Skip to main content
The Globe and Mail
Support Quality Journalism.
The Globe and Mail
First Access to Latest
Investment News
Collection of curated
e-books and guides
Inform your decisions via
Globe Investor Tools
per week
for first 24 weeks

Enjoy unlimited digital access
Enjoy Unlimited Digital Access
Get full access to
Just $1.99per week for the first 24weeks
Just $1.99per week for the first 24weeks
var select={root:".js-sub-pencil",control:".js-sub-pencil-control",open:"o-sub-pencil--open",closed:"o-sub-pencil--closed"},dom={},allowExpand=!0;function pencilInit(o){var e=arguments.length>1&&void 0!==arguments[1]&&arguments[1];select.root=o,dom.root=document.querySelector(select.root),dom.root&&(dom.control=document.querySelector(select.control),dom.control.addEventListener("click",onToggleClicked),setPanelState(e),window.addEventListener("scroll",onWindowScroll),dom.root.removeAttribute("hidden"))}function isPanelOpen(){return dom.root.classList.contains(}function setPanelState(o){dom.root.classList[o?"add":"remove"](,dom.root.classList[o?"remove":"add"](select.closed),dom.control.setAttribute("aria-expanded",o)}function onToggleClicked(){var l=!isPanelOpen();setPanelState(l)}function onWindowScroll(){window.requestAnimationFrame(function() {var l=isPanelOpen(),n=0===(document.body.scrollTop||document.documentElement.scrollTop);n||l||!allowExpand?n&&l&&(allowExpand=!0,setPanelState(!1)):(allowExpand=!1,setPanelState(!0))});}pencilInit(".js-sub-pencil",!1); // via darwin-bg var slideIndex = 0; carousel(); function carousel() { var i; var x = document.getElementsByClassName("subs_valueprop"); for (i = 0; i < x.length; i++) { x[i].style.display = "none"; } slideIndex++; if (slideIndex> x.length) { slideIndex = 1; } x[slideIndex - 1].style.display = "block"; setTimeout(carousel, 2500); } //

Seven years ago this month, when then Newfoundland premier Danny Williams announced the province would go ahead with the now cursed Muskrat Falls hydroelectric project on the Lower Churchill River in Labrador, he proclaimed the moment "would go down in history as the day that finally eclipses that day back in 1969 when the Upper Churchill agreement was signed."

He's turned out to be right, just not in the way Newfoundlanders had imagined.

Instead of providing an antidote to the bitterness engendered by an Upper Churchill contract that overwhelmingly favours Quebec, Muskrat Falls has become an albatross that threatens the province's very solvency. Most Newfoundlanders now rue the day Mr. Williams approved it.

Story continues below advertisement

A public inquiry launched this week by current Premier Dwight Ball will examine how this was allowed to happen. While the inquiry promises to rub salt in the wounds by exposing the faulty assumptions, political considerations and inadequate checks and balances that led to the project's approval, it is a necessary exercise that will provide lessons for all Canadians.

That's because there is a similar story to tell in almost every province. Whether it involves provincially-owned hydroelectric behemoths in British Columbia, Manitoba or Quebec, or the Crown-owned nuclear-dominated Ontario Power Generation, politically-driven energy policies across Canada have saddled ratepayers and taxpayers with billions of dollars in extra debt.

The inquiry into the 824-megawatt Muskrat Falls project by Justice Richard LeBlanc of the Supreme Court of Newfoundland comes too late to save the province from a $12.7-billion sinkhole that will see consumers in Newfoundland pay more than 100 times for their electricity what Hydro-Québec now pays for power from the 5400 MW Upper Churchill development.

Though the inquiry, which must table its final report by the end of 2019, will not be able to make findings of criminal or civil responsibility for the Muskrat Falls fiasco, it promises to shed light on a recurring pattern in provincial energy policy-making across Canada. In too many instances, politicians and the Crown-owned energy entities they control have hidden or lowballed the risks inherent to their megaprojects. And they've gotten away with it by exempting these projects from a preapproval review by provincial energy regulators.

It's only after construction contracts are awarded, shovels are in the ground and thousands of workers are hired that the economic folly of these projects becomes apparent to all. Costs spiral upward – twofold so far in the case of Muskrat Falls. There are eerie parallels in British Columbia's $9-billion Site C hydro project and the $8.7-billion Keeyask dam in Manitoba. OPG's $12.8-billion refurbishment of the Darlington nuclear facility risks following the same path.

The Muskrat Falls inquiry will examine whether the Progressive Conservative governments of Mr. Williams and his successors Kathy Dunderdale and Paul Davis had all the information necessary to make the right calls along the way, or whether they were kept in the dark by management at Nalcor, the provincial energy company overseeing the hydro project. Justice LeBlanc will be able to review all cabinet records, subpoena Nalcor files and former executives and order a forensic audit of the project. While Indigenous groups opposed to the project will have standing, the inquiry will not specifically examine their environmental concerns.

In June, Mr. Ball, a Liberal elected in 2015, released a 2013 report prepared for Nalcor by SNC-Lavalin that warned the Crown corporation of major risks and cost overruns that Nalcor is now accused of burying. Montreal-based SNC-Lavalin had been awarded the contract for engineering, procurement and construction management at Muskrat Falls. The firm had long lobbied for the project, arguing joint development of the Lower Churchill's hydro potential by Newfoundland and Quebec would enable the provinces to bury the hatchet over Churchill Falls.

Story continues below advertisement

That, of course, never happened. The lopsidedness of the original Churchill Falls contract and Quebec's refusal to renegotiate it prompted Newfoundland to go it alone on Muskrat Falls, a project far too large for such a tiny province. Newfoundland and Quebec, meanwhile, are headed to the Supreme Court of Canada next month to settle a dispute over water rights on the Churchill River that threatens Muskrat Falls's ability to generate as much power as Newfoundland claims it will.

Newfoundland's hopes for energy export contracts for Muskrat Falls power, through an underwater transmission link to Nova Scotia and from there on to the United States, are unlikely to ever materialize – or at least not at prices that would come close to covering the project's costs.

It's a Shakespearean tragedy, in a Newfoundland accent.

Your Globe

Build your personal news feed

  1. Follow topics and authors relevant to your reading interests.
  2. Check your Following feed daily, and never miss an article. Access your Following feed from your account menu at the top right corner of every page.

Follow the author of this article:

View more suggestions in Following Read more about following topics and authors
Report an error Editorial code of conduct
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to If you want to write a letter to the editor, please forward to

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

If you do not see your comment posted immediately, it is being reviewed by the moderation team and may appear shortly, generally within an hour.

We aim to have all comments reviewed in a timely manner.

Comments that violate our community guidelines will not be posted.

UPDATED: Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies