Nalcor confident of securing project cash

Rob Antle
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Lower Churchill costs rise to $10 billion

The province's energy corporation remains confident it can finance the proposed Lower Churchill hydroelectric project, even as projected costs rise and global capital markets stumble.

Nalcor Energy now expects Lower Churchill costs to total roughly $10 billion. That's up from previous estimates of $6 billion to $9 billion.

Gilbert Bennett, Nalcor's vice-president for the Lower Churchill project, speaks to reporters following a technical briefing on the project Tuesday in St. John's. - Photo by Keith Gosse/The Telegram

The province's energy corporation remains confident it can finance the proposed Lower Churchill hydroelectric project, even as projected costs rise and global capital markets stumble.

Nalcor Energy now expects Lower Churchill costs to total roughly $10 billion. That's up from previous estimates of $6 billion to $9 billion.

Increased material and labour costs contributed to the higher figure.

So, where is the province going to find the $10 billion necessary to fund the Lower Churchill?

"There is certainly a high level of interest in large-scale sou-rces of renewable energy," replied Gilbert Bennett, Nalcor's vice-president for the Lower Churchill project.

"The federal government could play a key role here. There is a lot of interest for supplies of energy that have the long-term nature of this one, that are of the scale, the magnitude, of the project. Certainly, raising funding is one of the key issues that we have to work through."

Bennett indicated that the go-it-alone option is not the only one on the table for the potential megaproject.

"The preferred alternative is for us to lead the development of the project," Bennett said.

"That statement has been made certainly by government on many occasions. From our perspective, our job at this point in time is to collect the data necessary to give government the information they need to make a decision. So I'm not going to comment on partners, sources of equity, at this point in time."

He acknowledged the "preferred" option is not the only one under consideration.

Three years ago, the Williams government rejected a number of external Lower Churchill development proposals, choosing instead the option of "doing it by ourselves, for ourselves."

Meanwhile, Bennett said he is not worried by Quebec's plans to develop a power project on the Romaine River, saying there is a large market in eastern North America for secure, clean energy.

Any project sanction date for the Lower Churchill likely won't happen until the summer or fall of 2010 - a year later than initially expected.

The project, if successful, will produce more than 3,000 megawatts - about 250 MW higher than previous estimates.

Lower Churchill hydroelectricity could power the equivalent of 1.5 million homes, Bennett indicated.

rantle@thetelegram.com

Geographic location: Quebec, Romaine River, North America

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Recent comments

  • Dave
    July 02, 2010 - 13:34

    I find it interesting that King Danny is crying poor when it comes to our nurses and health care in general but has no problem with a multi billion dollar project like this. Isnt a functional well staffed Health Care system also a good return on investment? Apparently Health Minister Wiseman cant be found these days NO COMMENT from NO CRISIS Wiseman. Wiseman surfaced here in Clarenville to take part in the opening of the Clarenville Winter Carnival on Friday the 13th. How appropiate that Minister Wiseman who is part of the Williams Circus show up at a Carnival. At least your in a place where you feel at home I guess. Now it appears Ross in gone back into witness protection until Danny lets him out again.

  • Jim
    July 02, 2010 - 13:32

    Don't let the $10 Billion price tage scare you. Remember, Qubec takes in $2 Billion a year from the upper Churchill. Perspective folks.

  • DB
    July 02, 2010 - 13:30

    $10 billion to start but most likely will rise to well above that. Why do I have the feeling that rates will be going up.

  • Kenneth
    July 02, 2010 - 13:30

    This is a great project but I have concerns over the timing. Doing this as the world spins out of control in this financial depression is bothersome.

    Danny's legacy is tied to all of this. The federal govt. better be on board or else we will be that far in debt we will need a shovel to get us out. With NO opposition to challenge the govt on the path forward I hope the Telegram does its job. I'm a little scared when Mr. Bennett states.. the federal govt could play a role here. Don't you know if they will?

    This project is so large it needs the federal govt to be a major partner... Hope the feds forget Danny's foolishness with ABC. Time will tell.

  • Alec
    July 02, 2010 - 13:27

    Nalcor is unwilling to even put a ballpark figure on the proposed Anglo-Saxon (underwater) power transmission line for the Lower Churchill project.

    Even in the best economic times the underwater route was no more than political rhetoric from our Government. Has any prominent member within economics or engineering outside this province endorsed this proposal?

    $10 billion is the new estimate for the entire project or just the generating station?

    The Federal Government cant involve itself if our province intends to completely avoid Quebec and Ontario via the underwater route. Ontario and Quebec had a join proposal flatly rejected by our government with no legitimate reason stated. Danny should have released such an unacceptable contract to the public so the merits would be discussed.

    Without a power purchase agreement in place no financial institution in the world will invest in this project. Why has the vice-president/Nalcor failed to mention this little tidbit of information even once in the past few years?

    Hypothetical: Lower Churchill was finished by 1980 with a standard 40 year contract in place. Included were an escalator clause and an 800 MW power recall clause (recalled power would be based on current residential Quebec kilowatt/hour rate). Estimate an average of $75 million a year for NL X 28 years = $2.1 billion dollar (this possible revenue can never be gained under any current Lower Churchill contract). In a few years (2015) Quebec would have wanted a 25 year extension on the current contract. Only this time the initial capital investment (construction cost) would not factor in the new contract. NL would see a great increase in profits in 2021 (plausibly 4 times the initial amount: $300 million annually).

    But alas the Lower Churchill project remains mothballed as it has for the past 40 years without any real chance of development.

    Side note for Nalcor: Basing the current contract on the obviously flawed Upper Churchill contract is futile and distracting for the development of Lower Churchill.

    Let go of the past and look to the future for Lower Churchill.

    Alec Campbell

  • Now Where
    July 02, 2010 - 13:26

    Seems odd that they can feel confident to obtain the funds while so many are being toosed out of homes and employment worldwide.

    Bigger and better have tried to survive with BILLIONS in loans and grants, and the people (you me and buffalo blue) still wind up going without. Yet a newly named company here is sure of making it. If it sounds too good to be true, it dam well is. Time for baby steps, not balls to the wall.

    Yes we need to do this, but lets look at the TOTAL costs involved before getting further into debt. I am sure everyone in this province and country carry a high debt load now as it is. When do they expect to see a return on this 10 BILLION is the real question.

  • Chris
    July 02, 2010 - 13:26

    I say get the loan, cut down the trees, and forget about Quebec.

    Holyrood has got to go, its an embarrassment.

  • Lloyd
    July 02, 2010 - 13:22

    Sure, at least double the public debt. Play havoc with the environment, national park, proposed national park (Mealy Mountains), no contracts for power purchase. Most of all NOTHING for Labrador from the project.
    I say no project unless and until every community in Labrador is able get power from this project at decent prices to allow Labradorians to benefit. Temporary subsidies will no cut it. I want you all to imagine the outrage and the outcry if such a project was developed on the island purely for export to somewhere else. Imagine that.

  • John
    July 02, 2010 - 13:22

    Yeah, we poor taxpayers can pay for that. I just love working so the rich can have socialism.

  • Richard
    July 02, 2010 - 13:13

    Jim, why shouldn't we let the $10 Billion price tag scare us? We've already burdened our grandchildren with more debt than anyone else in North America. All this will do is put the public finances further in the whole and drive up the cost of electricity. After all, who (other than us) is going to by electricity that only makes it as far as St. John's?

  • Willi
    July 02, 2010 - 13:13

    This is the same Gilbert Bennett that used to work for Danny at Cable Atlantic, right?
    I woudl like to know what experience his Cable Atlantic work (or any other of his previous jobs) qualifies his to head up such a massive and important project. I know that cable wires are kind of close to the power wires on the light poles, but otherr than that, I would think that a project such as this would require significantly more knowledge and experience to successfully manage.
    Is being a former loyal employee of Danny Williams sufficient to ensure the project's success - or is there more to this individual than that. Please Telegram, some investigative reporting is in order.

  • Roger Langille
    July 02, 2010 - 13:10

    I need 1000 mw for my steel industries in Nova Scotia.

    I can also fund this whole thing !

    Nicklan@Telus.Net

  • Butch
    July 02, 2010 - 13:09

    $ 10 billion amortised over 100 years at
    say , 5 % average interest , would cost the province about $ 350 million yearly .
    The preoject generates 3000 megawatts
    or three billion watts at site and loses a
    great deal through transmission . How can this project make a profit using the
    trans-insular route ? Stop the baloney and deal with Quebec !

    Torbay conservative

  • Dave
    July 01, 2010 - 20:23

    I find it interesting that King Danny is crying poor when it comes to our nurses and health care in general but has no problem with a multi billion dollar project like this. Isnt a functional well staffed Health Care system also a good return on investment? Apparently Health Minister Wiseman cant be found these days NO COMMENT from NO CRISIS Wiseman. Wiseman surfaced here in Clarenville to take part in the opening of the Clarenville Winter Carnival on Friday the 13th. How appropiate that Minister Wiseman who is part of the Williams Circus show up at a Carnival. At least your in a place where you feel at home I guess. Now it appears Ross in gone back into witness protection until Danny lets him out again.

  • Jim
    July 01, 2010 - 20:21

    Don't let the $10 Billion price tage scare you. Remember, Qubec takes in $2 Billion a year from the upper Churchill. Perspective folks.

  • DB
    July 01, 2010 - 20:19

    $10 billion to start but most likely will rise to well above that. Why do I have the feeling that rates will be going up.

  • Kenneth
    July 01, 2010 - 20:18

    This is a great project but I have concerns over the timing. Doing this as the world spins out of control in this financial depression is bothersome.

    Danny's legacy is tied to all of this. The federal govt. better be on board or else we will be that far in debt we will need a shovel to get us out. With NO opposition to challenge the govt on the path forward I hope the Telegram does its job. I'm a little scared when Mr. Bennett states.. the federal govt could play a role here. Don't you know if they will?

    This project is so large it needs the federal govt to be a major partner... Hope the feds forget Danny's foolishness with ABC. Time will tell.

  • Alec
    July 01, 2010 - 20:15

    Nalcor is unwilling to even put a ballpark figure on the proposed Anglo-Saxon (underwater) power transmission line for the Lower Churchill project.

    Even in the best economic times the underwater route was no more than political rhetoric from our Government. Has any prominent member within economics or engineering outside this province endorsed this proposal?

    $10 billion is the new estimate for the entire project or just the generating station?

    The Federal Government cant involve itself if our province intends to completely avoid Quebec and Ontario via the underwater route. Ontario and Quebec had a join proposal flatly rejected by our government with no legitimate reason stated. Danny should have released such an unacceptable contract to the public so the merits would be discussed.

    Without a power purchase agreement in place no financial institution in the world will invest in this project. Why has the vice-president/Nalcor failed to mention this little tidbit of information even once in the past few years?

    Hypothetical: Lower Churchill was finished by 1980 with a standard 40 year contract in place. Included were an escalator clause and an 800 MW power recall clause (recalled power would be based on current residential Quebec kilowatt/hour rate). Estimate an average of $75 million a year for NL X 28 years = $2.1 billion dollar (this possible revenue can never be gained under any current Lower Churchill contract). In a few years (2015) Quebec would have wanted a 25 year extension on the current contract. Only this time the initial capital investment (construction cost) would not factor in the new contract. NL would see a great increase in profits in 2021 (plausibly 4 times the initial amount: $300 million annually).

    But alas the Lower Churchill project remains mothballed as it has for the past 40 years without any real chance of development.

    Side note for Nalcor: Basing the current contract on the obviously flawed Upper Churchill contract is futile and distracting for the development of Lower Churchill.

    Let go of the past and look to the future for Lower Churchill.

    Alec Campbell

  • Now Where
    July 01, 2010 - 20:13

    Seems odd that they can feel confident to obtain the funds while so many are being toosed out of homes and employment worldwide.

    Bigger and better have tried to survive with BILLIONS in loans and grants, and the people (you me and buffalo blue) still wind up going without. Yet a newly named company here is sure of making it. If it sounds too good to be true, it dam well is. Time for baby steps, not balls to the wall.

    Yes we need to do this, but lets look at the TOTAL costs involved before getting further into debt. I am sure everyone in this province and country carry a high debt load now as it is. When do they expect to see a return on this 10 BILLION is the real question.

  • Chris
    July 01, 2010 - 20:13

    I say get the loan, cut down the trees, and forget about Quebec.

    Holyrood has got to go, its an embarrassment.

  • Lloyd
    July 01, 2010 - 20:07

    Sure, at least double the public debt. Play havoc with the environment, national park, proposed national park (Mealy Mountains), no contracts for power purchase. Most of all NOTHING for Labrador from the project.
    I say no project unless and until every community in Labrador is able get power from this project at decent prices to allow Labradorians to benefit. Temporary subsidies will no cut it. I want you all to imagine the outrage and the outcry if such a project was developed on the island purely for export to somewhere else. Imagine that.

  • John
    July 01, 2010 - 20:07

    Yeah, we poor taxpayers can pay for that. I just love working so the rich can have socialism.

  • Richard
    July 01, 2010 - 19:52

    Jim, why shouldn't we let the $10 Billion price tag scare us? We've already burdened our grandchildren with more debt than anyone else in North America. All this will do is put the public finances further in the whole and drive up the cost of electricity. After all, who (other than us) is going to by electricity that only makes it as far as St. John's?

  • Willi
    July 01, 2010 - 19:51

    This is the same Gilbert Bennett that used to work for Danny at Cable Atlantic, right?
    I woudl like to know what experience his Cable Atlantic work (or any other of his previous jobs) qualifies his to head up such a massive and important project. I know that cable wires are kind of close to the power wires on the light poles, but otherr than that, I would think that a project such as this would require significantly more knowledge and experience to successfully manage.
    Is being a former loyal employee of Danny Williams sufficient to ensure the project's success - or is there more to this individual than that. Please Telegram, some investigative reporting is in order.

  • Roger Langille
    July 01, 2010 - 19:45

    I need 1000 mw for my steel industries in Nova Scotia.

    I can also fund this whole thing !

    Nicklan@Telus.Net

  • Butch
    July 01, 2010 - 19:44

    $ 10 billion amortised over 100 years at
    say , 5 % average interest , would cost the province about $ 350 million yearly .
    The preoject generates 3000 megawatts
    or three billion watts at site and loses a
    great deal through transmission . How can this project make a profit using the
    trans-insular route ? Stop the baloney and deal with Quebec !

    Torbay conservative