Ed Martin combative, unshakable in first day of testimony at Muskrat Falls inquiry
Former Nalcor CEO defends screening out other options for island’s electricity needs
The embattled former president and CEO of Nalcor Energy was combative and unshakable during his first day on the witness stand at the Muskrat Falls inquiry Monday.
For five and a half hours, Ed Martin was firm and sometimes frosty under questioning from inquiry co-counsel Kate O'Brien, refusing to give any ground in his belief that Muskrat Falls was the best choice for the province's future electricity needs when the project was sanctioned six years ago.
O'Brien probed Martin on everything from the decision to exclude options like importing power from Hydro-Quebec and using liquid natural gas to power Holyrood, to what lending institution would provide financing for the project.
Martin, who left Nalcor in 2016 under a cloud of controversy over cost and schedule overruns, was stone-faced the entire time. There were some tense exchanges, disagreements, multiple interruptions, and Martin's CEO personality emerged at times when on several occasions he told O'Brien to "proceed."
'I'm not babysitting'
Some of the more tense moments came late in the day, with Martin taking several shots at his former Nalcor colleagues, including chief financial officer Derrick Sturge.
Sturge testified in November that he was left in the dark on issues like project costs and schedule.
"It's not my job to keep him in the loop. If you're not in the loop, go get in the loop. He's the CFO of the company. Get on with it," Martin offered.
It's not my job to keep him in the loop. If you're not in the loop, go get in the loop. He's the CFO of the company. Get on with it.- Ed Martin
Martin went further, saying, "I'm hiring these people. They're officers of the company. I'm not babysitting them."
Martin also addressed an eye-raising comment made by Sturge during his testimony on Nov. 1.
When asked by his lawyer if there was ever anything that made him uncomfortable at Nalcor, Sturge said there was a "strong suggestion" in 2012 that CIBC be engaged to provide financing for the massive project.
CIBC and project financing
Martin called this a "non-event" and said Sturge "may have misunderstood."
But Martin acknowledged there was support for CIBC at the highest levels in government.
"Obviously folks would say how's it going from CIBC? They were good to us. I would say I'll let you know," Martin said.
"You mean folks within government?" asked O'Brien.
"It would have been at the minister, premier level. It would be in general discussion," Martin replied.
Martin said CIBC had done some "scoping of work for us … generally on a volunteer basis," and that he and some officials in government had "established a relationship" with CIBC.
"I can't remember exactly where it came from. It was not a pressure situation," said Martin, adding that the inquiries likely came from then-premier Kathy Dunderdale and then-natural resources minister Jerome Kennedy.
When asked if there was ever a suggestion from Dunderdale or Kennedy that the financing contract be awarded to CIBC, Martin offered a firm "never."
The contract to provide $5 billion in financing through a loan guaranteed by the federal government eventually went to a consortium of institutions led by TD Bank.
"The bottom line — it was properly assigned, so there it is," Martin said.
A tense debate over risk
The tension escalated late in the day when the topic turned to cost and schedule risks.
Martin contradicted earlier testimony from project director Paul Harrington and his deputy, Jason Kean.
Both testified that the approach to cost estimates changed in 2010 when they were asked to provide cost estimates based on a risky 50 per cent probability of reliability.
Prior to that, they said, estimates were prepared based on a more cautious 75 per cent probability.
Martin said it was always his intention to use what's called a P50 approach.
"A P50 is where my mind always was with respect to sanctioning the project. As far as assigning a project team a control budget, under any scenario, it was, it was going to be, and it would be a P50," said Martin.
As far as assigning a project team a control budget, under any scenario, it was, it was going to be, and it would be a P50.- Ed Martin
The issue of risk has been a dominant one at the inquiry, with evidence showing advisors recommending Nalcor use at least a P75 for a project that will be paid for by electricity ratepayers in this province, and the provincial government picking up any cost overruns.
When asked if he doubted Kean's testimony, Martin said "I'm the one making the call" and that Kean is "four or five levels down in the organization."
It was a chilly start to what is scheduled to be five full days of testimony for Martin, whose role as "gatekeeper" for the Muskrat Falls project made him into a household name in the province.
At one point, O'Brien asked Martin whether he felt he was living up to the mandate of the province's Electrical Power Control Act, which is to provide electricity to ratepayers at the lowest possible price.
"I do, 100 per cent," he said.
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