Muskrat Falls reality check: Part II

Ashley Fitzpatrick
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An aerial view of Muskrat Falls taken in August. — Photo by Ashley Fitzpatrick/The Telegram

Second in a two-part series

In a continuation from Friday’s edition, The Telegram looks at more outstanding issues related to the Muskrat Falls project.

Access to information

“I really am looking for information around the analysis that was done on alternatives.”

— NDP Leader Lorraine Michael, Feb. 8, 2012, following VOCM Muskrat Falls debate

Today, there is a wealth of information about Muskrat Falls and the Lower Churchill development, including the government’s look at alternatives.

That said, some items are still outside of the public eye, such as the value of project contracts.

The Telegram contacted the Public Utilities Board (PUB) to ask about 15 exhibits deemed “confidential” under its review.

While typically the confidentiality of exhibits can be challenged, through an appeal to the board, the Muskrat Falls review was not a typical case. “Pursuant to the Terms of Reference in the Muskrat Falls review, Nalcor, not the Board, made the determination that certain documents were of a confidential nature not to be released,” stated an emailed response to questions.

However, it is also true the provincial government has gone above and beyond its verbal promises and has now set out a clear record of its thinking and the relevant project numbers.

In addition, Nalcor Energy has made its executive and project leaders available to reporters at all points along the way.

“Paid with billions from the treasury and higher rates the users pay.” — from “Our Daughters and Our Sons (Muskrat Falls),” as promoted by the grassroots People’s Assembly - Newfoundland and Labrador

While the planned hydro development at Muskrat Falls is, at times, blamed for higher power bills people will pay in this province, the reality is higher bills are coming regardless.

The only question is what option for providing additional power will keep power bills as low as possible.

The average monthly, residential electricity bill in this province jumped about $45 from 2000 to 2011, according to the provincial Department of Natural Resources.

Comparisons between Muskrat Falls and other options have focused on what happens to bills from 2017 onward, when Muskrat Falls is up and running.

The reality is, bills are expected to surge between now and then (see image accompanying this story).

The province has estimated an average jump of $30 in that period and it will mean, in total, a $75 per month average increase for the period 2001 to 2017 — a tough hike for some individuals and low-income families to absorb.

The markets

“If you were asking the question about an export (of power) that will take place tomorrow, I could give you an answer. But this project is well off into the future and nobody can say with certainty what the New England-Northeast U.S. market will look like several years from now.” — Energy consultant Gordon Weil, July 31, 2012, in an interview with The Telegram

Of all the power produced at Muskrat Falls, 20 per cent is set to be sent to Nova Scotia. Meanwhile, Newfoundland and Labrador Hydro is forecasting a demand for Muskrat power on the island, as a result of growing small business and residential needs.

The provincial government has highlighted a domestic sales market in Labrador mines. Yet, exactly how many mines will come and how much power they will demand is still uncertain.

Overall power demand is enough to justify Muskrat Falls, but not enough for government to currently push for the development of Gull Island as a follow-up.

There have been no commitments to date for the 2,250 megawatts of power a dam at Gull Island would produce. It is found between Muskrat and the existing Churchill Falls power facility.

Premier Kathy Dunderdale has said Ontario is “very interested” in Gull power.

“Ontario’s Ministry of Energy has met with Nalcor Energy to receive updates on the Lower Churchill hydro projects and supports continued discussion between the Ontario Power Authority and Nalcor,” a ministry spokeswoman confirmed in response to questions.

“We have not made any decisions about importing power from Newfoundland and Labrador at this time. Assessment of any supply opportunity will take into account Ontario’s long term power needs, its supply mix goals, alternative supply options, Nalcor’s ability to deliver firm power to Ontario, as well as the cost and value to Ontario ratepayers.”

What comes next

For those tired of the Muskrat Falls talk, it is far from over.

A conversation on government regulation and oversight is expected, as government will be introducing legislation to govern how Muskrat Falls power will be dealt with by the PUB.

As well, Newfoundland Power’s general rate application is under review by the regulator. Hearings on that application will start in January and questions around everything from system maintenance and service to energy conservation programming.

Meanwhile, Nalcor is looking at power deals for the Labrador mines, while coastal communities on the other side of the Big Land are desperate to get off constricting, dirty, diesel-fed systems.

Movement on any of these items have the potential to affect power bills for people around the province.

A final note: objections to the project — based on complaints of an incomplete environmental assessment made by Sierra Club Canada, Grand Riverkeeper Labrador Inc. and the NunatuKavut Community Council — will be heard in Federal Court in Ottawa beginning Monday.

Organizations: Public Utilities Board, Nalcor Energy, Department of Natural Resources.Comparisons Newfoundland and Labrador Hydro Ministry of Energy Ontario Power Authority Newfoundland Power Sierra Club Canada Grand Riverkeeper Labrador NunatuKavut Community Council Federal Court

Geographic location: Muskrat, Newfoundland and Labrador, Ontario Gull Island New England-Northeast U.S. Nova Scotia Ottawa

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Recent comments

  • Maurice E. Adams
    November 25, 2012 - 10:31

    There is no evidence that the is "sufficient demand to justify Muskrat Fall"..... The only two independent reviews (the federal/provincial review panel and the PUB) have said there is INSUFFICIENT evidence that the island needs the power. I think there is an onus on the media to stop spouting Nalcor and government's propaganda as if it were fact.

  • Dawn
    November 24, 2012 - 10:26

    I am so tired of hearing about Muskrat Falls!. It seems that they are gonig ahead with it no matter what. What about the alernatives, such as windmills. Instead of going ahead wih Muskrat Falls and having more power than we can sell and costing so many billions of dollars. What about having windmills and generating as the need arises ..

  • Cyril Rogers
    November 24, 2012 - 09:37

    Ms Fitzpatrick, there are many realities that could be associated with Muskrat Falls but truth and clarity are not much in evidence. The "wealth of information" you reference is mostly a collection of half-truths and outdated or poorly-researched documents. The inability of the independent regulator(PUB)to do a thorough review speaks volumes about the veracity of the information on display. None of it is a complete lie but there are liberal interpretations of the reality of what we will face in terms of cost and in the actual monthly power rates we will be forced to endure. The reality that "bills are expected to surge between now and'....2017, is simply a ploy by the powers that be to jack up rates, whether justified or not. NL Hydro was granted a 7.5% rate increase for 5 years, beginning last year, I believe, for a total increase of 37.5%. To say this rate increase was justified is a stretch, and it seems to me that it was merely designed to prime us for the inevitable increases that MUST follow the completion of Muskrat Falls. While they have suggested that rates between 2017 and 2030 will rise incrementally, what happens when the costs of completing the project jump by 2-3 billion dollars? Once sanctioned and committed to this financial white elephant, there is no turning back. The only reality will be financial hardship for the people of the province. Sure, we will pay for it.....but it will be at the expense of essential services. Dig deeper and you will find another reality!

  • Maurice E. Adams
    November 24, 2012 - 08:57

    "Overall power demand is enough to justify Muskrat Falls" ---- based on what evidence? That is not a true statement, according to the independent federal/provinical Review Panel and the NL public utilities board, both of whom determined that Nalcor had NOT DEMONSTRATED that the island needs more power --- not alone based on a crystal ball 50-year demand forecast (2 and 1/2 times as long as what NL Hydro is allowed BY LAW to ask its clients to provide), oil based on $200 a barrel, no efficiency program, no proper review of alternatives, etc. etc. etc.

  • John Smith
    November 24, 2012 - 08:42

    The muskrat Falls development is a well thought out, well researched, well reviewed answer to our coming energy requirements here in this province. Several independant analysis has been conducted, and they have all come back in support of Muskrat. Two recent polls show most support the project. It has been shown that our costs for electricity have risen by 70% since the mid 90s, and we will see about 10-14% increase between now and this time next year. The only way we will stableize our rates is to get onto Muskrat power as soon as possible. We will borrow about 4 billion dollars for the project, about what we spend each year on healthcare in the province, for a 100 year project, that will see us connect to the mainland, allowing us to export excess energy, persue wind and other alternatives, rid ourselves of the smoke belching plant in Holyrood, and get off reliance on middle eastern bunker C. We will be paying into our own project, our own resource that will serve us for generations. The naysayers have not put forward one report, one review, one study, one expert that will come out against this project...why? Because no sane rational, expert would ever back one of these hairbrained schemes over a hydro project.Simple as that. Don't you think that if the 2041 group, or one of the other groups had expert evidence they would bring it forward? Same with the opposition. Don't you think if they could find someone, anyone with a scintilla of credibility that they would be trotting them out with all the fanfare you could imagine? But yet...we only hear crickets chirping...silence from the naysayers side...except of course from themselves...which is meaningless.