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.”
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.
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