07 December 2016

Megawreck #nlpoli

Over the past couple of weeks, the people of Newfoundland and Labrador have been shown more and more the lunacy that is Muskrat Falls.

Nothing better exemplifies the crazy world of the Muskrateers than Dwight Ball's claim in interviews that he has wrestled the project back under control.  Not long after, we learned that problems with the cofferdam and the powerhouse go back to the summer and yet the public have only just learned about the cost over-runs that will continue on a project that is as far from under control as possible.

We don't need to review all of this because you can find posts about the decision-making failures at Muskrat Falls long before now.  In light of the recent revelations, it's worth going back tos ee how may of the problems turned up way before anyone started building.  So enjoy these posts from 2012 on decision-making.

Try not to cry.

"The past decade has shown that even the best owners and contractors have been largely unable to scope, define, plan, estimate and execute these mega-projects with any sort of predictability. Cost overruns of 100% or more have been widely reported, along with years of schedule delays. In fact, such experiences are so common there is even a word for it: a 'megawreck'." (Westney Consulting Group)
For fun, take a look at a post from February 2012 about the cost of Muskrat Falls and the impact on consumers.  When Danny Williams set us down this road,  Kathy Dunderdale said the thing would raise electricity prices to something like 17 cents a kilowatt hour.  

The most recent estimate - now long out of date  - was for about 21 cents a kilowatt hour.  When people talk about the new loan guarantee shaving off a bit of the cost, understand that the loan guarantee will only have an impact on future cost increases.  In other words,  we are still talking about consumer prices of at least 21 cents a kilowatt hour.  Remember that number.

In February 2012,  Nalcor calculated the cost of service price for Muskrat Falls electricity, including the approved rate of return was 21.4 cents per kilowatt hour. That's not the cost of electricity to consumers but even at that point,  Nalcor was talking about taking consumer prices from around 11 cents a kilowatt hour to 17 cents in order to cover off the cost of Muskrat Falls.

That 21.4 cents didn't include construction of the transmission facilities or any of the subsequent cost over-runs on the project. The cost of the project is roughly double what it was in February 2012.

Now do a bit of math.

Try not cry.