Nalcor defends Muskrat Falls

Andrew Robinson
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Minimizes environmental report’s connection to loan guarantee

Ed Martin speaks to reporters. — Photo by The Telegram

Nalcor president and CEO Ed Martin is disappointed by some of the recommendations contained in the environmental assessment report on the $6.2-billion Lower Churchill hydroelectric development, but remains steadfast that Muskrat Falls is the least-cost way to meet provincial energy demands.

“There is no question, I am surprised and disappointed in the tone of the report in these areas,” he said, refering to recommendations suggesting Nalcor and the province give a further look to alternative projects.

The joint review panel that prepared the report, which was informed by hearings held March 3 to April 15, 2011 across the province, was direct in expressing its concern regarding the Muskrat Falls project.

“However, the panel concluded that Nalcor’s analysis, showing Muskrat Falls to be the best and least-cost way to meet domestic demand requirements, was inadequate and recommended a new, independent analysis based on economic, energy and environmental considerations,” read a statement in the report’s executive summary.

Martin defended Nalcor staff involved in preparing its own analysis, going on to question the appropriateness of the executive summary’s tone.

“My message remains unchanged from where I’ve been since November — we have done an extensive review of the alternatives. At this point, Muskrat Falls, with a link to the island of Newfoundland to support the province’s future energy requirement, remains the best option.”

Martin went on to say a review by global consulting firm Navigant, which began two months ago and is expected to be finish by early September, will address all concerns raised by the joint review panel’s report. He said Nalcor is also assisting the Public Utilities Board in its own review of the project at the request of the province.

Asked if the public can still have confidence in the project when Nalcor’s analysis is deemed “inadequate” by the third-party, Martin said the Crown corporation has been open and transparent and has already analyzed several different options for serving the energy needs of the province.

He said after further analysis takes place, the public will see that a decision has been made based on “robust data.”

As for whether the report’s recommendation to review the economic benefit of the project will impact the province’s ability to obtain a loan guarantee or equivalent financing from the federal government, Martin was adamant it will not impact the memorandum of agreement signed last Friday in St. John’s.

“The actual due diligence with respect to providing the loan guarantee was completed, and the federal government has committed to going ahead with the loan guarantee based upon their three criteria, which included the economic benefits being provided into a particular region of the country.”

Speaking last Friday in St. John’s, federal Minister of Natural Resources Joe Oliver said financial advisers for the federal government will assess the project to determine how to implement the loan guarantee or equivalent financing in such a way that reduces risk for all parties involved.

Nalcor has said a loan guarantee will mean lower interest rates and savings for consumers.

A spokeswoman for Oliver said the federal government will review recommendations from the report that apply to the federal government.

“We remain committed to working with the Province on the Lower Churchill project,” she wrote in an e-mail to The Telegram.


Aylward’s assessment

Liberal Leader Kevin Aylward, who met with reporters Friday at the Delta Hotel in St. John’s, defended the expertise of Nalcor, but had harsh words for the provincial government on its handling of the Muskrat Falls development.

“This report is an indictment of this government and the way that they have handled this project,” he said.

Aylward offered details on how the mandate of the Public Utilities Board’s review of the project compares with the recommendations of the joint review panel.

He said the issues of conservation, demand management, use of offshore gas as a fuel for the Holyrood thermal generating facility, cash flow projections, and the implications for the province’s regulatory systems were not included in the PUB’s mandate.

Alternate on-island energy sources were allegedly left to the board’s discretion, while the options for monetization of surplus power were specifically excluded, he alleged.

Former premier Danny Williams, speaking in Manuels for an announcement relating to the St. John’s IceCaps professional hockey team, said he continues to have full confidence in the work being done by Nalcor on a project he initiated prior to leaving politics last fall.

“From my own perspective, this was a good project then, it’s a good project now, and it’s a good project for the future of the people of Newfoundland and Labrador,” he said, stating it will get the province into the American marketplace, offer lower electricity rates, and avoid partnering with Quebec.

The remaining 81 recommendations Martin termed as “technical environmental points.” Based on early review, he said some appear quite helpful, while Nalcor may not agree with others. Nalcor staff will review those recommendations and prepare a detailed response in the weeks ahead.

Nalcor’s official response must be submitted to both the federal and provincial governments by Sept. 24.

Martin said Nalcor continues to work towards getting the project sanctioned, after which construction work at Muskrat Falls would commence.

Following ministerial approval of the environmental assessment, further engineering work and cost and schedule updates must be made, along with the ratification of agreements with Aboriginal groups and the finalization of financing.

—With files from Robin Short

Organizations: Public Utilities Board, Navigant, Delta Hotel

Geographic location: Island of Newfoundland, Manuels, Newfoundland and Labrador

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Recent comments

  • Randy
    August 28, 2011 - 15:41

    Danny Williams will never admit he was wrong,,He has his hired guns ,like Martin and Dunderdale trained to do the same..This project is the second comeing of the upper churchill.It has the potential to bankrupt our province,and double our power bills,yet these ego-maniacs keep trying to shove it down our throuts

  • Bob
    August 28, 2011 - 08:11

    Does OBSERVER suggest his appraisal of the report will be superior to that of The Telegram? Duh!

  • Observer
    August 27, 2011 - 17:14

    I trust that all who comment will have read the report. As reported, some aspects of the report appear speculative. I will withhold other comments until I have read the report and suggest that others do the same.

  • Eli
    August 27, 2011 - 13:39

    Can't help but wonder if "Fast Eddie' would have such a cavalier attitude if even some of these hundreds of millions already spent were his? His hands should be cuffed and his lip buttoned. My hope is the Feds will renege on their backing.

  • Charles Martin
    August 27, 2011 - 08:28

    I have to admit that it is good to FINALLY see some objectivity concerning this project.

  • George S
    August 27, 2011 - 08:16

    It has been a good news week for Newfoundlanders and Labradorians. THE low cost alternative is installing natural gas turbines at Holyrood and using a LNG regassification vessel (see Excellerate Energy) as a supply until the resources offshore are produced. The $200million now required to clear cut the Muskrat Falls reservoir location would be enough to buy a regassification vessel or pay for one third the capital cost to convert Holyrood. The real alternatives were never assessed. If they were, this 6.5 cent per kWh alternative would have been chosen. Navigant has been a consultant to the Province for years....I wonder what they will conclude after not biting the hand that feeds them. Time to stop the spending and call it quits. Or, call for a open tender to provide the necessary power and let the market decide what is cheaper.