Nalcor Energy to be no more: Crown corporation being folded into N.L. Hydro

Newfoundland and Labrador's Crown corporation Nalcor Energy, the body that oversees the controversial Muskrat Falls hydroelectric project, is being dismantled and folded into Newfoundland and Labrador Hydro.

Premier Andrew Furey made the announcement at a noon media conference Wednesday, joined by N.L. Hydro president, Nalcor interim CEO Jennifer Williams, and Energy Minister Andrew Parsons.

Furey said the work was already underway,and fulfils a promise to taxpayers to save money.No official would give a estimate ofcost savings from combining the two entities.

"The reality isthere is no set number. There is no set target," said Parsons, adding it is too complex to put a dollar figure on the move, but "there will obviously be savings." Furey said officials believe those savings will be significant.

The move was recommended in the recent report from the premier's economic recovery teamled by Moya Greene, as well a 2020 report from the Public Utilities Board. Furey said the move was not being made solely because of the Greene report, and called its recommendationa coincidence.

The elimination of the corporation in charge of the province's energy assets requires legislative changes, said Parsons, and contractual changes may also be needed.

Nalcor was created in 2007 to handle the province's hydroelectricity and oil and gas assets. The corporation is in the final stages of completing Muskrat Falls, a project first projected to cost $7.4 billion but which has ballooned to $13.1 billion. Amid its construction itwas subject to a public inquiry which produced a scathing report called Muskrat Falls: A Misguided Project.

Furey said Muskrat Falls was not the reason for Wednesday's announcement.

"We've looked to the future of NalcorEnergy beyond Muskrat Falls, and this is the prudent, responsibleplanning for life after the completion of that project," he said.

He said he didn't thinkWednesday's announcement would interfere with talks with the federal government about rate mitigation for taxpayers once Muskrat Fallspower comes fully online. Furey said the impending changesshowthat the provincial government is taking steps tosave money.

"These are all appropriate and big signals to the federal government that we're taking our own structural issues seriously," he said.

No mass layoffs: Parsons

About 1,600 people work at Nalcor. Parsons said there will not be mass layoffsas its operations are streamlined.

"We think there are ways we can do things better, but it does not mean a mass shuffling out of peopleout of that entity," he said.

Williams said there will be "opportunities for attrition" and there is duplication between the two. Furey pointed to Williams herself now in the dual role of overseeing both Nalcor and NL Hydro as one example of savings.

"Me taking this [Nalcor CEO] jobis a job lost. There's more of that to come," said Williams, who stepped into the CEO role upon the retirement of former CEO Stan Marshall on June 15.

The volume of expertise built up within Nalcor over the Muskrat Falls era has been "a silver lining" to that project, said Parsons, and if the province wants to pursue future hydroelectricprojects those human resources will be needed.

"Wehave options, we have possibilities, we have ideas," he said. "We have not made decisions on those, butwe have huge assets that we can develop if we wish, and if we're going to have thatconversation, you're going to need expertise."

While the Muskrat Falls public inquiry report called out particular executives for their actions, no official would say Wednesday what the future holds for individuals.

"We have to be very careful about what we say, so we do not trigger legal consequences," said Parsons.

How long will it take?

How long the entire dissolution will take is also unknown.

"This is the first of many steps. How many steps is required? Time will tell," said Furey.

The complexity of untangling contracts is one area where time will be needed. Williams said even streamlining Nalcor'sactual operations will require care, calling its electricity system "incredibly dangerous."

"We have to be very careful tomake sure we're making the right decisions," she said.

The details,such as which buildings might close, arealso up in the air. Parsons said Wednesday's announcement was meant to give the public as much notice as possible of impending changes.

"The reality is we knew that we would not have the answers to that today, but we felt it was important to know that direction," he said.

Nalcor lost $90 million in 2020, and continued to bleed cash for the first quarter of 2021, with corporation officials blaming the pandemic andturbulent oil prices.

During question period Wednesday, Opposition leader David Brazil asked Fureyif he would direct Parsons to table the analysis used to make thedecision to dissolveNalcor.

Furey said the governing Liberals will provide the analysis, including the PUB report.

Brazil also asked why, if the decision was evidence-based,neither Furey nor Parsons provided estimates on cost savingsor potential job cuts.Furey said the evidence lies mainly in the fact that there are "significantduplications" within both corporations.

"After Muskrat Falls is complete I'm not sure what the purpose of Nalcor is. We have a utility company, Newfoundland and Labrador Hydro. OilCo is no longer with Nalcor, so what is the purpose?" Furey said.

"We're not prepared to continue to waste money on corporations that don't have any morepurpose."

Brazil brought up a 2019 estimate from consumer advocateDennis Browne that said the province could save roughly $20 million annually by folding Nalcor into Newfoundland and Labrador Hydro. He asked why Fureycouldn't provide any estimates on Wednesday when Browne's are two years old.

"We said we whatever number we would provide would likely be inaccurate. So we're still doing a fulsome analysis of the exact savings," Furey said.

"Likely there will never be an exact determination, prior to folding in, exactly what the savings will be. We'll have an estimate of course, and that's one that we'll make."

Read morefrom CBCNewfoundland and Labrador