders are thousands of pages of previously secret and now unredacted Muskrat Falls dam reports, emails, memos and “confidential and commercially sensitive” Nalcor documents.

Vardy, Benefiel and others tried to obtain some of the reports and information through access to information requests, often coming up empty-handed or with critical pages redacted.

Together with testimony, the contents of the binders shine a spotlight on facts that project critics have been trying to put on centre stage for years.

Those in the media room observe Derrick Sturge of Nalcor Energy as he testifies at the Muskrat Falls Inquiry in St. John’s, N.L., in March 2019. Photo: Paul Daly / The Narwhal

Normand Béchard, project manager for SNC-Lavalin, prepares to testify at the Muskrat Falls public inquiry in St. John’s, N.L., in March. Photo: Paul Daly / The Narwhal

No one is exempt from being called to the witness stand, as former premiers, top civil servants and Nalcor officials are grilled by the inquiry’s co-counsels and a bevy of suited lawyers who sit at long desks day after day as monitors flash up exhibits.

Tommy Williams represents his brother, former premier Danny Williams, who announced the Muskrat Falls project to much fanfare in 2010 and, in his inquiry testimony last December, called continuing opposition to the project “reckless, irresponsible and shameful.”  

Even the embattled engineering firm SNC-Lavalin is on the stand, its Muskrat Falls documents relinquished to the inquiry for anyone to see. The Quebec company was a Muskrat Falls dam cost estimator, a role it also held for B.C.’s Site C dam.

SNC-Lavalin was also originally responsible for the Muskrat Falls dam engineering, procurement and construction management. Then Nalcor demoted the company amidst conflict revealed in jaw-dropping testimony, with Nalcor testifying it was unhappy with SNC’s early performance and a SNC-Lavalin veteran project manager saying his team was bullied by Nalcor and “treated like slaves.”  

Helpful inquiry staff call people ‘dear’ in Newfoundland brogue, similar to an Irish accent. The uniformed sheriffs pass around a box of chocolates at the end of the day. But underneath the island’s traditional friendliness the atmosphere is solemn and contemplative, the hearing room expectant, as LeBlanc and inquiry co-counsels try to get to the bottom of how so much public money was squandered.

‘You can’t un-crash a helicopter’

For those who question the amount of money spent on the inquiry, Vardy points to the crash of Cougar helicopter flight 491 as it ferried workers to a three-week shift on Newfoundland’s Sea Rose offshore oil platform. The 2009 accident killed almost everyone on board and led to an inquiry that made recommendations about how to improve safety in Newfoundland’s offshore industries.

“You can’t un-crash a helicopter,” Vardy says. “But you can find out why it happened and try to make sure it doesn’t happen again.”

Former Newfoundland utilities board director, David Vardy. Photo: Bojan Furst

The Newfoundland government, acutely aware of escalating worries about rising hydro rates, released a plan on April 15 called “Protecting You from the Cost Impacts of Muskrat Falls.” The plan is designed “to protect residents from increases to electricity rates and taxes resulting from the Muskrat Falls project that would affect the cost of living.”

The government describes the plan as the “culmination” of a series of important steps taken to protect residents.

Those steps include restoring the oversight role of Newfoundland’s public utilities board and securing a federal commitment to engage with the province “to expeditiously examine the financial structure of the Muskrat Falls project so that the province can achieve rate mitigation.”

A federal bailout with tough love conditions appears almost inevitable now for the cash-strapped province. “This is an existential threat to the financial independence of the province and to our political sovereignty,” Vardy says. “If we have to be bailed out by the feds we’ll lose some element of our sovereignty.”

At the end of April, just after the plan is released, Benefiel travels from Happy Valley-Goose Bay to the northeastern United States for a Muskrat Falls speaking tour, organized by the North American Megadams Resistance. Large dams are a “false solution” to the climate crisis, the alliance asserts, noting the disproportionate toll they take on Indigenous communities.

Benefiel says it’s important to educate “folks down south” about the perils of big hydro projects: “They’ve got to stop buying this damn power.”

“I don’t know what keeps me going sometimes,” Benefiel admits. “I’ve been fighting this project for 20 years.”

The Narwhal’s reporters are telling environment stories you won’t read about anywhere else. Stay in the loop by signing up for our free weekly dose of independent journalism.

Residents of Newfoundland and Labrador are preparing for electricity rates to double in the next five years, adding an estimated $150 per month in power costs for the average homeowner, as a consequence of building the Muskrat Falls hydroelectric dam — and experts warn it could be a cautionary tale for British Columbia.

“Muskrat Falls was not the right choice for the power needs of this province,” public power company CEO Stan Marshall told the press last year, confirming the project is a “boondoggle.”

“It was a gamble and it’s gone against us.”

Meantime in British Columbia, debate continues over whether to continue building the 1,100 megawatt Site C hydro dam on the Peace River, estimated to cost $9 billion, at a time that power demand has been essentially flat for 10 years, despite population growth.

“There are a lot of parallels between British Columbia and Newfoundland,” David Vardy, former CEO of the Newfoundland Public Utilities Board, told DeSmog Canada. “There’s the same fixation with the megaproject.”

B.C. Premier Christy Clark has vowed to get the project past the “point of no return,” while provincial NDP leader John Horgan has promised to send the project for a review of costs and demand if elected in May.

Vardy, who led Newfoundland’s public utilities board from 1994 to 2001, has called for a public inquiry into the Muskrat Falls dam.

Review Panels Called For Further Study of Dam Economics

In an interview with DeSmog Canada, Vardy pointed to several similarities between Muskrat Falls and the Site C dam.

For starters, the joint federal-provincial environmental panel that reviewed Muskrat Falls concluded there was not sufficient evidence the dam was the best and least cost project for the province and called for an independent analysis.

“There were a lot of fundamental questions that were raised about the justification for the project,” Vardy said. “The joint panel warned against proceeding with this without doing a very in-depth review.”

In British Columbia, the Site C panel’s finding was nearly identical, calling for further study of capital costs and electricity demand — a recommendation that was ignored much to the chagrin of the panel’s chair Harry Swain.

“The thing that’s in common … is that we’re dealing with large crown corporations. And these crown corporations are very close to government. They are seen to be instruments of government policy,” Vardy said.

Experts have questioned whether BC Hydro and the Premier’s Office are too close for comfort.

Both Dams Skipped Full Review By Utilities Boards

Despite the panel recommending otherwise, the Newfoundland government didn’t send Muskrat Falls for a full review by its public utilities board. In B.C., the government also ignored the panel’s recommendation for a review by the B.C. Utilities Commission.

“In the normal course of events it would have gone to the public utilities board and they would have done an exhaustive analysis of all the options and they would have looked at costs,” Vardy said.

Former Newfoundland Premier Roger Grimes told DeSmog Canada that B.C. should still send Site C for a full review by the B.C. Utilities Commission.

“There’s no doubt: once you short-circuit the public review process, there’s something wrong,” Grimes said. “If it can’t withstand that kind of proper review in the proper public forum, history has shown us that there’s probably something wrong with it.”

Grimes said if it’s the right project, the B.C. government shouldn’t fear the outcome of a utilities commission review.

“If they have information that has them as the government so convinced that it’s the right thing to do, then any independent panel that looks at it should come to the same conclusion with the same information,” Grimes said.

In Newfoundland’s case, the government did seek the opinion of the Public Utilities Board, but the terms were limited to examining two options and alternatives couldn’t be considered. Still, the utilities board found the evidence presented was not complete or current enough to support the project. Newfoundland forged ahead anyway.

“The government commissioned a whole flurry of consulting studies,” Vardy said. “Consultants were charged to demonstrate that what the government wanted to do was the correct thing. There was no independent testing. There was no cross-examination. It was all contrived to create a business case for a project that made no sense from the beginning.”

ICYMI: The Startling Similarities Between Newfoundland’s Muskrat Falls & BC’s #SiteC Dam #bcpoli #cdnpoli https://t.co/ZgO61VLVx2 pic.twitter.com/chdEs51cKh

— DeSmog Canada (@DeSmogCanada) August 18, 2017

Lack of Checks and Balances

Democracy only works with checks and balances, Vardy said.

“What we have is a strong crown corporation, which is overbearing and spends enormous amounts of money. It has infinite communications resources. It has infinite money for studies,” he said. “They’ve basically backend loaded the project so the people in 50 years time will still be paying off this project.”

In British Columbia, BC Hydro has tried to stifle critical media coverage and has conceded that residents will be paying for the Site C dam for 70 years — until 2094.

“By the time the Site C hydroelectric dam is paid off, fusion or some other energy advancement might already have made it obsolete,” Nelson Bennett wrote in Business in Vancouver.

Grimes has said the legacy of Muskrat Falls will haunt Newfoundlanders for generations.

“This is the biggest mistake that Danny [Williams] ever made, by far, and will haunt all of us, unfortunately, for the rest of my life, my daughter’s life, my granddaughter’s life even,” Grimes told CBC.

Questions About Power Demand

Stan Marshall, the incoming CEO of Newfoundland’s public power utility, Nalcor, announced last year that load growth estimates had been vastly exaggerated and the cost of the project had escalated to $11.7 billion, from $6.2 billion in 2010.

In B.C., questions about demand for Site C’s power on the current timeline have been raised by review panel chair Harry Swain, former CEO of BC Hydro Marc Eliesen and former premier Mike Harcourt.

BC Hydro argues that B.C. will need new power to meet the needs of a growing population. This is where the provinces diverge as Newfoundland is not projecting any population growth.

However, B.C.’s power demand has stayed flat for the past 10 years despite a growing population, due in part to the shutdown of several industrial pulp mills, which are large consumers of electricity. Efficiency improvements for things like appliances and light bulbs also decrease demand.

“Hydro’s demand forecasts are persistently and systematically wrong,” Swain wrote in an affidavit to a federal court last year. “There is no reason to believe that much new power, if any, will be required in the next 20 to 30 years.”

In the 2012 load forecast used for decision-making by the B.C. government, BC Hydro predicted nine per cent growth in power demand over the next four years. It dropped by one per cent.

However, if B.C. electrifies its economy, including transportation, to fight climate change, B.C. will need more electricity, argues Mark Jaccard, former head of the B.C. Utilities Commission and professor in the School of Resource and Environmental Management at Simon Fraser University.

That said, it’s important for demand forecasts to be reviewed by the utilities commission, Jaccard told DeSmog Canada.

“We ran into this where the politicians will lean on people in Hydro to give a different forecast because it will justify whatever they wanted to do,” Jaccard said of his time at the helm of the utilities commission between 1992 and 1997.  “It’s always tricky when the utility is publicly owned.”

“If we’re going to act on climate, we need a lot of electricity. But we don’t need the Site C dam to get that electricity. We could get it other ways too,” he said.

Out of Sight, Out of Mind

Another thing Muskrat Falls and Site C have in common is that they’re located in remote areas with very small populations.

“On the island, in St. John’s, it’s been kinda out of sight, out of mind,” Vardy said. “Until such time as people see it show up in their electricity bills, most people are fairly oblivious to these impacts.”

Power rates in Newfoundland are now projected to rise from 11.5 cents per kWh to 21.5 cents per kWh when the dam comes online in 2020.

“It’s a very precarious situation where the interest on the public debt is now costing more than what we’re spending on our schools,” Vardy said.

Newfoundland is relying on exporting excess power at spot market prices, which are a fraction of the cost of producing the power —  also part of the plan in B.C.

“Ninety per cent plus of the burden is placed on consumers in this province. That is the core problem,” Vardy said about Newfoundland.

Rate increases in B.C. will depend on the final cost of constructing the Site C dam, domestic demand for power and the ability of B.C. to export excess power.

‘Blinded By the Sunk Costs’

Muskrat Falls is now beyond the point of being stopped, according to Vardy. But he argued for years that it could have been stopped, even though it had begun construction.

“You can’t do anything about sunk costs. You’ve got to weigh the future costs of stopping against the future costs of continuing. They kept being blinded by the sunk costs,” Vardy said.

Vardy’s advice to British Columbia is to “go back to the public utilities board and take this thing apart and see if it makes any sense.”

“If there’s no business case, it should be stopped because it’s going to be a burden on future generations.”

Escalating Costs

In particular, Vardy warned there needs to be a process in place to stop construction if costs escalate.

“That’s exactly what should have happened here. We should have said: ‘Things have changed. Circumstances have changed.’ ”

An Oxford University study in 2014 found that large dams suffer average cost overruns of 96 per cent and delays of 44 per cent.

Commenting on Premier Christy Clark’s vow to get Site C “past the point of no return,” Vardy said: “That’s not good public policy. What you want to do is do the right thing. If it doesn’t make sense to do the project, then it should be stopped.”

He pointed to the problem of politicians getting too attached to projects.

“They’re looking at this as a legacy project and they’re focused on their own egos and their hubris. And this is what happened here. And it sounds like the same thing is happening in British Columbia.”

The Narwhal’s reporters are telling environment stories you won’t read about anywhere else. Stay in the loop by signing up for our free weekly dose of independent journalism.