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Concerned Citizens face grilling at Muskrat Falls Inquiry

Former Public Utilities Board chair David Vardy (left) and former city manager and provincial deputy minister of public works Ronald Penney (right) have been talking and writing about their concerns and doubts around the Muskrat Falls hydroelectric project for years. They were called to the stand Wednesday at the Muskrat Falls Inquiry hearing room at the Beothuck Building in St. John’s.
Former Public Utilities Board chair David Vardy (left) and former city manager and provincial deputy minister of public works Ronald Penney (right) have been talking and writing about their concerns and doubts around the Muskrat Falls hydroelectric project for years. They were called to the stand Wednesday at the Muskrat Falls Inquiry hearing room at the Beothuck Building in St. John’s. - Ashley Fitzpatrick

Coalition representatives David Vardy and Ron Penney admit gaps in knowledge

It had been swimming just under the surface, but on Wednesday the “us” versus “them” on Muskrat Falls hydro was hauled out of the water.

There were glimpses before on the record, of the sides and the division: voices publicly pro-project and the people speaking against it, with varying reasons on both sides. The “cheerleaders” in favour, versus the “bottom feeders” opposed — in their words.

Then Ron Penney and David Vardy were called as witnesses. Vardy is a former chair of the Public Utilities Board (PUB), while Penney is a former St. John’s solicitor and city manager, with both considered among the most recognizable voices in opposition to the project. They are leaders in the Concerned Citizens Coalition, with standing at the inquiry.

The pair reiterated their desire for greater public debate before Muskrat Falls was sanctioned. They spoke about their view that more consideration could have gone to options to bring the province through to 2041, and with contracts relating to the Churchill Falls power plant expired, tapped power there for domestic use.

Vardy said the Muskrat Falls hydroelectric development downstream should not have been exempted from full PUB review, even if it would have required additional expert advisers, and the government of the day dealing with policy and legislative barriers.

“We just didn’t need that project,” Penney said.

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On cross-examination, lawyer Erin Best (representing Kathy Dunderdale) challenged public statements from Vardy and Penney about the earlier Grant Thornton audit report for the inquiry — claims of certainty the Muskrat Falls project should not have been sanctioned.

“That was our interpretation of the Grant Thornton report,” Vardy said.

She had Vardy acknowledge he didn’t know how much it would cost for options such as power from natural gas, despite his advocating for years it required greater exploration as an alternative with potential.

Lawyer Tom Williams took to the podium, and started by highlighting the time passed since Vardy would have been trained in economics and Penney would have been trained in law. He asked both men more about their expertise, as they acknowledged they had not been formally trained in engineering, hydroelectric development or megaproject development, and were not presented as expert witnesses.

Williams represents a collection of elected officials who were in power during the time of the Muskrat Falls project’s sanctioning and construction (a handful of former Progressive Conservative government ministers and premiers from 2003 to 2015, not including former premier Kathy Dunderdale, but including former premiers Paul Davis, Tom Marshall and Danny Williams).

The lawyer proceeded to make connections between Penney, Vardy and other individuals who have publicly questioned and criticized the project.

He noted Penney’s past work in the government of Brian Peckford. Peckford made public comments in opposition to how the Muskrat Falls project was assessed, later advocating against waiting to begin a forensic audit as construction ran over budget.

Uncle Gnarley blog producer Des Sullivan (right) tackles questions from reporters following the conclusion of testimony at the Muskrat Falls Inquiry Wednesday. Former St. John’s mayor Andy Wells, asked into the media area to also respond to a few questions, waits while listening to Sullivan’s responses.
Uncle Gnarley blog producer Des Sullivan (right) tackles questions from reporters following the conclusion of testimony at the Muskrat Falls Inquiry Wednesday. Former St. John’s mayor Andy Wells, asked into the media area to also respond to a few questions, waits while listening to Sullivan’s responses.

Williams mentioned former mayor and former PUB chair Andy Wells, noting Penney would have worked with Wells during their time with the City of St. John’s.

Penney said the two still get together two or three times a year for dinner, not seeing an issue with maintaining the relationship during Wells’ time as PUB chair.

Williams said Des Sullivan, who writes the blog known as Uncle Gnarley, is also part of the Concerned Citizens Coalition, and published guest posts from Vardy and Penney on his website.

He said engineer Stephen Bruneau — who has long said the province should have further explored using natural gas from the offshore oilfields as an alternative to Muskrat Falls hydro — is a member of Vardy and Penney’s coalition.

The witnesses were unable to speak to some points — for example, when Penney was asked about former Nalcor Energy president and CEO Ed Martin’s megaproject experience, he said his understanding was Martin didn’t have any, but agreed he had never checked that.

The pair said they did not know everything about the project, but have tried to gather evidence showing alternatives explored, promoting critical review in public.

Commissioner Richard LeBlanc stepped in when Williams started to say Sullivan, Uncle Gnarley, should have been on the stand. He said requests for witnesses could be made to his co-counsel.

“I have a job to do. And I’m not too concerned about all the personalities involved,” LeBlanc said. “You know, I don’t know what the love-hate relationships are or anything like that, and to be quite honest with you, I don’t really care about that. What I’m trying to do is respond to the terms of reference that I have.”

Former premier Danny Williams told reporters little weight should be given by the commissioner to Vardy and Penney.

“They’re criticizing for the sake of criticizing, and nobody is safe from that,” he said.

Sullivan told reporters Vardy and Penney can say a great deal with credibility, and while he did not testify, what he has said and done is in the public domain.

“I thought it was a subtle attempt at I suppose you could call it character assassination,” said former mayor and former PUB chair Andy Wells. “What they’re trying to do is to invalidate the great work that Dave Vardy, Ron Penney and Uncle Gnarley over there have done with respect to this issue.”

Wells repeated his own position now, that Muskrat Falls was a “major public policy mistake.”

Scheduled witnesses for Thursday are Roberta Benefiel of Grand Riverkeeper Labrador and Philip Raphals of the Helios Centre.

Ron Penney suggests expropriation of Churchill Falls

While on the stand Wednesday at the Muskrat Fall Inquiry, former Public Utilities Board chair David Vardy and former St. John’s city manager Ron Penney were asked about the idea they’ve promoted as a possible alternative to Muskrat Falls: finding a way to bridge the gap on power needs, and use electricity from the larger Churchill Falls power plant when contracts around its use expire in 2041.

Nalcor Energy lawyer Dan Simmons walked previous witnesses through the idea, and he did the same with Penney and Vardy. He noted, among other things, power was not necessarily free and clear and in the hands of Newfoundland and Labrador at that time.

Churchill Falls is controlled by the Churchill Falls (Labrador) Corp. (CFLCo). And while CFLCo is a Nalcor Energy subsidiary, Hydro-Québec continues to have a minority stake.

Given the duty under corporate law for for CFLCo to act in the best interests of its shareholders, it will have to look for the best price being offered for its power. That means, setting aside the potential for further negotiation on that front, Newfoundland and Labrador would have to offer a competitive price for the power.

Simmons asked Penney if it was as simple as waiting for 2041 for free power. Penney said “obviously” the province doesn’t own CFLCo outright and acknowledged Hydro-Québec’s interests.

“They have a lot of extraordinary power over and above their one-third interest. So that will remain. At the time — I probably won’t be around — but at the time, or prior to that, there’s a number of choices that we have. I believe we could expropriate their interest. I realize that gets back to one of the cases … or we could leave them in,” he said.

The idea to “expropriate their interest” didn’t pass by Simmons, who noted when interests are expropriated, they still need to be paid for, with the cost borne by the province. Simmons said it would also be likely subject to “a long legal fight with Quebec.”

Expropriation has not been suggested as an option by the Government of Newfoundland and Labrador.

Former premier Danny Williams told reporters it couldn’t happen.

“Legally, I don’t think it stands a chance,” he said, citing in addition the prohibitive cost.

The proposal does not meet any immediate or near-term needs and both sides acknowledged other investments would have to be made to “bridge the gap” to 2041. Vardy and Penney could not suggest what the costs there would be, but said it could have been further explored.

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