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No outside check of final ‘strategic risk’ assessment for Muskrat Falls project

Commissioner Richard LeBlanc.
Commissioner Richard LeBlanc. - -File photo

Project director asked more questions about independent project reviews

Muskrat Falls hydroelectric project director Paul Harrington wanted “cold eyes” reviews before the project’s green light in 2012 to be as efficient as possible, which is why he didn’t want the Manitoba Hydro International (MHI) review team taking away drawings, or working out of their home office, or looking into strategic risk.

“I wanted them to sit in our offices and work with our people,” Harrington testified on the stand at the Muskrat Falls Inquiry for a second day Tuesday.

Harrington spent much of the day fielding questions about the highly touted, “cold eyes” project reviews by both MHI and the Independent Project Review (IPR) team of consultants.

There were questions about why he made certain recommendations and did not send on potentially relevant information. He was asked if the work was independent, and a fair and a complete reflection of the project’s risks and cost.

Harrington said he did recommend the MHI review team should be provided “high-level” documents and be reminded of their scope of work, but not to avoid criticism.

He said he thought it was a good idea for the Crown corporation to avoid anything like the “long, drawn-out effort” required for the previous Public Utilities Board (PUB) review, with its many requests for information from the consultants to Nalcor Energy.

He said the back and forth was dropped in favour of a face-to-face review of documents.

Paul Harrington, project director for the Muskrat Falls project pre-sanction, was more recently named project director (generation) in a rearrangement of the project following a change in 2017 in Nalcor Energy’s president and CEO to Stan Marshall.
Paul Harrington, project director for the Muskrat Falls project pre-sanction.

“It’s more efficient to do it that way,” he said, responding to questions from inquiry co-counsel Kate O’Brien, who asked why he would not allow the consultants to decide on the best approach.

The inquiry has heard about changes made to the MHI report. Harrington said he did propose changes to consultant reports. He testified he did not expect, nor believe, changes would be made if the consultants disagreed with them.

“There’s no coercion. There’s no pressure put on the authors here,” he said, explaining that revisions are commonplace in the “project world.”

Slide on ‘strategic risk’

He was asked about a presentation slide carrying information on “strategic risk beyond contingency,” removed from a presentation given to MHI. The slide was also not included when the slide deck was passed to the provincial government.

“I can confirm to you the Government of Newfoundland and Labrador, to the best of our searching, never received that slide,” O’Brien said of the strategic risk information, asking Harrington why a warning related to potential costs of the project would be kept from the government.

Harrington said he was not the person who sent the deck to the government. He also said what was communicated to the government, or to the Nalcor Energy board of directors, was determined by Nalcor Energy vice-president Gilbert Bennett and Nalcor Energy president and CEO Ed Martin.

The IPR report

Harrington said he did propose changes to a second “cold eyes” review — the IPR team’s final report. He proposed different wording at points, he said, but he denied asking for changes in meaning or message.

The IPR team of consultants rejected the changes proposed. But their report was also not widely shared.

Harrington said he doesn’t know who decided only a summary of the final IPR report would be in the “decision gate three” support package that went to Nalcor Energy’s board of directors and the provincial government. The IPR report was not included in full.

Harrington said he was certain the Nalcor Energy executive, namely Bennett and Martin, were aware of the level of strategic risks, and of those risks not being covered by the project’s public cost estimate.

He would not agree the public project cost estimate should have been higher. He said a management reserve to cover strategic risks was being dealt with separately from the project’s other estimated costs.

Harrington is scheduled to be back on the stand for further questions Wednesday.

•••

Project director pay released

Having challenged the public release of his exact project pay, Paul Harrington was told Tuesday by Commissioner Richard LeBlanc it was fair game for inquiry counsel.

LeBlanc ruled unredacted copies of Nalcor Energy contracts with Fabcon Canada (2005-06) and then Erimus Consulting — Harrington being the named contracting consultant — were entered into evidence.

The documents confirmed the project director was contracted at a day rate of:

• $1,500 from April 1, 2007 to March 31, 2009

Hourly rate: $166.66

• $1,538 from April 1, 2009 to March 31, 2010

Hourly rate: $192.25

• $1,676 from April 1, 2010 to March 31, 2011

Hourly rate: $209.55

No further updates were made before the project’s sanctioning, according to testimony.

Deputy project director Jason Kean previously testified his company (Project Solutions Inc.) contracted for $1,100 to $1,200 per day.

A more extensive report on the pay decision is available online at thetelegram.com.

ashley.fitzparick@thetelegram.com

Twitter: @TeleFitz


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(NOTE: An earlier version of this story suggested Paul Harrington testified of being certain the provincial government was aware of a $300 million to $600 million estimate for "strategic risk" reserve required for the Muskrat Falls project. Upon review, he testified only to knowing Nalcor Energy vice-president Gilbert Bennett and president and CEO Ed Martin were aware. A quote used in an earlier version of this story was in refernce to only the Nalcor Energy executive, not government staff or members. It has been removed to assure clarity.)

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