Electricity from Labrador would be cheaper than from Quebec, Nova Scotia study finds

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Premier Kathy Dunderdale and Nova Scotia Premier Darrell Dexter speak with reporters in St. John's last year in this file photo after a meeting on cost implications for the development of the Muskrat Falls project. — Telegram file photo

The Canadian Press and The Telegram

A study conducted for the Nova Scotia government says buying electricity from the proposed Muskrat Falls project would be $402 million cheaper than importing it from Quebec.

The study, released today by consultant John Dalton of Power Advisory, concludes that supporting the Labrador project would cost $1.5 billion less than using a mix of wind and natural gas over the 35-year life of the commercial contract for the hydro development.

The projected costs are based on 2017 dollars, which is when the project is expected to be online.

The study uses a computer model to compare the differences in the costs between the three options considered.

In the case of Hydro-Quebec, Dalton says Muskrat Falls would help Nova Scotia avoid transmission tariffs he described as “relatively high.”

The greatest uncertainty in generating more power through wind and gas would be the cost of upgrading gas pipelines, estimated to be in the hundreds of millions of dollars, the report said.

The study was commissioned last September but Nova Scotia Premier Darrell Dexter only announced it was ongoing last month.

When asked why he kept the study under wraps, Dexter initially indicated he did not want the media pestering Dalton’s company. The premier later said that the only thing that mattered was that the work was being done.

Dalton’s report follows several commissioned on behalf of the government of Newfoundland and Labrador, which approved the $7.7-billion project last month.

Critics in that province have questioned the efficacy of reports that weren’t vetted by a public regulator and also accused the government of ignoring other reports by the province’s Public Utilities Board and a joint federal-provincial environmental review panel.

Those reports concluded that Muskrat Falls had not been proven to be the cheapest or even necessary option to meet Newfoundland and Labrador’s needs.

As part of the development, Nova Scotia private utility (Emera) would build a 180-kilometre subsea cable known as the Maritime Link, which would ship power from Cape Ray in southwestern Newfoundland to Lingan, N.S., in Cape Breton. That is estimated to cost about $1.5 billion.

Newfoundland Premier Kathy Dunderdale told reporters today she’s not surprised by the study’s conclusion on costs.

“I’m not a bit surprised. You know we understand this project inside and out. We’ve been very, very thorough with our research and analysis. The people at Nalcor understand energy development and the costs associated with that. And for Nova Scotia, in terms of Emera, they do that kind of work as well. So that was the kind of information, the work that had been done and the information that had led to the decision to partner between Nalcor and Emera to develop Muskrat Falls,” Dunderdale said.

She said it’s good, however, to have that”arms-length confirmation of the things that Nalcor has been saying and this government has been saying for the last three years.”

Joe Oliver, federal Minister of Natural Resources, said the study shows that the federal loan guarantee for the Muskrat Falls project will not only help create jobs and economic growth for people in Atlantic Canada, but will also provide a cheap, stable and sustainable source of clean energy for the region.

“In addition to reducing up to 4.5 million tonnes of greenhouse gas emissions annually, the Lower Churchill projects will result in an average of 1,500 jobs during each year of construction with peak employment during construction of approximately 3,100 people. They will also generate $1.9 billion in earnings for the people of Newfoundland and Labrador,” Oliver said in a prepared statement.

He said this project has the support of all official political parties in the House of Commons.

“Our government supports energy projects that have regional or national significance, economic and financial merit, and significantly help to reduce greenhouse gas emissions,” the minister added.

Organizations: Canadian Press, Hydro-Quebec, Public Utilities Board Maritime Link

Geographic location: Nova Scotia, Newfoundland and Labrador, Quebec Cape Ray Southwestern Newfoundland Lingan Cape Breton

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  • darryl
    January 21, 2013 - 15:06

    Well for one, Maurice is not alone is questioning this study, as it was un-tendered and actually came to a conclusion that the Dexter govenment has been preaching about. Dexter only mentioned the report was commissioned when he knew the results were what he was hoping(paying) for. Actually, Hydro Quebec is considering applying for intervenor status at the URB, and I quite sure they will have a field day with the company(person) who conducted this study. After-all, they did not even ask Hydro Quebec for any information but rather came to this conclusion that importiing energy from Quebec would be more expensive. Huh? Just when you thought that Joey Smallwood was a one of a kind, sign it all away person, we have a premier here in N.S. that have been handed the baton and is carrying it proudly. Darrell Dexter is our Joey !

  • Bill
    January 18, 2013 - 04:04

    Isn't it interesting that we can even have this conversation? The very fact that this is even happening and we are trying to develop resources on our own and not be overrun by some "other province" bent on sucking the life out of everyone...where were you Mr Adams when we were destitute begging for crumbs from ther tables of our "have provinces" and being ridiculed for it. "Go to your guts" Newfoundland and Labrador...take all you can and get all you can while you can...oh and by the way, maybe you could just help someone else along the way. Good on ya'!!

    • david
      January 18, 2013 - 09:29

      Bill, you're clearly one the far-toom-many people that are quite happy to overlook the complexity, risk, and economic feasibility of this and simply ----simple being the perfect word for it ---- believing this is a build-it-and-they-will-come / Newfoundland finally being a big success on its own. Mark this down: this will be the biggest white elephant, a monument to extreme political arrogance and stupidity, and a financial millstone around this place for longer than Churchill Falls has existed. Put the flag down and sober up.

  • Winston Adams
    January 17, 2013 - 22:35

    Why wouldn't our power be cheaper for Nova Scotia. They run an extentiion cord to Port aux Basque, and we give them free power for 35 years. Then they give us a worn out cord, needing 5 billion to replace in 35 years at our expense. Think Quebec Hydro is that foolish? But build it any they will come --- like the movie Field of dreams. Free power to Nova Scotia, no demand elsewhere, and little if any on the island. Several economists has warned of lower population, and aging population. And already Dunderdale realizes this problem. But she has a solution.... increase the population. She has hired Ross Reid to make this happen. More kids won't help power demand, as that is a 20 year delay for housing. Immigrants? New industry? How about rubber plants, chocolate bar factories, battery factory... has Ross any contacts in east Germany? This gets worse every day. Poor Gil. what has he got us into? I do wish a good outcome, but I would give it 30 percent chance. I don't often wish to be wrong, but I do on this. It doesn't pass the smell test , not alone analysis.

  • Cats and rats
    January 17, 2013 - 18:55

    Its free power people, how could it not be cheaper! They don't have to cook the books like our own governmnet did.

  • Maurice E. Adams
    January 17, 2013 - 14:07

    Casey, I am not aware of any rational, evidence-based reason for why Muskrat Falls has been sanctioned. The only 2 independent reports concluded that it had not been shown that we need the power. So why has Muskrat Falls been sanctioned? Good question. It has not been shown that we need the power -- PERIOD. Where the the independent report that demonstrates, that shows, that proves --- that we need the power. Muskrat Falls is predicated on a "forecast" ---- and not just any forecast ---- but a 50-year, compound average annual forecast increase in demand that has been crystal balled BY THE PROPONENT.

    • Casey
      January 17, 2013 - 15:36

      So Mr. Adams if as you say there is no rational, evidence-based reason to go ahead with the Muskrat Falls project can you give us some reason why it is going ahead?

  • John W.
    January 17, 2013 - 13:58

    Strange how you see the same people with their everlasting negative comments. Just hope that you have your holes dug so that you can jump into them when you are proven wrong. And..................... that will happen.

    • david
      January 17, 2013 - 14:59

      So....you're saying you'd be happier if people's opinon on this would flip flop from week to week? We aren't politicians....or idiots. Sorry.

    • Elim
      January 17, 2013 - 15:06

      Thank god we're out here JOHN W. You're one of those who who willl either benefit personally from this or a nutball who'd say: "I really don't know much about it but would sanction it anyway. Get a life or go back to sleep!

  • skipper
    January 17, 2013 - 13:38

    Cut backs and lay offs comming as they need the money for Muskrat Falls.It is so sad that the govt. will cut back on health care and housing just to insure there own future. Maybe i am wrong but after the next election i think there will be outsted cabinet ministers appointed to good paying boards having to do with Muskrat Falls.

  • Cold Future
    January 17, 2013 - 12:54

    If power is cheaper in Nova Scotia from Labrador than from Quebec, why did NL government create legislation to prevent power imports to this province? Why legislation to prevent competion in the provivion of electricity? Why is the NL PUB being prevented by recent legislation from regulating the rates for power being sold by Nalcor to NL Hydro. The more shovelling the Nova Scotia and NL governments do the worse it smells.

  • david
    January 17, 2013 - 12:32

    Yes...buying it from Newfoundland might very well be cheaper for NS. But that little calculation does not require them to account for ANY of the $12 billion eventual, actual upfront capital cost or any of the project risk.....that's all for Newfoundland's account, and Newfoundlanders to pay. You're welcome, Nova Scotia...Danny loves you, but he clearly hates us.

  • Elim
    January 17, 2013 - 12:23

    The Dundee government of NL (and all it's PC-MHA's) will be hated on a level attained by the Mulrooney Hoods of Ottawa.

  • Casey
    January 17, 2013 - 12:19

    Mr. Adams maybe you could tell us why Muskrat Falls has been sanctioned. Just to get back at Quebec or is to make Danny Williams richer?

    • RJ
      January 17, 2013 - 12:58

      Dundee answers to Father Williams like Nonis answers to MLSE board... they both have no say just figure heads.

  • Maurice E. Adams
    January 17, 2013 - 12:08

    I would give this report commissioned by the NS government about the same level of credibility as the numerous reports commissioned by the NL government to justify sanctioning Muskrat Falls.

    • Of all people to say that
      January 17, 2013 - 14:11

      Wow, you throw a hissy fit if anyone questions your credibility but it's okay for you question the credibility of others.