Muskrat opponents dismiss loan guarantee ‘farce’

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

It was announced with plenty of fanfare in Happy Valley-Goose Bay Friday afternoon, but opponents of the Muskrat Falls project were underwhelmed by the multibillion-dollar federal loan guarantee term sheet.

New Democrat Leader Lorraine Michael wrote it off as a “crazy farce” talking to reporters at Confederation Building shortly after the announcement.

“I have to say I’m disappointed. I think we were all expecting a full loan guarantee and what we have is a term sheet, which probably explains why everything happened so quickly,” she said. “I think it’s not acceptable that the government sanctions based on a term sheet.”

The loan guarantee has been in the works for more than a year and a half. It was first promised by Prime Minister Stephen Harper in St. John’s during the 2011 election campaign — the same campaign where Premier Kathy Dunderdale endorsed his candidacy.

For more than a year, federal and provincial officials have been negotiating the terms of the loan guarantee, and what was presented Friday was an agreement on the broad brush strokes that still needs to be hammered out into formal legal language.

Already with the Muskrat Falls project there have been major delays on that legal wrangling, Liberal Leader Dwight Ball pointed out.

“When you look at what happened between Emera and, for instance, Nalcor, they missed that deadline by about eight months in getting from a term sheet to the formal legal agreements,” he said.

Both Ball and Michael also pointed to the apparent confusion around Friday’s announcement, too, as a cause for concern.

Dunderdale told reporters Thursday afternoon that she didn’t know anything about Harper’s plans to visit the province, and wasn’t aware of any announcement — just 24 hours before she was in Labrador participating in the announcement.

“The big news for me here today is how little involvement the premier has actually had in this, to the point that she didn’t even know it was going to be announced today,” Ball said.

Michael said if she was the premier, she’d be embarrassed by how it all went down.

The announcement was greeted by expressions of support from several groups, including the Newfoundland and Labrador Environmental Industry Association, and the “I believe in the power of NL” group which is advocating for the development of Muskrat Falls.

But at the same time, the 2041 Group which opposes the current plan to develop Muskrat Falls said the loan guarantee announcement doesn’t really change anything, since it had already been factored into Nalcor’s most recent cost projections.

Dennis Browne, who speaks on behalf of the group, said his real cause for concern is the potential for Nova Scotia to back out of the deal.

“Nova Scotia is a fly in the ointment in all of this, Nova Scotia doesn’t have to sign onto the project until July of 2014,” he said. “If Nova Scotia doesn’t sign on and work has already commenced on Muskrat Falls, what happens then?”

Friday’s announcement also provoked some anger from lawyer Lara Tessaro, who is representing environmental groups on a federal court case challenging whether Muskrat Falls can legally proceed.

“My clients argued to the Federal Court that the government does not have any jurisdiction to issue that loan guarantee. And to put that in really plain language, we say that loan guarantee is unlawful, that basically, in plain speak it is null and void,” Tessaro said.

“Basically what the government is doing in issuing it, is rolling the dice, because what the Federal Court is considering right now is whether or not the government even has the right to issue that loan guarantee.”

Twitter: TelegramJames

Organizations: Federal Court, Newfoundland and Labrador Environmental Industry Association

Geographic location: Muskrat Falls, Happy Valley, Goose Bay Nova Scotia Labrador

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Recent comments

  • Duffy
    December 02, 2012 - 09:25

    The King and Queen have spoken. Muscrap falls shall go ahead at any costs - it has been decreed.

  • Paul
    December 02, 2012 - 05:31

    So we can spend a fortune more, Emera can still back out and we can get stuck with the Bill!!! While Emerald and the feds can still screw us around. Great negotiating!! Until a loan guarantee is in place and Emerald has signed on it is just a waste of time for us to be talking about Muskrat Falls. If not, people will be speaking Kathy Dunderdale's name with a lot less respect that Joey Smallwood in the years to come. If you are going to ignore or dismiss any concerns at least get what your doing right. At this point this stinks almost as much as the Newfoundland and Labrador Environmental Industry Associationl leading people to believe they are an environmental group with their name when really they're a group of self interested businesses who stand to benefit from the project including Nalcor!!!

  • Kathleen Walker
    December 01, 2012 - 20:41

    My father, Tom Kierans is at 100 years old, the last living project engineer from Churchill Falls. He is dead set against Muskrat Falls for practical reasons: because it is downstream from Churchill Falls, it's success depends on the generosity of Quebecers, who will control the flow past the turbines. My dad is also opposed to the fact that Muskrat proponents will not permit private investment in Muskrat: the people of Newfoundland will have to foot this 10 billion dollar risky business.

    • John Smith
      December 02, 2012 - 09:34

      Well kathleen, with all respect to Mr. Kierans, I don't think he has total understanding of the project as a whole. What we have with Quebec Hydro is a contract for electricity....not water. When the transmission lines connect the Uper churchill, with muskrat falls, and then Bay D'Espoir, Cat arm ect. will all be interconnected. We will be able to store water here on the island, flow power to labrador from the island, or to Emera to NS. We could send power from muskrat to the UC to meet our demands there if need be. As long as QH gets the amount of power they were promised that's all they have. There are Nalcor employees who run the Upper Churchill not Quebec hydro employees. We do have private investment...Emera is a private company they are putting in 2 billion dollars. The thing is was a private company that really put the screws to us with the we can and should limit private my opinion.

  • Winston Adams
    December 01, 2012 - 19:14

    John, wasn't the 7.4 million allowing there would be the fed loan guarantee as Brown says, otherwise it would top 8 billion? And where is your integrity? You said Vale takes 100MW and it is 74.3 MW according to Nalcor data. You said the price of power would go up 17 percent and the calculator shows 31 percent. And Nalcor says we reached saturation on energy efficiency, and for heating 65 percent saving is the rule, with 99 percent of that untapped. SOME SATURATION. SOME INTEGRITY. SOME SPOKESMAN JOHN. LOL

    December 01, 2012 - 17:54

    speaking of a farce lorraine michael, look no further then the province of manitoba. here your NDP friends have us over a billion in debt for the fiscal year and growing, crumbling roads, a useless museum no one wants, user fee on just about everything, 2.5 cent tax on gasoline, highest provincial taxes west of quebec, inquiries coming out of their ears, the NDP took from manitoba hydro to balance the books, in return they allowed hydro to raise rates on consumers. manitoba as become the foodbank capital of canada, and winnipeg the murder capital of canada thanks to the NDP. so before you use the word farce maybe your party and your federal cousins should look in the mirrow.

  • Coco
    December 01, 2012 - 13:10

    What I find flummoxing is the price. The least cost option is going ahead no matter how much it costs; so in trying to plan for the future, how much will it cost per household per month? For example, dividing $6,000,000,000 by 240,000 ratepayers, equals $7,142.86 (plus 928.57 HST) per year for 35 years. Plus there’s the portion we will owe the Dunderdale regime and future governments for decades. Add to that, their cost over runs, interest, HST and so on. It looks like the payment will be at least $1,000.00/month per ratepayer. Of course I know that can’t be right, but what is it then? What is the monthly payment per resident or household for building Muskrat? Ballpark figure anyone?

  • Don II
    December 01, 2012 - 09:45

    The Telegram headline reads: "Harper signs loan guarantee." The fact is that Prime Minister Harper signed a Term Sheet which contains the proposed terms and conditions of the loan guarantee which have yet to be negotiated and finalized. The article does make passing reference to the "term sheet" but the misleading headline has dutifully reported the Government propaganda. The public now wrongly believes that the Muskrat Falls project is fully funded and is a done deal. There is no point now in asking any more questions or opposing the project because The Telegram headline said the Prime Minister has signed the loan guarantee. Why is The Telegram reporting Government propaganda as fact? Why is The Telegram not investigating and reporting what the actual terms and conditions of the proposed loan guarantee will be? What are the current issues still to be negotiated? Why is The Telegram not reporting to the public what consequences the Government of Newfoundland will face if it defaults on loan payments or breaches the terms and conditions of the deal?

  • Joe
    December 01, 2012 - 09:40

    Lorraine Michael's political career is the craziest farce of all. Who keeps giving her airtime? Dennis Browne is a broken record

  • saelcove
    December 01, 2012 - 09:37

    The island part of Newfoundland we never see muskrat power

  • John Smith
    December 01, 2012 - 08:48

    Dennis Brown is wrong...the loan guarantee was not included in the DG3 numbers. It was also not included in any review of the project to date. Mr. Browne is also incorrect that there are no markets for any excess power we may want to sell. When Emera signs onto the deal we will have open access to the spot market, which will allow us to sell power at anytime we want. Why is this guy putting out these lies and falsehoods? It makes no sense...he is only weakening the stance of the naysayers(if possible), by dealing in hearsay and hyperbole. oh well, when you have no case, I guess you have to make one up...

    • confused
      December 01, 2012 - 12:37

      John, how can we get power to the spot market when the 345KV 300 MW line between NS and NB is at its max capacity and is only there to stabilize power between the two provinces. Just google Renewable Electricity Plan Nova Scotia and read page 23.

    • david
      December 01, 2012 - 17:22

      Just post your name...we already know the gist of the BS. Save us all some time.

    • Josh
      December 01, 2012 - 22:46

      The loan guarantee was included in many aspects of the DG3 numbers including the online bill calculator. Mr. Browne is correct in the market, as there is no evidence suggesting that we will be able to match U.S. energy prices in the future.

    • confused
      December 02, 2012 - 11:53

      hey john, google " renewable electricity plan Nova Scotia "and read page 23. So I wonder why we are not taking our power to NB.

  • crista
    December 01, 2012 - 08:34

    how can the the government sign there guarantee loan if the agreement is null and void in plain speak when there is an on going court case concerning land rights and environmental rights in process concerning aboriginal laws in a democratic society when it got to do with public interest and their is not enough information released for the interest of the public,would that not put the agreement null and void for the best interest of society,is there some thing missing here????when you search for documents in the freedom of information act. What is it you will be looking for????

  • crista
    December 01, 2012 - 07:42

    if the loan guarantee is unlawful,and it is before the courts for environment reasons and in plain speak is null and void then would not the agreement by the government be null and void,the courts have not made a decision on the land rights and environment rights because that is still before the the federal courts????

  • Brad Cabana
    December 01, 2012 - 07:37

    It's not often, or ever, that I feel sorry for Kathy Dunderdale, but some empathy is required here. Not only did her "negotiating team" leave her out of the loop, thereby humiliating her when the word came down, but the PM then called her essentially a liar in front of the national media. However, that doesn't change the fact that this "guarantee" is only a term sheet. It requires NL to pay out of that $2 bil in the bank the up front costs, it doesn't cover all the project, it leaves any cist over runs on a sub sea link to be split 50/50 between Emera and Nalcor, and it dies if Emera decides not to go ahead with the project. In other words it changes nothing, but does confirm what I've been saying for a year-no Emera, no loan guarantee. Dig deep folks, this one, if it goes ahead, will be on you.

  • W Bagg
    December 01, 2012 - 07:34

    Dunderdale says Muskrat is a great project and for the future of Newfoundland. I’m sure the same was said about Churchill Falls. They are very similar projects, except Churchill Falls had less impact on Newfoundlanders. It wasn’t financed by the people, they just never received the proper return since Quebec earned most of it. In 2041 we will realize the income from Churchill Falls. The same is true for Muskrat, in 50 years Newfoundlanders will finally realize the benefits of Muskrat. Until then we will be saddled with paying for power, not going to Quebec or the United States but to Mining Giants. Hold on for 50 years we will have been duped by our own government on Muskrat. Then we'll realize the benefit., but most of us won't need power then.