An audit found Newfoundland’s Nalcor Energy may have overstated the potential value of its Muskrat Falls hydro megaproject and prematurely dismissed alternative electricity options for the province.
READ MORE: Muskrat Falls public inquiry over cost overruns begins
Accountants from Grant Thornton are testifying Friday at the inquiry into cost overruns of the $12.7 billion Labrador dam, presenting a report on the provincial Crown corporation’s early financial analysis and consideration of other power options.
David Malamed and Scott Shaffer found that Nalcor’s early estimates for the project excluded $500 million of strategic risk exposure, and could have used a more precise model when estimating its capital costs.
Experts consulted for Grant Thornton’s report said a different calculation model would have increased the project’s capital cost estimate by $767 million.
Nalcor initially forecast annual operating and maintenance costs at $34 million – an estimate that has since risen to $109 million.
READ MORE: Indigenous leaders share historical ties to Churchill River at Muskrat Falls inquiry
The report also found that Nalcor did not formally discuss importing power from Hydro-Quebec and dismissed the option of waiting until 2041 to import power from the Churchill Falls dam, when the longstanding contract with Hydro-Quebec expires.
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