Report pokes holes in project

Andrew Robinson
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The findings of an environmental assessment report looking into the Lower Churchill hydroelectric development project has cast doubt over Crown corporation Nalcor’s position Muskrat Falls is the most effective way to meet provincial energy demands.

The report, prepared by a joint review panel that held hearings in Newfoundland and Labrador earlier this year, concluded that “Nalcor’s analysis, showing Muskrat Falls to be the best and least-cost way to meet domestic demand requirements, was inadequate,” according to the executive summary.

It recommends a new, independent analysis based on economic, energy and environmental considerations be undertaken on the $6.2-billion project.

Premier Kathy Dunderdale, speaking to reporters outside the House of Assembly Thursday afternoon, said further work is already underway to assess whether Muskrat Falls is the least-cost alternative.

“That’s a question that has been pivotal to this whole debate and why (global consulting firm) Navigant and the PUB (Public Utilities Board) have been engaged in the assessment of the project.”

Navigant is conducting an assessment on behalf of project proponent Nalcor, while the board is working on behalf of the provincial government. Dunderdale noted those groups were brought on board after the review panel completed its hearings, which took place from March 3 to April 15.

Liberal MHA Marshall Dean said the report backs statements his party has been making ever since plans for the Muskrat Falls development were first announced.

“The report pretty much concludes what we’ve been saying all along,” he said. “It’s a rushed deal. It needs independent review. The economics of it don’t make sense, (and) the timelines don’t make sense.”

New Democratic Party Leader Lorraine Michael said the government needs to take this assessment very seriously, and she’s concerned about the premier’s reliance on the work of Navigant and the PUB.

“They’re looking at Muskrat Falls. They’re not looking at alternatives, and the panel has said Nalcor hasn’t proven this is the cheapest. The only way to prove this is the cheapest is by doing the broad-based analysis of the various alternatives, which has not been done.”

Dunderdale understands the need to scrutinize the project given its stature.

“This is a $6-billion project. That’s a lot of money, and people should be asking tough questions and hard questions, and question whether the analysis is correct.”


Equal measure

The premier appeared to question the panel’s preference for giving equal measure to information provided by Nalcor and presentations made by other interest parties who took part in the hearings that informed the report. The report also relied on the environmental impact statement prepared by Nalcor.

“I don’t see in the report from the panel the analysis that shows us where Nalcor’s shortfalls are in terms of their determinations on the finances of the project. They quite clearly say that all participants’ testimony (was) given the same weight, but the expertise rested with Nalcor.”

In the executive summary, the panel said Nalcor’s approach to the cumulative effects assessment was “less than comprehensive,” while adding participants in the hearing raised valid concerns that contributed to a broader understanding of the project’s cumulative effects.

It found the project would have a significantly adverse environmental effect on aquatic and terrestrial environments, culture and heritage, and potentially on land and resource uses.

She said the report will not affect efforts to obtain funding for the project. Last Friday, the province signed a memorandum of agreement with the federal government and the Government of Nova Scotia offering assurances on a loan guarantee or equivalent financing for the project once financial advisers look at the project.

Noting the fact the project has not yet been sanctioned by government, Dunderdale said the province would back away from Muskrat Falls if Navigant and the utility board find issues regarding the least-cost alternative question.

The environmental assessment report, which was submitted to the federal and provincial governments on Monday, was jointly made public Thursday by federal Environment Minister Peter Kent and his provincial counterpart Ross Wiseman. It focused on the generation stations for Muskrat Falls and Gull Island. Transmission lines were not included in its scope.

Nalcor said in a news release it will comment on the environmental assessment report today.


Panel conclusions

Nalcor’s analysis that showed Muskrat Falls to be the best and least cost way to meet domestic demand requirements is inadequate and an independent analysis of economic, energy and broad-based environmental considerations of alternatives is required.

The panel has determined that the project would be likely to have significant adverse effects in the following areas: fish habitat and fish assemblage; terrestrial, wetland and riparian habitat; the Red Wine Mountain caribou herd; fishing and seal hunting in Lake Melville should consumption advisories be required; culture and heritage (the “loss of the river“).

The panel has identified a range of potential project benefits.

The panel has identified crucial additional information required before the project should proceed in the areas of long-term financial returns, energy alternatives to serve Island needs and reducing uncertainty about downstream environmental effects.

Source: Joint Review Panel established by Canada’s Minister of the Environment, the Minister of Environment and Conservation for Newfoundland and Labrador, and the Minister for Intergovernmental Affairs for Newfoundland and Labrador

Organizations: Public Utilities Board, New Democratic Party, Government of Nova Scotia

Geographic location: Muskrat Falls, Newfoundland and Labrador, Gull Island

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Recent comments

  • No Big Deal
    August 26, 2011 - 12:19

    The report seems to be only a speed bump with this project.

  • Eli
    August 26, 2011 - 11:34

    I never did agree with the process here especially the $350,000,000.00 already spent without one red copper being accounted for. But I think this assessment thing will be Harper's excuse to renage on his guarantee. Whoopee all around!

  • WG
    August 26, 2011 - 10:01

    To RJ. Unfortunately, the term environmental assessment is a bit out-dated. In fact, the mandate of the environmental assessment panel was to analyze the merits of the project in a holistic context, including environmental, economic and cultural considerations, among others - it is definitely broader than the antiquated term (as a result of federal and provincial legislation) would suggest based on an outside glance.

  • Frank M
    August 26, 2011 - 09:24

    Government or an independent analysis needs to explain the high cost to taxpayers and consumers (double provincial debt or double electricity rates) for this project that will make profits of hundreds of millions of dollars per year for the life of the project (100 years at least). Can't financing be arranged that does not hit the citizen????

  • Why did Danny go so quickly
    August 26, 2011 - 09:00

    The Williams Leegacy seems to have enough holes in it to drive a fleet of Mack Trucks through it almost as fast as the water flows over the falls. Can anyone say SET UP? Thats just what Williams did to Premier Dunderdale. He created this mess and walked away to let her take the heat for his blunder and never ending ego trip.

  • stanley oliver
    August 26, 2011 - 08:30

    The project still needs to address the lack of social housing needs that will be further experated by this project in Upper Lake Melville not just another study and or strategy development.

  • John Smith
    August 26, 2011 - 08:22

    So, they want more information. They are saying that there needs to be an independant review...OK. Funny how the headlines don't focus on all the benefits of the project, that were mentioned in the review. It would be a sad day if we lose this opportunity, but hey...that's the NEWFY way. Sign on to the upper churchill, no problem, yet throw this project in the garbage. So sad.

    • Give us ALL the facts
      August 26, 2011 - 10:09

      If the negatives outweigh the positives, this project should be shelved. An independent review would provide an objective opinion on the benefits of the projects vs. the risks. Who in their right mind would not want that information to base their decision on? The only people that I could think of that would want that approach are those that stand to personally benefit regardless of the cost to those that have to pay for it.

    • Reality
      August 26, 2011 - 10:21

      Ever hear of sober second thought, or are you only all about toeing the party line?

    • Carl
      August 26, 2011 - 13:47

      After reading John Smith's comment, I went to the report itself to see whether there are indeed positive findings that are being given short shrift by the media. It turns out there are many: "there would be net benefits beyond the province in the form of employment and business opportunities, greenhouse gas reduction, and energy stability"; "during the construction period, there would be substantial potential economic benefits for all areas of the province, especially Labrador"; "effects on fishing in the Churchill river would not be significant." These are just a few positive findings in the report. See the report for yourself if you want a balanced and informed opinion.

  • Maurice E. Adams
    August 26, 2011 - 07:40

    The recent Memorandum of Agreement effectively gives Ottawa, Emera and Nova Scotia control over the details/conditions that will be in the final guarantee agreement. That puts control of the project (and NL control/ownership of the generating station and transmission lines at risk in the event of default). NL and Nalcor make up only a minority on the committee that will decide the details and conditions of the agreement. ======= As the environment report states --- 'the need is not there'....... Nalcor's own document states that the "existing system (has an) installed NET capacity (of) 1958 MW", while Nalcor's Annual Report states that our "peak demand" last year was only 1305 MW (February), and furthermore that our peak demand has not exceeded 1390 MW for the last 5 years. Also, their documents also show that our demand has gone down on average more than 2% per year since 2004 (down a total of 16% since 2004). Also, the only significant demand on the horizon is Vale's Long Harbour plant which will add only 85 MW to last year peak of 1305 MW. So that still leaves an existing excess net capacity of more than 600 MW ===== So why do we need to increase our debt by BILLIONS -- so that we can get for island use 330 MW of very high cost power (and put the province's fiscal viability at risk?). Maurice E. Adams, Paradise

  • Dale Kirby
    August 26, 2011 - 07:28

    If an independent, more thorough analysis is recommended, it should be done. There's no rush here. Muskrat Falls is not going anywhere.

  • RJ
    August 26, 2011 - 07:15

    Can someone please explain why an environmental assessment report is commenting on "domestic demand requirements"??

    • Robert
      August 26, 2011 - 08:27

      The environmental assessment project weighs the merits of a project against resulting environmental costs. Domestic demand is being cited by the proponents as being the primary reason that the project is necessary. The committee is saying that they do not agree that the requirement is there, thus environmental damage is unnecessary.

  • Shannon Reardon
    August 26, 2011 - 07:02

    You could drive a Mack truck through it.