Dwight Ball says he's not ready to don Muskrat jersey, as inquiry reaches milestone

The Muskrat Falls inquiry reached a significant milestone with the conclusion of Phase II on Friday, with Premier Dwight Ball providing a frosty critique of the troubled project, and accepting some of the blame for an embarrassing mistake related to methylmercury.

But it was an exchange with a lawyer representing some former premiers, including Danny Williams, nearing the end of Ball's two days of testimony that stood out.

The premier was being cross-examined by Tom Williams, Danny Williams' brother, when asked whether he had an optimistic outlook for the potential benefits that Muskrat Falls might bring to the province.

Williams was referring to the potential cash flow from export energy sales, and optimism about significant growth potential in the offshore oil industry. Williams said that new revenue could be used to help pay the massive cost of building Muskrat.

"We have to be very optimistic about money from the offshore," said Williams.

Ball wants Muskrat to be successful

And in setting up his question for the premier, Williams made reference to a Nalcor official who recently urged people to don the Muskrat jersey and get behind both the project and government-owned Nalcor.

But if Williams was hoping for cheerleading from the premier in response, it's safe to say his question fell flat.

Ball launched into a highly critical analysis of the project, saying it will require government to use at least $2 billion in Nalcor dividends from oil and gas revenues over the next decade to help keep electricity rates affordable.

That's money that won't be used to support public services like health, education and infrastructure, said the premier.

I don't deposit optimism in the bank account of this province.- Dwight Ball

"We were told the project would be $6.2 billion. We're at 12.7. We were never told that this project would be nearly 30 per cent of the net debt of this province," said Ball.

"If I had known that information, or if Newfoundlanders and Labradorians … had known that back in 2012 and '13, I don't think we would be sitting here today, with this project done the way it is."

As for Williams' comments about the prospect of significant growth in the offshore, Ball said, "I don't deposit optimism in the bank account of this province."

He added that to count on revenue that right now is imaginary is "not responsible."

Ball said using dividends — $200 million annually beginning in 2021 — from oil and gas to pay for Muskrat was not in the original plan.

In the longer term, the premier acknowledged there might be benefits from Muskrat, but he predicts a tough decade ahead.

"In the short term we still have a lot of money that will need to be injected into this project to keep rates affordable, and to keep this province into a point where were actually compete and attract business here. This is what I'm dealing with."

Premier an optimistic person

Ball said he's an optimistic person, and believes in a bright future for the province, but added "I'm not going to sit here today and say that we have an optimistic future simply because of the Muskrat Falls project."

The Liberals have promised to stabilize electricity rates on the island at 13.5 cents per kilowatt hours in the Muskrat era, well below the 22.9 cents rates are projected to reach if no mitigation measures are taken.

One of the biggest planks in that plan is a restructuring of the financing arrangement for the two federal loan guarantees. Talks between Ottawa and the province on that front continue, Ball confirmed during his testimony.

The public utilities board is also reviewing ways to keep power rates affordable, while still making Muskrat mortgage payments that will amount to nearly $726 million in two years.

'There's a shared responsibility'

Meanwhile, Ball was again challenged Friday about an embarrassing oversight relating to efforts to reduce the threat of methylmercury contamination in Lake Melville, downstream from the Muskrat generating station.

It's now too late to carry out what's called wetland capping in the reservoir that will be created once water impoundment begins this summer.

This measure was recommended by an expert independent advisory committee called the IAEC more than a year ago, and was approved by the Ball government in January.

Do I share some of the concerns about this and some of the responsibility? Of course I do.- Dwight Ball

But before any action could be taken, time ran out.

That's despite the fact Nalcor applied to the provincial environment department for a permit 12 months ago. That permit was never approved, and Ball blamed that oversight on the department.

But as the Minister of Intergovernmental and Indigenous Affairs, and the Minister responsible for Labrador Affairs, Ball accepted some of the blame Friday.

"There's a shared responsibility to go around but I do not issue permits that come in to the Department of Municipal Affairs and Environment. Do I share some of the concerns about this and some of the responsibility? Of course I do," he said.

Ball denied there was a deliberate oversight in order to save money, and said Nalcor is now in talks with Indigenous groups in Labrador to explore other ways to invest the roughly $30 million that was set aside for capping.

Concern about methylmercury contamination of the wild food supply downstream of Muskrat is a longstanding issue, and Ball agreed to the capping measure following a series of protests in 2016.

But since then, said Ball, research has found that capping will reduce the threat by just one to two per cent.

And Ball said continuous monitoring of the water has not detected a spike in methylmercury levels.

"You have to wonder if the IAEC recommendation would have been the same if they had the data that's now available,"
 said Ball. 

The third phase of the inquiry begins July 16, with nine days of testimony in St. John's. The focus will be on the financial impacts of the Muskrat Falls project.

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