Sanctioning numbers will be ‘much tighter’
Nalcor CEO Ed Martin says he’ll share details about the Muskrat Falls project this summer. — Telegram file photo
Nalcor CEO Ed Martin says when the House of Assembly debates the Muskrat Falls project this summer, he hopes to be able to show them the “full picture.”
That picture will ideally include full details about the federal government loan guarantee, and finalized legal agreements with Emera in Nova Scotia to sell excess power.
What will definitely be made public later this year, Martin said, is much more detailed information on capital costs, financial estimates, oil forecasts and an updated schedule for the completion of Muskrat Falls.
Earlier this month, Premier Kathy Dunderdale announced that before the government formally decides whether to sanction the Muskrat Falls project, she will open the House of Assembly to debate the issue.
The full package of information used to inform the final sanctioning decision — also referred to as the “decision gate three” decision — will be made public, and given to Manitoba Hydro International for an independent review.
Martin sat down with The Telegram to explain what will be in that package of information. He said it will include much better cost estimates
“It’s going to be something that is much, much, much tighter than we had before, because so much engineering is done,” he said.
In total, he said more than 40 per cent of the dam’s engineering and design work has been done, and that should give Nalcor a much better idea of how much it will cost to build the dam and the transmission line running from Labrador to Soldier’s Pond, near St. John’s.
There won’t be a similar level of detail on other projects, though. In late 2010, Nalcor assessed the options, and at “decision Gate 2” it decided Muskrat Falls was probably the best choice.
Since then Nalcor has been working to refine plans on Muskrat, but hasn’t done any additional work on other options, such as refurbishing and replacing the thermal generating station at Holyrood.
“As far as the level of engineering in terms of upgrading Holyrood, building a new gas plant, building the other small hydros, building the wind, no we haven’t brought it along that far,” Martin said. “If we brought every one of those things through and did the same level of engineering to each of those as we’re doing on this, it would be a very, very expensive undertaking.”
That isn’t going to sit well with Liberal Leader Dwight Ball, who has been asking for detailed study of natural gas, wind power, and the possibility of using Upper Churchill power after 2041.
“All the information that we get on this, I mean, I want to see the same level of information and studies done on those three things as we’ve done on Muskrat,” he said. “And if we don’t get that, yes, I’ll be disappointed because I think the people of the province deserve that.”
Ball said that the picture Nalcor had at decision Gate 2 was “back-of-the-napkin” calculations, and that’s not good enough.
Martin said there will also be a lot more information on the financing for the debate in the House.
Nalcor has been fairly secretive about its financing plans, fearing that if it publicizes its assumptions, that could affect the rates it can get when it goes to lenders in the market.
“What we’ll do is put together a reasonable program. It won’t be the final program we’ll land on because we don’t want to totally inform the market,” he said. “We’re narrowing it down. We’ve got a pretty good idea of how this thing could look, within a range of debt-equity structures.”
As for the two other major elements — the federal loan guarantee and the final deal for excess power with Emera in Nova Scotia — those parts are less clear.
Martin said all indications from the federal government is that there will be a loan guarantee, which will lower borrowing rates by about two per cent. Whether the final, formal loan guarantee will be in place by the summer isn’t certain.
Similarly, Martin said Nalcor is getting close to finished with the legal agreements with Emera. All the basic agreements have been drawn up, and most of the wording has been agreed on. Small sections are still in brackets where the lawyers need to hammer the specifics out.
“The vast majority of words have been landed on in all of those agreements,” he said.
Martin said ideally, those agreements will be done before the final sanctioning decision, but if it’s not done on time, he wouldn’t let that hold up the final decision.
“In my mind, I’d like to have those Emera agreements complete to inform me of the full picture before we sanctioned,” he said.
What’s clear, he said, is that if the project gets sanctioned this summer, work could begin within weeks. Already, they’re looking at the first job, which will be to build a road in to Muskrat Falls.
Ball, cautioned once the sanctioning decision is made, that’s it.
“The thing is with Muskrat, when you stick that first shovel in the ground, you’re all-in then. You can’t turn back once this project starts,” he said. “If we don’t get that level of detail for the other options, we’ll always look back at this project and wonder.”