After 10 years, Muskrat Falls has left ‘deep wounds’ in Newfoundland and Labrador

It’s been exactly 10 years since the government in Newfoundland and Labrador green-lit Muskrat Falls, a hydroelectricity project that plunged the province into financial and political turmoil.

The project is years overdue and its costs have ballooned to $13.4 billion, up from the estimated $7.4 billion, including financing costs, when it was sanctioned.

Muskrat Falls has eaten away at provincial budgets and resources. Its mounting costs prompted a $5.2-billion bailout last year from Ottawa. It flooded Indigenous lands and threatens to contaminate hunting grounds in Labrador. And a public inquiry that began in 2018 concluded the government failed its people in pushing it through.

And the project is still not producing power at full capacity.

“It’s really a disgrace of some magnitude,” said Dennis Browne, a lawyer who was among a group formed in 2012 to oppose the project. He is also the province’s consumer advocate.

“We had everything going for us,” Browne said in an interview. “The government, with our oil revenues, were referring to this as our golden age. And then they took those oil revenues, and took our financial wherewithal, and put everything into Muskrat Falls. And it’s a failed project.”

Muskrat Falls was officially sanctioned on Dec. 17, 2012. It was touted as a way to kick-start a green energy economy for the province.

“This is truly a significant day in the history of Newfoundland and Labrador as we prepare to write the next chapter in our province’s future,” said then-premier Kathy Dunderdale in the news release issued by the Progressive Conservative government at the time.

Today it’s hard to find anyone in the province singing the project’s praises. Andrew Furey, the Liberal premier, last year called it “an anchor around the collective souls” of the province.

The project is largely completed, and it includes dams and a powerhouse in Labrador, as well as two main transmission lines: one from Labrador to the island of Newfoundland, and the other from Newfoundland to Nova Scotia.

But the software operating the line from Labrador to Newfoundland, called the Labrador-Island Link, has been plagued with problems and it’s not clear when they might be solved.

“There continue to be substantial doubts about both its short- and long-run ability to operate in a fashion that will permit reliance on its availability from a planning perspective,” said a Dec. 1 report from Liberty Consulting Group, which was hired by the province’s Public Utilities Board to monitor the project’s final stages.

Back in 2012, Browne’s group, called 2041 Energy Inc., wanted the Muskrat Falls project to be reviewed by the province’s utilities board. He said the government opposed the idea, saying the project wouldn’t affect domestic electricity rates and was therefore out of the board’s jurisdiction.

They were wrong, he said.

In July 2021, Ottawa announced $5.2 billion to help offset the project’s costs. Without it, domestic electricity rates in the province would have almost doubled.

Journalist Ashley Fitzpatrick is writing a book about Muskrat Falls, and she covered its development and the public inquiry into its failures for the Telegram newspaper.

“There’s been no closure on this for the public,” Fitzpatrick said in an interview. “And there were some really deep wounds. There was a real loss of trust that’s that’s happened over the course of the project. And I don’t know that there’s a full appreciation of that with the people who are in power today.”

A blistering report released in March of 2020 as part of a public inquiry into the project’s staggering costs and delays concluded the provincial government failed Newfoundlanders and Labradorians by deciding Muskrat Falls would go ahead, no matter what. Executives at Nalcor, the Crown energy corporation that oversaw the project, exploited that by withholding key information about rising and costs and risks, the report said.

Fitzpatrick said anyone wanting to launch big energy projects now will have to win over a suspicious and untrusting public. “The public here have been through basically a traumatic experience,” she said.

Government officials asked the Royal Newfoundland Constabulary to review the report for criminal activity. Fitzpatrick said there’s been no update on that investigation. The force said in an email Friday that it was unable to comment by press time.

Former premier Danny Williams was among Muskrat Falls’ first and loudest champions, though he retired two years before it was sanctioned. Alex Marland, a political science professor at Memorial University, said he’s struck by how Muskrat Falls changed residents’ opinions of Williams. Williams was not available for comment.

“I don’t think I can impress just how much Danny Williams was seen by many as an absolute saviour of Newfoundland,” Marland said in an interview. “But what has become potentially a legacy project for him has turned into a big albatross. It’s a complete flip in terms of public perception.”

This report by The Canadian Press was first published Dec. 17, 2022.