Nalcor Lies of Omission

What's a lie of omission? A lie of omission is defined as leaving out an important fact when putting forward a story. This is what Ed Martin, President of Nalcor did this weekend on CBC's show On Point. Frankly, I was shocked. Then I was angry - and I remain angry. Here is what was said during the interview:

President Ed Martin:

"If I can just take a brief moment to explain, as briefly as I can, what's really happening there. This is really about the Power Contract with the Upper Churchill, and the Power Contract is really the original contact for 40 years and the extension. In the original contract Hydro Quebec had negotiated the ability to really get the power when they wanted it, you know, at their say.In the renewed contract, in the second part of the contract, it is very clear and different. They get a fixed amount every month, and we've said to them you have to take that, that is what the contract says. They said we would like to have it the first way. We said, well folks, a contract is a contract in this particular case, and you are going to take it that way.

Putting that aside, that's what they are trying to argue. But from our perspective, even if we treated it like the original contract, it has no impact on Muskrat Falls flow, so either way we are fine. So we obviously expect we will win that, that court action, but assuming we didn't, either way we've run the numbers and it's not going to have an impact that's going to hurt Muskrat Falls."

Cochrane:

" So you're 100% certain that nothing Hydro-Quebec is doing in the courts right now will impact your ability to operate Muskrat Falls as intended in your business plan?"

Martin:

" That's correct. They've been operating that plant for fourty years in a certain way, and if they continue to operate that plant in that fashion for fourty years, no impact on the project."

Here is the link if you want to listen to it:
http://www.cbc.ca/news/canada/newfoundland-labrador/what-s-next-for-muskrat-falls-1.2464965

Point one is this, Quebec's lawsuit for a declaration of their rights under the Power Contract is not just solely affecting the Power Contract. Hydro-Quebec is suing, because apparently Nalcor/CFLCo have taken more MW of power from the Upper Churchill, since last June, than they are permitted to under the Power Contract. They are also suing over their right to operate the dam in accordance with their needs, which is what the Power Contract allows them to do. Now ask yourself this: If this Hydro-Quebec lawsuit has nothing to with Muskrat Falls, and especially the Water Management Agreement, then why is Hydro-Quebec suing over their right to operate the dam for only their needs (minus recall)?

It is apparent that Nalcor via CFLCo has been taking more MW than they are allowed to, so they must be doing so based on the Water management Agreement, because prior to that they had no grounds to take extra power. We have yet to be told by our government how much power was taken, and under what authority. However, it is clear that Nalcor is "being too cute" by applying the Water Management Agreement to take power, but not disclosing it to the public they are doing so, or what legal quandary that leaves us in - or expense. In other words, they are fighting a territory fight where the Supreme Court of Canada has already said they don't have territory, and we will pay for it, but they don't seem to care about that.

Martin also states that Quebec has to buy a minimum bloc of power under the renewal contract, and that is true. They have to buy what the average consumption they used over 40 years as a minimum monthly purchase. That's about 3500 MW. What he doesn't say is they take more than that now, and are by law entitled to. Essentially, Martin is not telling the truth here. Hydro-Quebec is not arguing about their minimum buy required. It's clear, spelled out, and they use more anyway. It's a completely false argument presented by Martin. There are only two points they are arguing: 1. Does Hydro-Quebec have the right to all the power created except the recall power? The Supreme Court decided that in 1984, and Nalcor has no right to take anything beyond recall. 2. Does Hydro-Quebec have the right to require the dam be operated to meet their needs, and their needs alone, other than recall power. The Power Contract says they do. In any case, Hydro-Quebec's case has nothing to do at all with how much power hydro-Quebec has to buy. This is just a blatantly false statement from Martin, and it really doesn't fit the criteria for a lie of omission - it's just straight out false.

Then Martin says he is 100% certain that Quebec's court action won't affect the flow for the Muskrat Falls dam. That is another stinker. Consider Nalcor's pre filed evidence to the PUB submitted in 2009:

"Uncoordinated production among the Churchill River facilities could result in either
15  excessive or insufficient water at the lower Churchill facilities. Excessive water will result in
16  spill.  Insufficient water to meet delivery schedules will result in excessive drawdown.
17  Either case represents inefficient use of the available water.  Flow regulation is therefore an
18  important factor in fulfilling the efficiency policy contained in subparagraph 3(b)(i) of the
19  EPCA...

22  The control of the rate at which water is delivered to a hydraulic generating facility
23  increases the plant’s ability to produce power on demand.  The ability to regulate the flow
24  of water is a result of having adequate storage.  The degree of flow regulation determines a
25  plant’s firm power and energy capability...

15  Irregular production at Churchill Falls will have different effects on the lower Churchill
16  facilities depending upon the uncontrolled natural inflows at various times of the year.  In
17  many months, the lower Churchill facilities would have insufficient water for production
18  requirements during periods of reduced production at Churchill Falls. However, during the
19  spring runoff, there would be excess water, resulting in spillage, during periods of increased
20  production at Churchill Falls.  These problems would be compounded if full CF(L)Co delivery
21  of Continuous Energy was scheduled early in one month followed by full production late in
22  the following month.  

4  In the absence of a water management agreement, Nalcor would not even have advance
5  knowledge of expected flows from the Churchill Falls facility to enable it to take steps to
6  mitigate spillage through advance drawdown of the lower Churchill reservoirs.

11  In the absence of a water management agreement, Nalcor would be required to utilize the 

12  water as it became available.  Given the limited storage capacity in the Gull Island reservoir 

13  (approximately three to four days of maximum flow from the upper Churchill facilities), 

14  Nalcor would have to turbine the water and produce energy at the time that it was 

15  available; it would be required to “chase the flows” from the upper Churchill.  Spills would 

16  be likely during the period of the spring runoff, resulting in wasted energy.

Water Management Agreement Application ‐ Pre‐filed Evidence

 

 Page 14

Nalcor Energy    

Table 1: Irregular CF(L)Co Production Profile 

Continuous Energy – First 20 days of month  4,765 MW 

Recall and Twinco  495 MW 

Total – First 20 days of month  5,260 MW 

Continuous Energy – Last 11 days of month  900 MW 

Recall and Twinco  495 MW 

Total – Last 11 days of month  1,395 MW 

 

1  The resulting releases into the lower Churchill reservoirs would be as follows for the above 

2  production values: 

Table 2: Irregular CF(L)Co Production Water Release 

Daily Churchill Falls Water Release – First 20 days of month  160 million m3

Daily Churchill Falls Water Release – Last 11 days of month  42 million m3

 

3  During the March timeframe, uncontrolled inflows into the Gull Island reservoir will be 

4  minimal and under average and dry year conditions are as follows: 

Table 3: Gull Island Uncontrolled Inflows March 

Daily Uncontrolled Natural Inflows – Average Year  6 million m3

Daily Uncontrolled Natural Inflows – Dry Year  0.7 million m3

 

5  Under average conditions, the resulting production at Gull Island would be 1,519 MW for 

6  the first 20 days and 443 MW during the last 11 days of March.  During a dry period, this 

7  scenario would require production levels of 1,471 MW during the first 20 days of March, 

8  and 395 MW during the last 11 days. Consequently, without a water management 

9  agreement, Nalcor would be limited to approximately 400 MW of continuous delivery in a 

10  long‐term power purchase agreement for Gull Island.   Such an arbitrary constraint on lower 

11  Churchill delivery schedules is unnecessary and is incompatible with the concept of the 

12  efficient use of the resource.

Bottom line, by Nalcor's own filed evidence, with an affidavit sworn by Nalcor's VP Gilber Bennett, the Water Management Agreement is necessary to operate Muskrat Falls at more than 20% capacity. So, when Ed Martin says that should Quebec win in court, and those two principles are ruled void, the entire Water Management Agreement is invalid, and we are screwed. Which, of course is why I have been in Court with them. Ask yourself this: Has Nalcor made Hydro-Quebec's claim or their own Statement of Defence available to the public or media?; Have they made their legal opinions available?; and if no why not? The clear answer is that Nalcor is simply not telling the truth. In some cases they are telling part truths without telling all the truths. In other cases they are simply not telling the truth. Either way, we are being deceived, to our peril, by a government and crown corporation that is meant to defend our interests, and not cripple them.