Muskrat Falls: Where they stand

James
James McLeod
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“Therefore be it resolved that this House now supports the development of the Muskrat Falls Hydro Project.”

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

This week, the political leaders of the province went into the House of Assembly to stand and be counted on the issue of Muskrat Falls.

It’s been more than two years since then-Premier Danny Williams announced a deal in mid-November of 2010, and since then, the essence of that deal is unchanged.

If the project is sanctioned, the provincial government will build a dam at Muskrat Falls on the Churchill River to generate more than 800 megawatts of electricity.

In a deal with Nova Scotia utility Emera, Nalcor will build transmission lines from Labrador to Soldier’s Pond, just outside of St. John’s.

Roughly 40 per cent of the electricity will be used to meet electricity demands in Newfoundland and replace the Holyrood thermal generating facility, which burns fossil fuel, to create electricity.

Emera will also build a subsea cable running from Newfoundland to Nova Scotia, and in exchange they’ll get 20 per cent of the electricity generated by Muskrat Falls.

The remaining 40 per cent of the power will either be sold to Nova Scotia or elsewhere in the Maritimes or the United States. The electricity could also be used in Labrador to fuel future mining developments.

The current cost estimate for construction and financing of Muskrat Falls is more than $8 billion — larger than the entire provincial government’s 2012 budget.

In the past two years Muskrat Falls has been the single dominant political issue in the province. In the spring of 2011 the opposition Liberals raised the issue every single day in the House of Assembly.

In the next few weeks, Premier Kathy Dunderdale has said her cabinet will move to make the final decision on whether or not to sanction the project.

On Wednesday in the House of Assembly, politicians held a two-hour debate on the project before they held a symbolic vote.

Here’s what they had to say.

•••

Premier Kathy Dunderdale’s speech laid out the core arguments that she's been making over the past two years, but it also relied heavily on Newfoundland and Labrador pride:

“Newfoundlanders and Labradorians are an incredible people with a storied legacy of hard work, heroism and survival. Strength and resiliency have been bred into us through centuries of adapting to challenges and overcoming hardship. Our people are resourceful and innovative, having coped in the face of scarcity and limited economic means.

“We are determined and tenacious, with 500 years of persistence in spite of our harsh climate and geographic location. Newfoundlanders and Labradorians, Mr. Speaker, have a remarkable optimism and an unparalleled work ethic and, throughout history, we have been adventurous and courageous.

“Now, as we look unflinchingly into the future, we must hold fast to those characteristics. This is the time like never before to focus our resourcefulness, resilience, innovation and work ethic.”

Dunderdale concluded her speech by saying that Muskrat Falls, and what comes after its development, will shape the future of the province.

“We will achieve energy self-sufficiency and break the stranglehold Quebec has had over future economic development in Newfoundland and Labrador, Mr. Speaker. This development will open doors to future clean energy developments at Gull Island, which we will move to after we sanction this project.

Mr. Speaker, we are truly, truly an energy super-warehouse and this project is a game changer for Newfoundland and Labrador. This is the new Newfoundland and Labrador: bold, confident, self-assured, and increasingly self-reliant. Now we are ready to take this Province to the higher plateau of prosperity and self-reliance.”

Liberal Leader Dwight Ball, in his response to Dunderdale, said when the project was first announced he was hopeful. But he said the government has taken shortcuts, and that the deal will likely hurt the people who finally have to pay for electricity generated at Muskrat Falls.

“The Premier, as she spoke today, mentioned that one of the things that were key to this project was protecting the people of the Province. There is an institution that we have had in place since after Confederation. Their mandate was to protect the ratepayers of this Province.

“Now, I am not going to ask members opposite or members on this side who that group was. I think we all know who that group was. It was the Public Utilities Board right here in our own Province. Their job was to make sure that we had the best rates available.

“This particular project, for the first time in our history, that will not happen. Our rates will be decided by someone else. It will be decided by a power purchase agreement that will be put in place by Nalcor and Newfoundland and Labrador Hydro. It will not be the PUB in this particular case. That power purchase agreement will be done for 50 years, and it will have to include the overruns on the project. The ratepayers of this Province will be responsible for 100 per cent of the overruns on the project, and that will have to go back into the rates, because the federal government says that we must generate enough revenue to cover off these costs. That will be in the power purchase agreement.”

•••

Because of delays and the debate format, New Democrat Leader Lorraine Michael got less than eight minutes to speak on Wednesday — compared to 15 minutes for Ball and half an hour for Dunderdale.

Michael talked about the need for more debate, and more scrutiny as well. And for the first time, she explicitly opposed the project in its current form. Up until Wednesday, New Democrats said they were unconvinced, and needed more information to prove Muskrat Falls is the best option for Newfoundlanders.

“We are into a totally non-democratic process with this discussion here today. It is the largest expenditure this province will ever make and what I have to point out, Mr. Speaker, because there are people in this Province who are not aware: every single cent of this project is on the backs of the people of this province.

“The debt will be paid on the backs of the people of this Province. All of the cash that goes to Nalcor will be cash from the money of this province, which is the people’s money. It is the people of this Province who will be the ratepayers who will be paying the exorbitant amount for electricity that will be demanded by Muskrat Falls.”

•••

In the end, just after 5 p.m. on Wednesday, the House of Assembly voted to support the Muskrat Falls project 36 yeas to 10 nays. The 35 members of the PC Party voted in favour. Ten members of the Liberals and the NDP voted against — Liberal MHA Jim Bennett was absent.

Independent MHA Tom Osborne voted in favour of the project. He was not given a chance to speak during debate. Outside the House of Assembly afterwards, he said he voted in favour because he believes Muskrat Falls is likely the best option to meet Newfoundland electricity demand, but he still has serious misgivings.

“In principle, you know, I think most people in the province support the project. I had a tough time even standing today, but overall, … the project is a good project for the future. My concern, and it’s a very real concern, is what the ratepayers of the province are going to pay. We saw a $1.2 billion overrun on the project before it’s even sanctioned.

“The project now is at $7.4 billion. That’s $14,000 for every man, woman and child in this province. A family of four: $56,000 that they’ve got to pay back on their utility bills. So I’ve got a very real concern about the cost overruns.

“There’s still a potential — a very real potential — for cost overruns on this project.”

jmcleod@thetelegram.com

Twitter: TelegramJames

Organizations: House of Assembly.In, Newfoundlanders and Labradorians, Public Utilities Board The Premier Newfoundland and Labrador Hydro PC Party NDP

Geographic location: Newfoundland and Labrador, Nova Scotia, Churchill River United States Quebec Gull Island

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Recent comments

  • H JEFFORD
    December 10, 2012 - 07:07

    Hydro power is the cleanest,Most reliable,safest and most dependable source of power in the world, Some people talk of natural gas to run a power plant, as being the cheapest source of power, but like all gas & oil when the demand is up and supply is down so is the cost up, The upper Churchill power plant as run for years, there is no dirt, or smoke going into the air as it is from the Holy rood generating plant, which is listed as one of "The Top Ten Air Polluters in the WORLD" The Churchill River That Runs The Turbines Will Run Forever and A Day at no Cost, The Holyrood Generating Plant burns Millions of Gallons of oil each year, So much oil That it is listed as one of the top ten air poluters in the WORLD!

  • Frank
    December 09, 2012 - 17:57

    Once again it's the Punch and Judy show. Sorry I meant maurice and John!!

  • Jackie Logans
    December 09, 2012 - 12:53

    Well done, the government of Newfoundland & Labrador. The vision of Danny Williams continues to take shape. And giving the Nation of Quebec the middle finger is an added bonus!

  • jerome bennett
    December 08, 2012 - 20:06

    They say trust us,we know what we're doing.Trouble is the only totally honest men i know off were my father and Jesus Christ and they are both dead.

  • Fintip
    December 08, 2012 - 15:04

    Good article James, but I particularly like the headline - Muskrat Falls: Where they stand. If you decide to look back at Smallwood's Churchill Falls fiasco, you'll discover that the record of who knew what, who said what and who decided what is not all that clear. Aside from Hansard, Smith's book on Brinco, the Evening Telegram and the Daily News, there is not a real strong public record of how this thing evolved from an exciting, noble, promising concept into the corrupt, horrific, abject failure that we now know it to be. What we do know is that there are many disturbing similarities between the run-up to Churchill and to the present day Muskrat decision. First among them of course is that the impetus and core components of the deals came from singularly autocratic leaderships - premiers known for relying more on their own sense of infallibility than on the wisdom and dissenting opinions of others. Secondly, there is the enormous shroud of secrecy that hung over the decision-making process. The cone of silence was an accepted, pervasive feature of government in the Smallwood years but in today's legislatively protected access to information environment it required an entirely new draconian piece of legislation - Bill 29 - to abrogate those rights. Not only would this keep the media and the general public at bay, but it would even prevent the PUB from accessing the data it would need to review the Muskrat Falls proposal. Thirdly is that both governments employed the same sleazy tactics to stifle opposition and debate. Rather than address the substance of the criticisms or doubts aimed at their grandiose schemes, they instead attacked their critics. Together with their official and unofficial shills (the latter including their pseudonyms like John Smith) they publicly questioned the integrity, the motives, the intelligence and even the sanity of their detractors. Students of history will recognize this behaviour, of course, as a mainstay of dictatorships the world over. Adding to those similarities is the reliance in the present day Muskrat debate on the tried and proven fascist technique of rallying public support for an otherwise indefensible government stance by appealing to nationalism. It takes the form in this case of course of demonizing the province of Quebec. Quebec defrauded us on the Upper Churchill (which it did but with great help from our Smallwood, from Canada's PM Louis St. Laurent, and from a large group of carpetbagging financiers). Quebec continues to block our energy development aspirations (which it is with Ottawa's full support) and that Muskrat is therefore a means of giving Quebec the middle finger. And that too would be O.K. if it didn't require that we cut off our nose to spite our face in the bargain. It is my fervent hope that the blatant absence of viability of this project is something that will be offset and repaired by future events (i.e. that the price of oil goes higher - not lower - and hence that what now appears to be prohibitively expensive electrical power will become more affordable). If so, then the taxpayers and ratepayers of this province might be spared what otherwise could be catastrophic fiscal and economic fallout from this project. But if things go the other way - which is arguably what all economic indicators point to at the present time - then I trust there will be a reliable, thorough record of how we got to this precarious state. In practical terms, I hope someone is keeping track of who said and did what. We know of course that is not in the interests of this government to do. Indeed I suspect that those providing strategic inputs to this process will be encouraged before long to destroy any records that could embarrass government at some point down the road. There are literally thousands of emails, letters, calculations, press releases, media interviews, and countless comments in public forums like this one. Hopefully some group, such as MUN's Newfoundland Studies department, will make an effort to solicit and capture as much of that information as possible so that future generations can have a better understanding of what went wrong - a better understanding than presently exists of what went wrong on the Upper Churchill. Ironically it was WInston Churchill, for whom Hamilton Falls was re-named, who said that 'those who fail to learn from history are doomed to repeat it".

  • grandfalls-windsor taxpayer
    December 08, 2012 - 13:56

    i like the title, muskrat falls: where they stand. if its anything like the abitibi-bowater screwup, then they don't stand very far and all those MHA'S responsible for that screwup should resign. what an embarrassment these politicians have become.

  • crista
    December 08, 2012 - 12:05

    big deals and WHO PROFITS FROM IT AND WHO PAYS FOR IT???? AND WHO IS NOT ALLOWED TO TALK ABOUT IT ???? HOW INSULTING,HARD TAXPAYING DOLLARS AND THEY DO NOT HAVE TO TELL YOU WHAT IS GOING ON????

  • pat
    December 08, 2012 - 11:03

    we complain about our electric rates which is the best deal we get out of everything we buy ,but we happily pay the same for cable tv for which we get almost nothing where else are we going to get power if we dont develop[ lower churchill

  • Maurice E. Adams
    December 08, 2012 - 08:45

    $7.4 billion is the capital cost ($54,000 per household). Over the 50 year time frame, households will pay 5 times that amount ($250,000 per household). If they use more power and demand goes up --- they pay more. If they spend money to insulate their homes, turn down the heat, etc, and use less power, demand goes down --- they pay even more (because it is a 'take of pay' contract). And Nalcor's forecast demand (on which rates will be set) is 8 times more than what our average yearly increase in demand has been over the last 20 years......People need to wake up --- The federal loan "guarantee" gives Canada control of all of the shares of the 4 Nalcor subsidiary companies that will be set up to borrow the money and build the projects. There are about 20 default 'trigger events', any one of which could trigger 'default' and move ownership and/or control of all of the assets (Muskrat Falls generation facility, MF - Churchill Fall Transmission lines, and the Labrador-Island Transmission Link to the other Loan Guarantee "Parties" --- Canada, Nova Scotia or Emera.) ------ Wake up my fellow Newfoundlanders and Labradorians and put a stop to this profoundly unwise project.

  • John Smith
    December 08, 2012 - 08:18

    ...of course there will be cost overruns...every project has cost over runs...there is almost a billion dollar(750 million) built into the cost of the project for over runs...so we will have to burn through that first...then we will have over runs...

    • concerned
      December 08, 2012 - 14:47

      John. 10% contingency on this project (which I also believe includes their escalation) is a joke. PLease dont sell this as prudent and responsible. They should be carrying a 20% contingency in the rates they are telling people. Furthermore they should not be including the benefits of the loan guarantee in those rate projections as well. Tell people the truth. 300 $ per MWhr of power is where this is going to be when it is all done. If anyone doubt me, read the FLG. There are enough loop holes that you could drive 10 Mack Trucks through.

  • Two Questions
    December 08, 2012 - 08:00

    On Nov. 18, 2010 Premier Williams said the deal gives Nalcor 51 per cent ownership of transmission and Emera the remaining 49 per cent. What does this mean for all the residents of NL who are solely responsible for 100 per cent of the loan payments? Also, what has the PC Government done with the Abitibi hydroelectricity station that they “accidentally” expropriated?