Nalcor and Emera sign agreements

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Newfoundland and Labrador Natural Resources Minister Jerome Kennedy, Nova Scotia Natural Resources Minister Charlie Parker, Nalcor president and CEO Ed Martin and Chris Huskilson, Emera president, are shown during this morning’s news conference. — Photo by Tobias Romaniuk

The proposed multibillion-dollar Muskrat Falls hydro project has taken a step forward with the signing of 13 formal agreements between Newfoundland and Labrador and Nova Scotia.

Newfoundland Crown corporation Nalcor Energy and private Nova Scotia utility Emera (TSX:EMA) signed the deals today based on a term sheet announced in November 2010.

Officials told a background briefing that the 35-year deals are to wheel power from the lower Churchill River to Newfoundland and then Nova Scotia using subsea cables.

Nova Scotia would get 20 per cent of the power for covering 20 per cent of capital and operating costs.

Muskrat Falls is expected to generate 824 megawatts of electricity at a cost of more than $6.2 billion.

Nalcor and Emera signed the agreements in what they said is a necessary step toward a utility review in Nova Scotia and a decision by Newfoundland on whether to sanction the project.

Officials say the deals allow for flexibility should those reviews raise unforeseen concerns.

They say costs for the project and the resulting price of power will be clarified later this year.

•••

Agreements have been signed between Nalcor and Emera outlining the progression of the muskrat falls project.

The agreement includes 13 formal agreements, outlining the specifics of deals with various stakeholders.

The 35-year agreement will see Emera getting 20 per cent of power while paying 20 per cent of the costs.

Those costs have yet to be determined, though, as Nalcor continues to work through the construction cost estimates.

Both nalcor and emera say this is the legal version of an agreement signed on November 2010.

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Recent comments

  • McLovin
    August 02, 2012 - 12:40

    So let me get this straight. We are going to build this damn using at least 5 billion dollars of our own money, but that number could realistically be a lot higher when we consider DG3 estimates and cost overruns. This dam will create power that is primarily going to be used by industry in Labrador, who will require power at a reduced rate in order to satisfy their returns to Shareholders and by the people of Nova Scotia who will not pay as much for that power as it costs us to produce it, in exchange they are going to pay for the line that THEY need to get that power in the first place. But wait, after that is all said and done, we will still have excess power that we may or may not be able to sell on the open market and even if we can, we still won't recover anywhere close to the cost is costs us to produce that power. And this is supposed to be GRAVY? It seems that the only benefits that this Province is going to receive is that we remove our dependence on oil and the creation of employment as a result of the construction. Yup this sure sounds like a great deal for the people of Newfoundland and Labrador alright!!! Great deal indeed. Adding at least 5 billion dollars to the Province's debt to supply power at a loss to another Province and to multi-billion dollar profit-making industries in Labrador and to get us off oil all at the expense of the Regular household consumer on the Island? We really are stupid!!!

  • Concerned
    August 01, 2012 - 06:52

    To me this is like getting a max out credit card in the mail, telling me i have 55 years to pay it off. Its going to be very expensive each month but not sure how much you will have to pay because its depends on the runoff of MUSK RAT FALLS. OUR POLITICIANS KNOW , WHAT ARE THEY TRYING TO DO TO US ALL AND THE GENERATIONS TO COME. WE NEED HELP.

  • Ann
    July 31, 2012 - 19:42

    The real reason we will have such a large deficit. No one bases a budget on money they MIGHT have and if we were going to reap large benefits in 2008 when it was much less, why are we not going to reap the benefits now. What happened to debating this the Fall. This is a done deal and there is nothing anyone can do about it because we tend to vote in an overwhelming majority and leave no opposition that keeps a government in check and enables us to have them do what the majority of the people of NL want.

  • Randy
    July 31, 2012 - 17:23

    John Smith sounds a lot like Steve Kent?

  • Maggy Carter
    July 31, 2012 - 16:57

    @ Anna - We don't know who John Smith is ....but we know what he is. He is an unabashed government shill. In online circles he would be known as a 'sock puppet'. His job is not only to spread propaganda but to seed online forums with disinformation. And guess who pays for it? Does anyone think it is coincidental that Smitty's comment was the first to appear today and almost every other day there is a story on Muskrat? Getting in there before anyone else is part of the strategy to foist Muskrat on an unsuspecting and inattentive public. Smitty already has his comment written before the story is published. He already knows what's coming. It may be a couple of years down the road, but inevitably the public will learn the extent of public relations payments made by NALCOR - contracts that were cleverly exempted from government disclosure rules - to help sell a massive government expenditure that could never be sold on its own merits. It will make interesting reading but unfortunately it will come too late to alert a sleepy electorate to the enormity of the financial risks being taken on by our government and the onerous repayment schedule that will be borne by our children and grandchildren for the next half century or more. This is a project the raw economics of which are so bad that the private sector would have nothing to do with it and the banks would only extend financing based on a massive equity infusion and government guarantee on the balance. The personal financial impacts of Muskrat Falls on Newfoundlanders and Labradorians will come in three tranches. The first will be the rapid escalation in electrical rates - far higher and far more quickly than we have ever experienced in the past. The second impact will follow a decision by a growing number of Newfoundlanders - at least those with the resources to do so - to avoid the onerous utility costs by adopting alternative energy technologies and retrofitting their homes. As these people do so, rates will rise even further as the balance of the population are left to make up the difference. When NALCOR eventually hits that brick wall known as the 'law of diminishing returns', it will turn to government for annual cash grants to stabilize rates, meet its debt obligations, and avoid insolvency. Government will have no choice but oblige in order to avoid triggering federal loan guarantees that would take the Muskrat asset out of provincial hands. All of this, of course, will have a devastating effect impact on the province's fiscal capacity. As oil revenues begin to slow, inward investment will all but vanish, personal and business taxes will soar, and government will be hamstrung in virtually every aspect of public spending. That third impact could conceivably lead to a collapse of the provincial economy similar to what preceded the Commission of Government tragedy in the thirties. 'Surely' you say 'government wouldn't be pushing ahead with this project if there was even a remote chance that such a scenario could unfold'. And yet Newfoundland history is replete with just such episodes of corruption, incompetence and arrogance. Nor are we unique. The spectre of governments out-of-control and in league with big business is exactly what precipitated the worldwide economic meltdown we are experiencing today. There is of course a chance that things won't reach that extreme. But once the charade of a public debate is out of the way this Fall, NALCOR and the province will formally commit us to a lifetime of hoping and praying that oil prices go through the roof - that they reach $200 per barrel and stay there - so that Muskrat Falls won't be our economic ruination. I think its called 'betting the farm'.

    • Susan
      August 01, 2012 - 13:08

      Dear Telegram - please install a word limit!

  • anna
    July 31, 2012 - 12:43

    Again John Smith, who are you?

  • Cold Future
    July 31, 2012 - 11:19

    Here we go again. Another step closer to the largest giveaway white elephant project which will put great stress on the NL ratepayers in order to subsidize rates for energy sold at wholesale prices in the mainland markets. NL will essentailly be giving back all the gains realized from the oil revenues to date. NL will continue to lose the benefit of the royalties from oil which could be spent on the crumbling infrastructure and health care because government money will have to be used to provide subsidized energy to NL'rs who cannot afford to buy electricity. Boundless energy for the mainland and boundless debt for the NL taxpayers. The spirit of Joey Smallwood must be out there turning over like on a rotiserry

  • Maurice E. Adams
    July 31, 2012 - 11:16

    So we can finalize pricing and costs, time frames, etc. (1,500 pages of them) with Emera, but cannot provide firm costs and rates to NL ratepayers. Since this project will be paid for by island ratepayers, don't you think that it would make sense to have those ABSOLUTELY nailed down BEFORE you decide on what price you can afford to charge others? Of course not --- because no matter how sour this project gets, no matter how much costs go up, rates (or taxes) for NL ratepayers will be jacked up to pay it. See www.vision2041.com This is a project for Nalcor --- not for island ratepayers.

  • Ashley
    July 31, 2012 - 11:11

    Great News...The development of this renewable, clean energy will: •Eliminate the reliance on oil price volatility; ensuring greater potential for rate stability. •Reduce exposure to gas emission regulations; further enhancing rate price stability. •Eliminate our province’s requirement for fossil fuel costs. •Eliminate the cost of upgrading the Holyrood facility. •Create the potential for future energy developments and electricity export revenues.

    • Kev
      July 31, 2012 - 14:13

      Excellent cut and paste job on those talking points, "Ashley".

  • Muskrat Construction has Begun Already
    July 31, 2012 - 10:59

    Nalcor has begun clearcutting the trees to build the highway to the project that has not been sanctioned by government.......yet. That's why Dunderdale postponed the debate, not to get more info but to start construction without the House being open to criticise her. The Fall debate is just a formality.

  • Cyril Rogers
    July 31, 2012 - 10:47

    This is anything but "good news", as it illustrates once again the lack of sincerity in the government's plan to allow for debate. They fully intend to ram this project down our throats, no matter what the cost to us, the people of Newfoundland and Labrador. We supposedly live in a democracy but we are being dictated to by a government that is out of touch with reality. Oil prices in the stratosphere were and are the major selling points for this project but it is simply based on voodoo economics. Furthermore, the actual cost of the project is already in the EIGHT billion dollar range, according to their own reluctant admission, and oil prices are going in the opposite direction to the estimates. Any cost overruns will exacerbate the problem even further and will bankrupt us down the road. The Premier talks about Muskrat Falls as an asset but consider this: Would you buy a million dollar home and sink 300,000 into it, only to find that five years out, you lost the ability to meet the mortgage payments. We will face a similar scenario here, except that what they will do is jack up hydro rates to cover the huge shortfalls.

  • Don II
    July 31, 2012 - 10:41

    I agree with you Eli, except for the shooting part. The cost of producing and transmitting the electricity from Muskrat Falls may be so high that Newfoundland will have to sell it on the market at a loss in perpetuity. It will be the Upper Churchill Falls deal all over again! Building a hydro electric project at Muskrat Falls for political reasons, for the private gain of politically well connected contractors and mine developers or to spite Quebec is not a good idea. If the Government of Newfoundland builds an economically unfeasible hydro electric project at Muskrat Falls it will saddle generations of Newfoundlanders and Labradorians with the cost of paying for that major blunder. That is what I mean by a spectacular failure. It could be a spectacular failure on many levels that will haunt generations of Newfoundlanders and Labradorians for decades to come. Governments seem to have failed to realize that access to stable sources of very cheap electricity is the foundation of economic development in Atlantic Canada and around the world. Once the price of electricity gets so high that industry and regular consumers cannot afford to pay the price, are forced to curtail their developments or seek out cheaper alternative sources of electricity, all is lost for Muskrat Falls and for the Government of Newfoundland. This development puts the Government of Newfoundland in a high wire act over Muskrat Falls without a net! One false step and that is the end!

  • fools gold
    July 31, 2012 - 10:37

    NS does not have a spot market, they have only a 300MW line to NB which is at max capacity. NS as a grid that is just as isolated as Newfoundland's his.

  • Don II
    July 31, 2012 - 09:28

    The Muskrat Falls project agreement is a great step forward toward Atlantic Canada's energy independence from Quebec. The agreement provides a power transmission corridor through Nova Scotia and New Brunswick so that Newfoundland can export electrical power to Nova Scotia, New Brunswick and the New England States in the USA. The Muskrat Falls project has the potential to succeed where the Upper Churchill project failed. If the cost of construction does not get out of control, if the cost of electrical power being sold to consumers is not too high, if Emera, the Nova Scotia partner in the Muskrat Falls project, is never purchased by Hydro-Quebec and there is never a catastrophic failure or major disruption of the undersea power transmission cable to Nova Scotia. If these variables cannot be controlled then this project will fail in spectacular manner. When the Upper Churchill Falls power contract with Hydro-Quebec expires later in this century it may be possible to divert electrical power from the Upper Churchill Falls to Nova Scotia, New Brunswick, PEI and the USA as well.

    • Eli
      July 31, 2012 - 09:54

      What you're neglecting to say Don II is the cost to Nova Scotia, New Brunswick and New England if there ever is a contract signed between us & them is the cost they'll pay will be 'way below what it's going to cost to produce it. That really make sense to you? Martin, Dunderdale & Kennedy "should be shot" as a former premier might put it.

  • Reddy Kilowatt
    July 31, 2012 - 09:04

    1500 pages of ''Terms'' but still unwilling to state what the cost will be for ratepayers.

  • John Smith
    July 31, 2012 - 09:03

    This is good news, but it is important to remember that the muskrat deal was proven to be viable without the Emera deal, without the loan guarantee, and without the sale of power on the spot market. Even without these sources the project is still the lowest cost option by 2 billion dollars. As far as the cost for the power NS will always pay less than us. They have access to the spot market, and can buy and sell power on the national grid. As well, power today in Toronto costs about 15.5 cents a KWH, we will pay 16.5 cents at soldier's pond. The power in NS will be sold for whatever we can get on the spot market, all gravy...it otherwise would have spilled over the dam, and we would have got nothing for it. This project makes good sense for us, it is the right time to do it...let's all get behind it and make it happen.

    • Little Man Dan
      July 31, 2012 - 15:34

      here Johnny, Johnny, Johnny....down boy; its signed now, lay off the propoganda; up on my lap boy...up....