Analysts closely watching Muskrat Falls

James
James McLeod
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Reports on megaproject question prospects

Financial analysts are keeping an eye on the Muskrat Falls hydroelectric project, but a trio of recent reports are lukewarm about the development’s prospects.

BMO Capital Markets’ analysis of Nova Scotia utility Emera’s energy prospects in Canada and the U.S. says there’s a “50 per cent probability of sanctioning” when it comes to the Maritime Link component of the Lower Churchill project.

Both BMO and CIBC say Emera’s plans to buy a trio of natural gas power plants in New England means it is going to do a lot of financing in the near future.

The power plant purchase represents about $541 million for Emera, and the Maritime Link comes with a $1.5-billion price tag.

The CIBC report also talks about “weak pricing” in the New England electricity market — where the Newfoundland and Labrador government has said excess Muskrat Falls power may be sold.

“The outlook calls for only modest improvements,” the CIBC report says. “Furthermore, capacity pricing has been at floor levels, and could actually go lower.”

The Telegram requested a response from Nalcor Energy, which is currently building the Muskrat Falls project on the Churchill River in Labrador, but did not receive a statement by press time.

It’s not just banks keeping an eye on Muskrat Falls, either; a white paper published by the New England States Committee on Electricity looking at hydro power gives a three-page writeup on Labrador hydroelectric power.

In particular, the report looks at the Hydro-Quebec lawsuit dealing with the Churchill Falls power contract, which could affect Muskrat Falls.

“As noted above, Hydro-Quebec filed a lawsuit against Churchill Falls that puts the Muskrat Falls project in jeopardy,” the report says. “Muskrat Falls uses the same river system as Churchill Falls.”

 

jmcleod@thetelegram.com

Twitter: TelegramJames

Organizations: CIBC, Maritime Link, Capital Markets Hydro-Quebec Nalcor Energy New England States Committee on Electricity

Geographic location: Muskrat Falls, Newfoundland and Labrador, New England Nova Scotia Canada U.S. Churchill River

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  • saelcove
    September 11, 2013 - 10:10

    The avalon is where all decisions are made, the rest of the island do not count

  • John Smith
    September 11, 2013 - 07:03

    I'm noticing a lot of French on the Tely pages these days...I guess it's due to the fact that a Quebec company owns our only paper. The bottom line that everyone keeps forgetting, is that we don't need Emera, or to sell power, or a loan guarantee to make this project viable...all that was, and is just gravy. The project will go ahead, because it is the lowest cost option to generate power for NL....that's the end of the story...

    • Tim
      September 11, 2013 - 08:30

      No John - as C Bennett said in Gander - it was the lowest cost between Holyrood and Muskrat - nothing else was ever seriously looked at. That from the Nalcor horse's mouth.

  • jimmy
    September 11, 2013 - 06:05

    Shocker! Not the Falls stuff but that McLeod wrote something relevant. Now if he could find out why McDonald's is still allowed to sponsor Open Line with no conflict of interest and why no one in St. John's or Corner Brook has been able to see the debate they held in Gander even though it has been on here in Grand Falls and Gander 100 times... oh right, Cathy was terrible and we can't have townie viewers seeing that. What a joke.