CEO, board leading Muskrat Falls hydro megaproject quitting amid cost scrutiny

ST. JOHN’S, N.L. – The man in charge of the $9.2 billion Muskrat Falls hydro project in Labrador is stepping down amid increasingly intense scrutiny of cost and schedule overruns — but says he wasn’t pushed to go.

“It’s my decision,” Ed Martin said as he announced his resignation Wednesday as president and CEO of Crown corporation Nalcor Energy, effective immediately.

Fallout was swift as, late Wednesday, a source who wasn’t authorized to speak publicly confirmed that the entire Nalcor board is also resigning as of Friday in apparent solidarity. The five-member board included Martin and oversees governance, approves audited financial statements and guides corporate strategy.

Board chairman Ken Marshall could not be reached late Wednesday for official comment.

Earlier in the day, Martin’s voice at times wavered as he spoke during a news conference of how his wife Mary Lou — “my high school sweetheart” — his four sons, and his father have supported him throughout his 10 years at Nalcor.

“Many times this job has come with significant public scrutiny. I recognize that that comes with the territory; however, I have to say, it’s quite difficult on my family. And I find that troubling.”

Martin, a veteran of the oil and gas sectors in Nova Scotia and Calgary, said he’s looking forward to the birth of his second grandchild and has decided to move on.

“I’m comfortable that this is the time,” he said. “I’m extremely proud of the accomplishments we have all achieved as a company.

“Nalcor is our province’s heritage fund and we should be proud of it.”

The Liberals, who won power last fall after 12 years of Progressive Conservative rule, have pledged to tighten oversight of Muskrat Falls, Nalcor’s major venture.

First power, to be generated by 2017, is now delayed until sometime in 2018, although Martin declined to discuss such details Wednesday.

“Absolutely not,” he said when asked if he had any regrets about the project’s management. Martin said he constantly worked to improve oversight and has every belief it will succeed long term.

The joint venture between Nalcor and Nova Scotia utility company Emera (TSX:EMA) will bring power to the island of Newfoundland and on to Nova Scotia using subsea cables and overland transmission lines.

Nalcor has most recently estimated its costs at just over $7.6 billion while Emera’s are almost $1.6 billion.

A recent interim report by EY — formerly Ernst and Young — found problems with oversight. It also said Nalcor’s cost and timeline forecasts last September were “not reasonable.”

The full report, with new price tags and schedules, is expected in May.

Martin said there has been much public debate about Muskrat Falls, but used his parting news conference to defend it.

“We need the power,” he said. “We will pay back our investment, and dividends will be paid back to the people of the province.”

Those earnings will help offset increased power bills for ratepayers, he said.

“The key is, in just a few short years, the investment in Muskrat Falls combined with oil and gas and other lines of business (are) projected to return $400 million to $500 million in dividends each year for decades to come.”

His words seemed a thinly veiled rebuke of comments by Finance Minister Cathy Bennett as she delivered a budget Thursday that hiked taxes and fees while still projecting a $1.8 billion deficit.

“Since its creation in 2007, taxpayers have invested over $2.25 billion yet have received no dividends,” she said of Nalcor. “For all corporations and their shareholders, this would be unacceptable.”

Nalcor Energy reported that its CEO and president received $681,429 in salary, performance benefits and other pay such as vehicle allowance in 2015.

Premier Dwight Ball praised Martin’s work and said it was his choice alone to leave.

“We had a good working relationship,” he told reporters.

Ball said he already has a short list of potential candidates, and a new president will be chosen as early as Thursday. Any severance pay for Martin will be up to the Nalcor board, he added.

Not everyone was buying the storyline.

Former Tory premier Danny Williams called it a “huge loss” fraught with politics.

“In the face of relentless and often recklessly partisan criticism, Ed’s commitment to this province has remained his sole focus.”

Christopher Dunn, who teaches political science at Memorial University of Newfoundland, said a big question is how many other senior Nalcor executives will follow.

“It’s plain as day that the government has driven Mr. Martin away.”

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