Harper signs loan guarantee

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Newfoundland and Labrador Premier Kathy Dunderdale (left), National Defence Minister Peter MacKay, Minister Peter Penashue and Nova Scotia Premier Darrell Dexter look on as Prime Minister Stephen Harper prepares to sign the Muskrat Falls loan guarantee. — Photo by Derek Montague/The Labradorian

By Sue Bailey

The Canadian Press

and Jamie Lewis

TC Media—Happy Valley-Goose Bay

Long-awaited backing from Ottawa has vaulted a hydro megaproject that supporters say will unleash Newfoundland and Labrador’s renewable energy potential while opening an Atlantic power gateway.

Prime Minister Stephen Harper signed off on a loan guarantee Friday that’s expected to save the province and Nova Scotia more than $1 billion in borrowing costs on the $7.4-billion Muskrat Falls venture in Labrador.

He shrugged off Quebec critics who called it an unfair subsidy and said it’s a low-risk investment — even though the project has not been endorsed by an independent regulator.

“I want to emphasize that this project is going to be a real game changer for this province and this region,” Harper told a news conference Friday at the 5 Wing Goose Bay airbase in Happy Valley-Goose Bay.

“It is a genuine historic occasion and it is the beginning of what I think will be a very long era of prosperity and opportunity for the people of this region and the entire province.”

The federal support, which Harper promised during last year’s election campaign, is included in a term sheet that would guarantee up to $6.3 billion in debt over 35 to 40 years for the financing of the project. The remaining cash to reach total cost of the development has been described as the two provinces’ initial down payment.

Harper congratulated Nova Scotia Premier Darrell Dexter and Newfoundland and Labrador Premier Kathy Dunderdale, whose determination on the loan guarantee he called “relentless.”

Dunderdale said Muskrat Falls is the key to “a sustainable, prosperous future” that will allow her province to harness more of its energy resources — circumventing what she describes as transmission blocks thrown up by Quebec — at the lowest cost to the province’s residents and businesses.

“You don’t see this kind of collaboration and co-operation in the country very often,” she said. “We have two provinces and the federal government doing a very significant piece of business together, important to all of our interests.

“For the people of the province, this of course represents an active affirmation from our federal government of our ambition to keep this province on the path to permanent sustainable, renewable prosperity. The Muskrat Falls project is first and foremost for the benefit of the people of Newfoundland and Labrador.”

Dunderdale said, the project … will stabilize electricity rates for generations at the lowest possible cost and support industrial development and future mining operations.

Dunderdale said with the decline of natural resources the Muskrat Falls Project is about taking action now to harness the return of the provinces non-renewable resources in order to bring renewable resources online.

“It is no exaggeration in saying that Muskrat Falls is the key sustainable, prosperous future, with an economy based on self-sufficiency. It is the next step as we move from short-term, project-based economy to a renewable economy,” she said.

Dexter said Muskrat Falls will provide secure, reliable energy in a province where many families struggle to pay heat and light bills.

“It means that we will for the first time not be at the end of the extension cord when it comes to electricity. We will in fact be part of an energy loop. We will be in a competitive energy situation for the very first time in our history.”

The project would be built in the riding of federal Intergovernmental Affairs Minister Peter Penashue, who has come under criticism for months for overspending his legal limit in last year’s election campaign.

The Opposition NDP have also questioned Penashue’s involvement in the awarding of contracts related to Muskrat Falls.

Harper dismissed the attack, saying Ottawa is not involved in the tendering or awarding of contracts for the development.

“What the federal government is doing under this agreement … is providing a loan guarantee at extremely low risk, and frankly, I think in the long-term, zero cost to the taxpayers of Canada,” Harper said.

Harper said that nobody has worked harder for the project than Peter Penashue.

“Peter knows what this great enterprise means, not only for the people of Labrador, but to the entire province, to the entire region and to Canada as a whole. And in Ottawa he has been the greatest advocate and his hard work there deserves a congratulations,

“(Penashue) included this commitment to the people of Newfoundland and Labrador and he is doing exactly what the people of Newfoundland and Labrador … elected him to do.”

Dunderdale’s government has waited for the federal support before officially approving Muskrat Falls, which she said is expected to happen before Christmas.

The Quebec government has opposed Ottawa’s involvement as an unfair fiscal handout.

“We’ll make sure that we use all tools available to us to make sure Quebec’s point of view is being heard, including judicial means,” Quebec Intergovernmental Affairs Minister Alexandre Cloutier told a news conference in Quebec City.

“The federal government is acting against Quebec’s interests, using Quebecers’ money to deploy a federal grant to Labrador, and that will have a bad impact on Quebec’s economy.”

Later in the day, Dexter said Quebec’s opposition to Muskrat Falls would merely reinforce Atlantic Canada’s support of it.

“The only effect that will have in Atlantic Canada is that it will strengthen our resolve to ensure the project is completed,” he said. “The Maritime link gives Newfoundland and Labrador more assured revenues and access to the world’s largest market for electricity and it gives Nova Scotia secure renewable power when it will be most needed.”

Even though there is an action before the Federal Court between Grand Riverkeeper Labrador, the Sierra Club of Canada and the NunatuKavut Community Council, Dunderdale said, it will not stop the project from moving forward.

“Let me say there wouldn’t be anything proceeding anywhere in the country or anywhere in the world by somebody filing a lawsuit, that could bring everything to a halt … nothing would ever happen,” she said.

If it goes ahead, Muskrat Falls would be the largest single public expenditure in Newfoundland and Labrador’s history, costing almost as much as its annual budget.

It is expected to begin generating power in 2017, and some of that electricity would flow to Nova Scotia through subsea cables.

Opponents say Dunderdale has not proven the case for Muskrat Falls, accusing her of fast-tracking a project without legislative committee scrutiny or debate that could burden future generations if it soars over budget.

She has countered the criticism by releasing a series of government-commissioned reports in recent weeks. They conclude the project is a viable, clean source of renewable energy that would wean the province off fossil fuels.

Dunderdale has refused further review by the province’s Public Utilities Board since it declined to endorse Muskrat Falls last spring, citing a lack of updated information.

If it proceeds, Muskrat Falls would be capable of generating up to 824 megawatts of electricity, 170 megawatts of which would go to Nova Scotia annually for 35 years. That would serve about 10 per cent of that province’s power needs.

The development is a joint venture between Nalcor Energy, Newfoundland and Labrador’s Crown utility company, and Nova Scotia private utility Emera.

Nalcor Energy would be responsible for the construction of the dam and power station in Labrador as well as transmission lines on the island of Newfoundland. That is expected to cost about $6.2 billion.

Emera would build a 180-kilometre subsea link that would transmit the power from Cape Ray in southwestern Newfoundland to Lingan, N.S., in Cape Breton. Chris Huskilson, Emera’s CEO, said Friday that is expected to cost between $1.3 billion and $1.5 billion, though final figures would be presented to the Nova Scotia Utility and Review Board in the future.

Emera has until July 2014 to opt out of the deal, but Harper said he is confident it will go ahead.

“I don’t see anything in Nova Scotia that will change that, so I’m very confident that everybody who’s a party will remain a party,” he said. “This is a project that is in everybody’s interest.”

Preliminary work on a road to the site near Happy Valley-Goose Bay has already started.

The project has been on the drawing board in one form or another for decades. In 1980, it passed an environmental assessment but was set aside due to market access and financing issues.

Organizations: Federal Court, Sierra Club of Canada, NunatuKavut Community Council Public Utilities Board Emera.Nalcor Energy Nova Scotia Utility and Review Board

Geographic location: Newfoundland and Labrador, Quebec City, Nova Scotia Muskrat Atlantic Canada Ottawa Happy Valley Goose Bay Island of Newfoundland Cape Ray Southwestern Newfoundland Lingan Cape Breton

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Recent comments

  • NLGal
    December 02, 2012 - 20:19

    Harper says "Peter knows what this great enterprise means". For whom? Perhaps for himself and his construction companies with Muskrat Contracts? Not a bad way for a poor man to get rich? And then there's the spending scandal. Sounds like Harper jumped in with a term sheet not the guarantee because this case is in court now. Before it got stalled. The guarantee might be a long time coming if any court liens are placed on it or maybe never arrive. Meantime can the NL Gov Nalcor still borrow without the guarantee or without a term sheet. I don't think so. They have no investors or collateral/ profits just taxpayers for construction project of this financial magnitude. On the other hand, even with a co-signer like the Feds, if NL Gov or Nalcor defaults on payments in the 40 year term period, Feds can expropriate and own the Project and dam that is then part of domestic and corp hydro bills. That is the Feds collateral on the loan guarantee. The Corps have options to opt out. The public does not and have to pay for corps on their hydro bills so corps pay little or nothing. What a mess Danny Williams/Dunderdale have made to the people of NL and to the provinces finances. It can only get worse along with an out migration surge again. NL politicians have always screwed this province to get rich themselves. At least most with no corruption probes to stop these gangsters.

  • Brad Cabana
    December 02, 2012 - 09:45

    Dunderdale says: " Let me say there wouldn't be anything proceeding anywhere in the country or anywhere in the world, by somebody filing a lawsuit, that could bring everything to a halt..." With atleast two court cases before the courts right now that aim to do just that, Ms Dunderdale has just commited contempt of court with the comment. For the love of God, there is a reason why grown up politicians say they cant comment as the case is before the courts. This another instance where the PC government asserts it is above the law, but this is Canada and the law rules. Dictators do not.

  • Adam
    December 01, 2012 - 19:49

    A Great day for NL. !!

  • Ray
    December 01, 2012 - 16:40

    Hurrah, Congrats on Mushrat Falls financing! Nice to see the Canada-NFLD-NS federation working well. Good for welding your new navy together. Much better than the 'fiscal clliff' negotiations going on here. New Yorkers are well aware of the carrying cost that Quebec adds to the 3.3 cents per KW-HR that NFLD gets for Churchill Falls power. We will remember who our friends are.

  • darrell
    December 01, 2012 - 12:02

    Gotta say....Kathy looks so nice these days. Good for her.

  • Cyril Rogers
    December 01, 2012 - 11:42

    This is like putting down a deposit when you are negotiating to buy a house, except that you have an "out" clause. If EMERA backs out, no deal. Plus, the feds only cover a portion of the total cost, leaving NL on the hook for cost overruns that will likely reach several billion dollars. Why would anybody get excited over this? The fact that the Premier was totally unaware of it shows how much of a farce it is. Seems to me that Harper is just trying to prop up the MP from his area without actually committing a penny toward the deal. Nothing new in this "announcement"!! A term sheet is far from a final and legally binding document!!

  • Avalon Girl
    December 01, 2012 - 09:42

    Well Well Well.. Premier Kathy Dunderdale on the news the day before had no idea to why Harper was coming to NL but yet she was there with bells on for the signing...Go figure..What other lies are you telling us Premier ?????

    • Paul
      December 01, 2012 - 10:46

      Typical of the day when she stood on that stage with Harper. She has been at his beck and call ever since. Jump Kathy jump. Sad state of affairs.