U.S. laws nix Muskrat Falls option: Prentice

Andrew Robinson
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Governments need new agreements for energy exports, former federal minister says

Jim Prentice

A former federal environment minister says work needs to be done to make sure renewable energy in Canada can be sold to American markets.

According to Jim Prentice, now a vice-president with CIBC, a number of New England states have laws through their renewable portfolio standards that prohibit the use of hydroelectric power options available from Canada.

Such standards would have implications for energy generated through the Muskrat Falls hydroelectric development in Labrador.

“It essentially means Canadian hydroelectricity, although we see it as renewable — the ultimate renewable energy — it doesn’t qualify as renewable energy in those states, because the renewable portfolio standard doesn’t recognize it. So basically you have a state-level interference with the market, and my point is if the North American market is going to work efficiently, we need the same standards on both sides of the Canada-U.S. border, and these renewable portfolio standards get in the way of our ability to sell Canadian hydro.”

This comes as the United States moves closer towards energy independence, he said.

“If you look at the numbers in terms of energy production in the United States and imports and exports (between) Canada and the U.S., it’s increasingly clear that the U.S. is moving towards energy independence.”

Combining the resources of Mexico, Canada and the U.S., Prentice predicts those nations will be energy independent by 2020. He said it becomes all the more important to keep the marketplace open and free from what he labels “sub-national impediments,” such as those state laws.


Asked about the implications for such standards with respect to Muskrat Falls, Prentice said they do not help.

“Well, it’s not helpful, and we need to make sure that across the United States, Canadian hydroelectricity is recognized as a renewable energy that is good for consumers.”

Prentice discussed the matter at an event in Halifax Tuesday hosted by the Maritimes Energy Association. He said federal government in both countries should establish working groups that focus on standards on both sides of the border.

“It can be done, for example, through the clean energy dialogue that exists between Canada and the United States. It’s really part of overall regulatory harmonization between Canada and the U.S., which is quite important given the energy systems we’re taking about are continental in nature.”



Twitter: @TeleAndrew

Organizations: CIBC, North American, Maritimes Energy Association

Geographic location: United States, Canada, New England Labrador Mexico Halifax

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Recent comments

  • Terry
    May 10, 2013 - 10:18

    This is just lawyer speak for "a money making opportunity for us negotiators".The majority of NLers support MF regardless of what hokus pokus math the naysayers come up with.BTW our rates will still be competitive at $250.00 per 2000 kw vrs Ont at $275.00 aprox.. Compared to the national average we are now slightly below it and will be slightly above it after MF.

  • concerned taxpayer
    May 07, 2013 - 06:05

    Wow another reason to stop Muskrat Falls. ABC next election!!!!!!

  • Cyril Rogers
    May 02, 2013 - 13:45

    Well, it seems that this is one of the niggling little details that they have conveniently chosen to ignore and dismiss. On the one hand, I am torn on this, simply because I know that selling power to the U.S. can only be done at a loss anyway...so it is probably moot to be in any way concerned about this. However, Martin and Kennedy have touted this as one of the ways for NALCOR to make money off this deal. It simply can't be done. Any power sold to the U.S. or anywhere else will ALWAYS be sold at a loss or, as in the case with Nova Scotia, given away.

  • nlgal
    May 02, 2013 - 13:12

    John Smith is also a anonymous lobbyist for Nalcor and Tories. He's been working the newspaper articles on Muskrat Falls daily along with a bunch of others. Our tax money most likely paying these creeps salaries secretly under bill29. This is one screwed up gov screwing the ppl of NL. Very deceitful crowd like Harper giving our money to corps and the rich. Laying off workers, cutting all programs/funding including fishery to pay for Muskrat. Bringing in foreign workers, while fastracking and funding immigration. The rot is from inside out.

    • david
      May 02, 2013 - 13:20

      Nobody knows who 'John Smith' is...but that's only half the story.

  • NLgal
    May 02, 2013 - 13:00

    Jim Prentice is a high profile red Tory. Used to be Alliance and worked for Harper as Indian Affairs Minister. Don't believe him. He helped merg the PC and Alliance Party. He runs a CIBC bank now in NL stands to make a lot of money from taxpayers funding Muskrat Falls 100% against their will and secretly thru a gov bill 29 brought in. (hyway robbery btw.) The public have had no say in gov taking their money and secretly giving it to Nalcor etc. The gov have refused anyone info on this money.He's drooling over all that public money been given to Nalcor & Danny's mine. He also went to Dalhousie Law scool like Danny. He's a Lobbyist for Tories. Probably being paid off by the boys. He's looking for media attn.

    • david
      May 02, 2013 - 13:16

      Wow..this is compelling stuff. What I take from this is that, when confronted with ideas from someone who has a long track record of success, achievement and capable, competent performance, he should immediately be ignored. The ramblings of some incompetent, unsuccessful, uneducated boob...someone you can trust....should be adopted instead. And this, in fact, is this country's sad pattern. Hello, John Manley...wherever you are.

  • coco
    May 02, 2013 - 12:17

    This information was available two years ago. Hydro electricity has been around for more than a century and is quickly becoming obsolete in today's world. It's not considered green by environmental standards to flood a forest, destroy wildlife habitat and poison the atmosphere with mercury, toxic waste, hydrolic fracking and all that. Technology has advanced. Different states and countries have newer laws around renewable energy. Some people actually care about where they live. People today are more educated and sophisticated too. Kathy turned everybody here into a captured customer. We have no choice but people in other places do. I doubt a lot of places would even take Muskrat for free, which seems to be our specialty anyway you know - give aways. Sustainable development and restoration is big business nowadays. Hundreds of hydro dams have been decommissioned in recent years.

  • Killick
    May 02, 2013 - 10:03

    Jim Prentice is absolutely correct. Much work needs to be done. The US will reach energy independence soon. The XL pipeline will get built. North Dakota now produces more oil than Alaska.....second only to Texas. The largest shale oil deposit anywhere, in California, is about to get fracked...this in a state with the toughest environmental regs. in the world. Contractors will be forced to reveal all, before permits are granted. Natural gas is at record low prices, and new NG co- generation electricity plants are being built at a rapid pace in the US. Muskrat falls faces severe competition from these sources, as well as from Hydro Quebec, which will start to bring its Romaine River hydropower project on line in 2015. This project will produce 1550 MW of power for $6.5B. We will pay $7.8B (so far) for 824MW from MF. That's nearly twice the cost per MW as Romaine River. Muskrat Falls is structured to provide 40% of the power to the island to displace Holyrood, 20% to NS in return for building the Maritime link, with the remaining 40% available for export. If the export portion cannot be sold at rates high enough to provide a positive return....what's the point? We end up subsidizing US consumers, just to sell the power. That's the whole point...MF is not competitive today. In 25 years...maybe. In the meantime we pay through the nose. The MF project has an unheard of 52 year Power Purchase Agreement in place, which was needed to make the project fly at all. This is just not the time for MF. This is all about rapid fire, knee jerk reaction politics, trying to extract some sort of revenge on Quebec. If anyone thinks we can compete profitably against Hydro Quebec, which produces over 35,000MW of power, compared to Nalcor, which produces just over 7500MW, (including the 5400 MW at Churchill Falls) - forget it.

  • Maurice E. Adams
    May 02, 2013 - 08:49

    Muskrat Falls is a dinosaur project on 2 fronts. 1)... it will on average cost ratepayers 7 times more (about $700 million a year) compared to the 2002-2011 (10-year) average cost of fuel for Holyrood ($98 million/year) and that could easlily be eliminated through efficiency improvements and wind/small hydro.......... 2)...the U.S. do not consider large hyrdo projects 'renewable' because of the environmental damage (long term, permanent damage) that when properly quantified (which has not been done with Muskrat Falls) shows that large hydro projects do not fit in with the new, renewable energy paradigm and instead are reflective of an older (dinosaur, small-minded, linear thinking) age.

  • Jon Smith
    May 02, 2013 - 06:53

    John, take some time to smell what you are shovelling. We are giving free on the wire at Port aux Basques 170 MW plus of energy for 35 years and having Nova Scotia build a subsea line to carry at least another equal amount to be sold at deep discount prices ( which we will pay dearly for- subsidies to the tune of $150 million and $ 100 million annually for each block) and you can say that we are developing Muskrat for ourselves. Most clear thinkers could not stand the stench of your statements.

  • Jack
    May 01, 2013 - 20:30

    Jim Prentice is wrong in saying that American States can block power from hydro-electric facilities as individual states or provinces cannot interfere on international matters. In other words, if Nalcor wants to sell hydro power to the United States, individual states cannot block it as only the United States "State Department" can make a decision if Canadian power can be sold to American markets, not individual states or provinces. This means that if Nalcor gets a blessing to sell their power from the United States "State Department", individual states cannot prevent us from selling our power. In addition, if American states stop Canadian energy companies like Nalcor from selling hydro power to the United States, they will suffer severe legal consequences as Nalcor reserves a right to challenge these states or even the American Government through the NAFTA Tribunal like Abitibi-Bowater did to us. Therefore, my Newfoundland and Labrador friends, don't let Jim Prentice feed us false information as he is not entirely correct as only the US State Department can decide if our power is sold to them as its an international matter, and Nalcor can threaten legal action before NAFTA Tribunal if they interfere.

    • david
      May 01, 2013 - 21:03

      Jim Prentice is quite smart and competent. I do not know who "Jack" is, but I'll bet that Prentice would wipe the floor with you.

    • David Elliott
      May 02, 2013 - 23:39

      I have to agree with Jack on this one. I admittedly lack the skill set to discuss NAFTA reg's with absolute certainly but from my limited research, electricity (and its distribution) is defined as a good under article 602 (although since this has not been tested some claim a measure of ambiguity whether it is a good or service-however GATT reg's also support the definition as a good) therefore protected from state interference. Only conditions such as critical shortages,times of conflict or pricing ABOVE what country of origin pays allow for state controls - none of which apply here. Finally it would seem some of the NE states actually get special mention on NAFTA provisions in defining and allowing set % of renewable power - and Hydro is defined within these reg's as a renewable (within both provided defined groups Class1 and Class2 technology). As we all learned from the Softwood fiasco, this may have to be seen all the way though in a legal battle; but by the spirit of NAFTA what Prentice suggests is not valid.

    • david
      May 03, 2013 - 11:58

      DE: Notwithstanding that unlike you, Jim Prentice HAS the "skill set to discuss reg's with absolute certainty"....I'd bet he does.....you suggest that we merrily just go ahead with our "great project", spend the billions, and rely on the courts when we're done to uphold Canada's rights under NAFTA...Yup, that is so sensible it has just GOT to work. How could it not?

  • Alec C
    May 01, 2013 - 16:49

    From a residential ratepayer perspective NL will be subsiding NS ratepayers 21.4 (cost of producing MF power)- 12.5 cents per kWh. 8.9 cents per kWh subsidization X 165 MW X 8,760,000 (kWh in 1 MW) = $128,640,600. $128,640,600 / 330 MW (Avalon MF block) = $389,820 per MW or 4.45 cents per kWh subsidization via NL ratepayers. 21.4 becomes 25.85 cents for NL residential ratepayers.

    • Information-Based
      May 08, 2013 - 08:05

      Inflation, decreasing availability of fossil fuels, and steady long-term, relatively fixed-cost output of hydro power from MF are the gaping holes in this argument. You're bringing arithmetic to a calculus fight, to make a cheesy analogy.

  • John Smith
    May 01, 2013 - 12:47

    First of all we don't need to sell any muskrat power outside the province. Period. Secondly, the US will buy any, and all the power we can produce. Energy independence? LOL give me a break...they have more coal fired electrical generation then any place in the western hemisphere...and are desparate to rid themselves of it. We will sell our power from muskrat on the spot market...no one knows, or cares where the power comes from...it all goes into one big pool, and is drawn down...we will have the ability to sell power in the AM and stop selling power in the PM. As well, Fortis itself owns utilities on the eastern seaboard of the USA, and they are looking for new sources of power. The bottom line is that Muskrat is being developed to supply the province of NL with power...this is not Gull island...this is not the upper Churchill...this is 800 megawatts of power, we will sell some on the spot market...or we will not...it will not matter to the reason we are building this dam...

    • david
      May 01, 2013 - 13:45

      Your first sentence reveals you to be a complete and utter fool. Abstract much appreciated.

    • Information-Based
      May 01, 2013 - 16:34

      I see you're looking for company, Dave.

  • Maurice E. Adams
    May 01, 2013 - 10:49

    There is not even a market in NL. The mining companies will only pay about 10% of what it coats to produce and transmit MF power (and there is not even a firm request from them). ........... On the island, for the last number of years, Holyrood has been needed to provide only about 17% of the reported 5 terawatts output capacity of MF...... and going down. See www.vision2041.com for Holyrood's contribution for the last dozen years. An 8 to 12 billion dollar, unneeded, dinosaur of a project that the U.S does not even consider "renewable",

  • david
    May 01, 2013 - 10:49

    Ooooh, small oversight. Ah, the pesky "details" that come up and bite you in the arse when you're intoxicated with the idea that you didn't bother to take the time to properly analysis, or put any competent consdieration and actual, responsible effort into.....oh well. A real tribute to the Joey years....well done, Newfoundland.

    • Information-Based
      May 01, 2013 - 16:50

      Yeah, one other pesky detail missing from your post, besides spellcheck, is that the U.S. is not moving towards energy independence, it is moving towards TEMPORARY energy independence. The mind-"dumb"ing post by Maurice that uses "dinosaur" to describe a hydro project is at once terrifyingly ignorant and sharply ironic, considering the literal fossil fuels this type of project competes with. The long view fortunately drowns out the din of your misinformed bleating, and I will accept your apology for opposing this project in 20yrs, when the choice will seem so much more obvious in retrospect.

    • david
      May 02, 2013 - 10:44

      IB: At first it was sort of flattering, but it's gotten a bit weird. Sorry, but I'm just not interested in a relationship. There are specific websites for what you want....and they don't seem that expensive.

    • Information-Based
      May 08, 2013 - 08:20

      I don't doubt you've done a lot of research into "specific websites". It would explain why you haven't had the time to look into the concepts in this article, for instance.

  • Shawn
    May 01, 2013 - 10:25

    This project will have the Province of Newfoundland and Newfoundland rate payers on the hook for many generations. With no viable market for the power other than Newfoundland, which I have said from the beginning, the rate payers of this province will foot the entire bill.

    • John Smith
      May 01, 2013 - 19:08

      well duh! Who do you think should foot the bill for our project?? People in Ontario...or Paris? LOL give me a break...the government has said all along that the project will be paid for by rate payers...

  • Yazsir
    May 01, 2013 - 08:00

    How much more will this cost our future generation and our province?