If Emera backs out of Muskrat Falls, Nalcor may pay

James McLeod
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Natural Resources Minister Jerome Kennedy speaks with reporters following question period in the House of Assembly Thursday. — Photo by Gary Hebbard/The Telegram

There’s not only a chance Nova Scotia utility Emera could back out of a deal to develop Muskrat Falls, but Nalcor could help make it easier for Emera to do so.

With a final decision imminent on whether to sanction the $7.5-billion mega­project, debate in the House of Assembly Thursday centred around whether the province is going out on a limb.

Opposition Liberals say the provincial government is making a risky move if it sanctions the project before it knows whether Emera is in or out.

Moreover, Liberal Leader Dwight Ball said if Emera backs out, it could be a costly proposition for the government.

“Section 3.5 of the term sheet for the federal loan guarantee states that if Emera backs out of sanctioning, they will owe Ottawa $60 million in the penalty. That does not sound like a committed partner to me. Yesterday, Emera went so far as to say that Nalcor has agreed to pay a share of the penalty,” Ball said during question period in the House of Assembly. “Why have you committed to giving away $30 million of taxpayers’ money to Emera to help Emera get out of the commitment to the Maritime Link?”

Natural Resources Minister Jerome Kennedy fired back, saying that from what he can see, Emera is totally on board.

“There is no indication anywhere that Emera wants to do anything but build the Maritime Link because they see it, Mr. Speaker, as a way to further their business, while the Government of Nova Scotia sees it as a way to get rid of the coal fire plants and to meet their environmental (targets,)” Kennedy said.

But speaking to reporters later, he confirmed that some sort of arrangement may, in fact, be part of the negotiations between Nalcor and Emera.

“Yes, there is a discussion (about) what would happen with that $60 million penalty that’s outlined in the federal loan guarantee. There’s no definitive answer on that at this point,” Kennedy said to reporters.

He wouldn’t give a reason why Nalcor would pay part of the penalty to the federal government if Emera backs out of the deal. Instead, he said those sorts of questions are better directed to Nalcor CEO Ed Martin, who is the one actually doing the negotiations.

Nalcor is a Crown corporation owned entirely by the provincial government, and therefore takes its marching orders from Kennedy and the provincial cabinet.

When The Telegram contacted Nalcor for comment, a spokeswoman said, “Nalcor is in commercial discussions with Emera and cannot provide any comments at this time.”

Premier Kathy Dunderdale has said the cabinet will move to sanction the Muskrat Falls project before Christmas.


Twitter: TelegramJames

Organizations: Maritime Link, Government of Nova Scotia

Geographic location: Muskrat Falls, Nova Scotia, Ottawa

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Recent comments

  • James G Learning
    December 09, 2012 - 12:57

    I agree totally with the Ducks take. Williams was not so sure he was still in charge when he saw what Hatper had done with the terms paper, perhaps this can be cleared up. He isn't in charge, his friend Stevie is and the whole idea at the site is being held hostage not by Quebec any longer but, now by NS, is the new realiity, NL is a by stander responsible for all of the bills. Nice going Danny. Your legacy is secure, I to will help write the commission investigation paperts.

  • Fintip
    December 07, 2012 - 11:19

    A well established legal precept governing agreements such as this one is that a penalty is imposed on any party that withdraws from the consortia. The objective of course is to ensure that the parties follow through with their undertakings - failing which the remaining parties are compensated in some manner for the associated costs and resulting disruption. Indeed that is the principle contained in articles 3.5 (viii) (a) and 3.6 wherein the federal government seeks to indemnify itself from costs should EMERA decide to walk away from the Maritime Link. (Considering the implications of 3.6, the penalty could be much higher than $60 million). Given that principle, it would be inexplicable were NALCOR obliged to absorb any portion of that penalty. On the contrary, EMERA should be obligated to compensate NALCOR if for any reason it withdraws from the project. That this is not the case tells us that the Maritime Link is far less important to EMERA than it is to NALCOR. This fact alone will be used to gouge Newfoundland taxpayers before this thing is over.

  • do we ever learn?
    December 07, 2012 - 10:57

    anyone who thinks stevie has done this province a favour in relation to musrat falls need to get out more often.. i am neither for or against the development cos i don't know enough about it. But trusting harper is "one" thing I will not do. he has proved too often that he cannot / should not be trusted.

  • Cold Future
    December 07, 2012 - 10:30

    The present government should look at its own record and get some help and strong reviews. The government is particularly weak in legal and contractual matters. The PC's should look at the Supreme court ruling on the Abitibi expropriation fiasco and who will pay for the cleanup of our aquisition( the plumb of a mill at Grand Falls). Have not that was no more will most likely be replaced with Have DEBT will be forever more.

  • Coco
    December 07, 2012 - 10:16

    “Is anyone else as confused by this as I am?” Kennedy is again referring questions to Ed Martin. It seems to happen a lot where he doesn’t know and Nalcor can’t comment. With this type of runaround it’s not surprising that over 75% of the public are missing needed information on Muskrat.

  • Trained DucKs
    December 07, 2012 - 09:04

    When the former premier stood and watched muskrat get passed, he saw what the debate and the drabble it came down to, he saw the loan from harper with massive holes in it and he made sure as he looked down on what he created and let every MHA in the flock know that they were there because of him. Muskrat was passed and we will pay for doing a deal with the devil's in Ottawa.

  • Winston Adams
    December 07, 2012 - 08:58

    A few years ago we spent 12 milliion dollars to build Goose Bay hospital , 5 million for Clarenville Hospital and about 6 million for urin Hospital. Now tens of millions are being spent like chicken feed. Is this what happens when income from oil makes government irresponsible. Corner brook hospital-- just listened to Tom Marshall on Vocm say maybe 600 million, then Dundedale say at least 1 billion. Is this Quantative Easing , QE1 where we can print our own money? Make no wonder Harper has all these conditions attached --- our government and Nalcor seems gone crazy on a spending spree. Imagine Nfld , that is, Nalcor paying Emera 30 million if they opt out. It would normally be the other way around-- if Emera has been engaged as a partner while Nalcor keeps spending on design and roads, and then Emera opts out, it should be that Emera not only pays the Feds 60 million, but pay Nalcor 30 million.But its only money right? Ratepayers money.

  • Muskrat Mullahs
    December 07, 2012 - 08:49

    ''...he said those sorts of questions are better directed to Nalcor CEO Ed Martin, who is the one actually doing the negotiations.'' Nice to know that our elected officials are no longer the ones accountable for $7.7 b of our taxpayer dollars.

  • saelcove
    December 07, 2012 - 08:45

    I find it hard to believe anything Jerome Kennedy has to say ,One minute he says emera is on board, and the next well maybe

  • John Smith
    December 07, 2012 - 07:00

    This is a seven or eight billion dollar project involving many levels of gov. and very complex wording, in the contract. Now the opposition are going to try to tear it apart, and inject more lies, innuendo, and hyperbole....as they have from the start. When you have nothing...you have to make it up I guess...pathetic...

  • Maurice E. Adams
    December 07, 2012 - 06:48

    Also, Emera may hold shares in the Labrador Island Company (which will be the "borrower" for the the Labrador Island Link Project)..... While a separate company, the "Labrador Island Link Operating Company" (wholly owned by Nalcor) will be solely responsible for all of the "obligations" of the Labrador Island Link Company" ---- the company which would seem to include Emera's obligations. See www.vision2041.com Controlled by Nalcor (held alone or together with Emera)

  • Holy Smokes
    December 07, 2012 - 06:35

    Nalcor are in commercial discussions with Emera? Well there is 1500 pages of commercial language within July agreements. Did these not contemplate the terms of the FLG? The reason why the July agreements did not consider the current terms of the FLG is that Harper really dont want to provide it. The FLG term sheet is riddled with default provisions which really questions the federal governemnts committment to the process. In all of this process the only people taking risk is the Newfoundland rate payer. Our risk is real. There is already over 500 million spent on this project. There are already hundreds of people working on it. I am really starting to question the ability of Nalcor to manage this project and process. Why not pause and wait until the UARB have completed their review..... We could also contemplate rejoining the democratic fold and return it to our own PUB. Meanwhile I myself will start drafting the terms of the royal commission which will undoubtably be struck in 5 years to investigate this unfolding fiasco.