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COMMISSION OF INQUIRY RESPECTING THE MUSKRAT FALLS PROJECT Transcript | Summations Volume 2 Commissioner: Honourable Justice Richard LeBlanc Tuesday 13 August 2019 August 13, 2019 No. 2 CLERK (Mulrooney): All rise. resigned from the premiership in January of 2014. This Commission of Inquiry is now open. As minister of Natural Resources, Ms. The Honourable Justice Richard LeBlanc Dunderdale became acutely aware of a presiding as Commissioner. significant threat facing this province. The threat was the looming demand for power. Houses Please be seated. were getting bigger, more people were using electric heat and the old Holyrood infrastructure THE COMMISSIONER: All right, good was doomed to fail. Without reliable, firm morning. power, there would be no prosperity in Newfoundland and Labrador, no hope for a Just to give a bit of an update as to what this stable future. It sounds dramatic, I know, but week’s plan will be. So based upon the that was the reality at the time. The threat was information that I now have related to the particularly intense on the Island portion of the amount of time that each counsel is proposing to province since it was truly an isolated system. use, I think it’s fair to say that we will be The threat was imminent, but by 2006, when finishing on Thursday. So that will give the Ms. Dunderdale came on board at Natural lawyers an opportunity to make arrangements Resources, government was already actively with their flights and things of that nature. addressing the issue. It had already recognized That’s why I’m telling you this. the complexity involved. So my plan today is to get as far as finishing the In 2004, two years before Dunderdale became Consumer Advocate and that should give us minister of Natural Resources, the Williams plenty of time to ensure that – based upon the government, in consultation with industry indications to Mr. Beresford as to the amount of experts, began restructuring Newfoundland and time each counsel would have, that will give us Labrador Hydro to create a new energy plenty of time to finish on Thursday. corporation. The purpose of this corporation was to amass and leverage expertise in the energy So, having said that, Ms. Best for Kathy sector. In 2005, a year before Ms. Dunderdale Dunderdale. started at Natural Resources Ed Martin was hired to lead the new energy corporation, now of MS. E. BEST: Good morning, Commissioner. course known as Nalcor. By the time Ms. Dunderdale was appointed minister of Natural As you know, I’m Erin Best and I represent Resources in July of 2006, Mr. Martin had been Kathy Dunderdale. in his role for about a year and activities at Nalcor were advanced. So I’ve prepared some oral submissions for this morning that summarize and supplement my The creation of the Nalcor Crown corporation, written submissions, but I am happy to take your as I said, was recommended by experts. This questions at any time. was because governments were, and still are, typically ill equipped to handle the complexities So I’m going to start with a brief timeline associated with the generation and distribution highlighting Premier Dunderdale’s involvement of energy. It’s an area that requires significant in the Muskrat Falls Project and in government, expertise. and then I will speak to a few issues that have been central to this Inquiry. Like most politicians, prior to her appointment as minister of Natural Resources, Premier Kathy Dunderdale was elected to the House of Dunderdale had minimal, if any, exposure to the Assembly in 2003. She was appointed minister energy or natural resources sectors. Before of Natural Resources in 2006, a position that she entering politics, Dunderdale had a career in held until December 2010 when she became social work and the community sector. Premier premier. In 2011, Premier Dunderdale was Dunderdale, like the premiers before her, was elected with a majority government. She not an expert in energy or resource development. Commission of Inquiry Respecting the Muskrat Falls Project 1 August 13, 2019 No. 2 She, like all other elected representatives, made given a strong majority mandate to advance its decisions based on the best information supplied energy policy, which included a promise to by the officials and experts who supported the consider the development of the hydroelectric office. potential of the Churchill River. When a need for expertise is recognized, Now, yesterday during submissions and government’s role is to allocate resources to questioning, there was some suggestion that the amass and develop that expertise. This was the 2007 energy policy provided a directive to raison d’être of Nalcor and the reason why Nalcor to develop Muskrat Falls. So I’d like to government was entitled to rely on Nalcor. In look at that policy and, Madam Clerk, if you many ways, as we’ve heard, Nalcor was much could please pull up P-00029, at page 40. like a core department of government. Premier Dunderdale was entitled to rely on the And firstly, as discussed, this document was information that she received from Nalcor prepared before Dunderdale’s time. It took years without the suspicion that she would have had to prepare and was released only months after for information she would have received from, she became minister of Natural Resources. And say, a private, profit-driven company. as we’ve all witnessed in our lives outside this Inquiry, with new leadership, naturally, comes In his evidence before the Commission, Stan new policies and new directives. So I’d like to Marshall, the current CEO of Nalcor, stated as read what this policy says at page 40. follows: “You know, you got to – when you go forward with these things, you got to have a “Together with our existing hydroelectric and team to do it. You know, the government should some wind power, the Lower Churchill project be entitled to rely on Nalcor. That’s what special will meet our long-term electricity needs.” These expertise would do. When Nalcor does it, it has “are, however, potential industrial developments a project team to do it. both in Labrador and on the Island that could result in a sharp rise in – sorry – “There are, “You can’t be double- and triple-checking.” however, potential industrial developments both in Labrador and on the Island that could result in Throughout her terms in elected office, Premier a sharp rise in demand before Lower Churchill is Dunderdale frequently and consistently developed.” Newfoundland and Labrador Hydro requested, challenged and relied on the “is actively working with existing and potential information and advice of her officials and new industrial customers to ensure their needs experts, especially the information and advice can be met. she received from Nalcor. “To ensure that we can meet our future Importantly, though, fundamental decisions, electricity needs, we must also have an alternate including the decision to sanction the Muskrat plan in the event Lower Churchill does not Falls Project and proceed through financial proceed as planned. In this case, we will provide close, were not made by Premier Dunderdale future electricity needs from the most alone. Decisions of that magnitude are beyond economically and environmentally attractive the authority of any one individual, even the combination of thermal, wind and smaller hydro premier. As per the normal course, these developments. These sources could provide an decisions were made by the consensus of additional 100-200 MW of power. The Cabinet based on the best information provided. remainder would come from thermal generation.” Newfoundland Hydro “is studying In 2007, when government released its energy these sources in parallel with planning for the policy, Nalcor and government were well aware Lower Churchill to ensure the future energy of the looming power deficit that would face this supply for the province is secured.” province. But they were also aware of some Newfoundland and Labrador Hydro “is also incredible opportunities. Prime among them studying the potential for landing gas in the was, and still is, the potential for hydroelectricity province from our offshore resources to fuel a from the Lower Churchill. In the 2007 election, thermal electricity generating plant.” the Progressive Conservative government was Commission of Inquiry Respecting the Muskrat Falls Project 2 August 13, 2019 No. 2 If you could please scroll down – “In Labrador, Corporation has established a comprehensive in addition to available recall from the Upper and clearly-defined project execution plan and Churchill, wind and other hydro developments will continue to advance the project on multiple are potential power supply options to be fronts, including engineering and the considered in the event that the Lower Churchill environmental assessment process, analysis of Project is not sanctioned.” market access options and market destinations, and a financing strategy. The project is targeting So we can see here, first of all, that government sanction in 2009, with in-service of Gull Island is considering the possibility that the Lower in 2015.” Churchill Project would not be sanctioned, and that’s explicit here in the policy. Actually, So again, there, quite obviously, none of that Madam Clerk, I am going to continue reading, happened. This mandate or directive that was and I apologize if it’s tedious to read through it, given to Nalcor clearly underwent significant but I’m just going to go through this section and revisions in the years to come. then we can move away from this document. If we could please, Madam Clerk, just scroll up Generating Electricity: Lower Churchill Project. to the top of this page, I would like to read the “The Lower Churchill Hydroelectric Project is section that’s in green on the left – Policy the most attractive undeveloped hydroelectric Actions: Lower Churchill Project.

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