How the pandemic forced Nalcor to pay nearly $1M for a Muskrat Falls contractor

NalcorEnergy paid nearly $1 million lastyear for the services of a single member of the project delivery team at Muskrat Falls, surpassing the annual earnings of CEO Stan Marshall, CBCNews has learned.

An access-to-information request for the earnings of the 21 most senior members of the team has revealed that Edmonton-based professional services company StantecInc. was paid just under $865,000 in 2020 for the services of one of its employees, Donald Phillips.

That's nearly double the $454,204 in fees charged by Paul Harrington, the longtime project director for Muskrat Falls, in 2020, and slightly more than the$804,000 in salary and bonuses paid to Stan Marshall in 2019.

Phillips served as generation startup manager at Muskrat Falls from August 2019 until his departure in January, providingmanagement, oversightand guidance for startup of the 824-megawatt hydroelectric generating station on the Lower Churchill River.

A year at Muskrat

But Phillips, who lives in the United States, stands outbecause the fees for his services were nearly $400,000 more than the second-highest-paid member of the team, Muskrat Falls construction manager Jeff Reid.

Why?

Phillips spent nearly the entire year at Muskrat in 2020 becauseof pandemic-related travel restrictions between Canada and the U.S. that required a 14-day self-isolation after entering Canada, and unlike many other positions,there was no backup person in the role, said a Nalcor spokesperson.

What's more, Phillips's fees were paid in American dollars, with an average exchange rate in 2020 of $1.34, according to the Bank of Canada.

The Nalcor spokesperson described the position as technical and specialized, and said an extensive recruitment effort took place before Phillips was hired in 2019.

Phillips wasrequired to work at the Muskrat Falls site in Labrador, said the spokeperson, so "the individual remained at the Muskrat Falls site through the majority of 2020 without going back to the United States. The fees paid to Stantec Inc. reflect the extended time the generation startup manager worked at the Muskrat Falls site through 2020."

According to his LinkedIn profile, Phillips has worked in the electric power industry for over 30 years, and has held senior engineering and managerial positions on a variety of hydroelectric generating stations and dams.

According to information obtained by CBC News, Nalcorpaid $1.26 million to Stantec for Phillips's services over a period of 18 months.

He left the Lower Churchill Project earlier this year, and the position is now occupied by a former SNC-Lavalin employee who has past experience on the Muskrat Falls project.

"The new incumbent has been hired on a short-term contract to complete this critical work through to project completion and turnover of the generation assets to operations, which is currently forecasted for later in 2021," the Nalcor spokesperson wrote.

CBC News requested an interview with CEO Stan Marshall for this story.

As of early March, the project delivery team comprised nearly 200 people, though the size of the team is gradually shrinking asthe generating and transmission assets are completed and the project eventually reaches full commercial operations.

Many of the team members are independent contractors who incorporated their own companies, or arerepresented by third-party companies like Stantec.

• Pandemic adds $400M to Muskrat project costs, full power a further 10 months behind

Meanwhile, the first of four turbines at Muskrat Falls began producing electricity late last year, and the remaining three turbines are in various stages of completion, according to Nalcor.

Muskrat Falls is a publicly funded project being managed by Nalcor, Newfoundland and Labrador's energy corporation.

The project was sanctioned in 2012 at an in-service cost of $7.4 billion, but that figure has since ballooned to $13.1 billion, and the project is years behind schedule.

Nalcor announced last fall that delays and complications related to the pandemic had increased the final forecast cost by $75 million. A spokesperson said this week that figure has not changed.

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