Opposition asks: how about those DG3 numbers?

James McLeod
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Liberals, NDP concerned province doesn’t know how much Muskrat Falls project will cost

Opposition politicians mostly reacted to Tuesday’s Muskrat Falls announcement with a shrug — both the Liberals and the NDP are more focused on how much the project is actually going to cost.

The Muskrat Falls partners — Newfoundland and Labrador, Nova Scotia, Nalcor and Emera — signed a package of 13 legal agreements totalling about 1,500 pages that details how the Labrador hydroelectric project will be developed.

“When I look at the big picture, I’m very disappointed,” said NDP Leader Lorraine Michael. “I’m glad they’ve got their contract signed, but we still don’t know what the reality of Muskrat Falls is for the people of Newfoundland and Labrador. We still don’t know what Muskrat Falls is going to cost consumers.”

Ultimately, the government still needs to decide whether or not to formally sanction the project, and before that happens, there will be a debate on the issues in the House of Assembly this fall.

Premier Kathy Dunderdale had said she hoped that final “Decision Gate 3” cost estimates would be drawn up by mid-July, but on Tuesday reporters were told it will be another little while before that work is done.

The partners don’t know how much the project will cost, and they don’t know how much the electricity will ultimately cost ratepayers, but Dunderdale has been bracing the public that the final cost estimate will be substantially higher than the initial estimate of $6.2 billion.

“Here we are with a term sheet in place with Emera, and we don’t know the cost,” said Liberal Leader Dwight Ball. “We really don’t know, at the end of the day, what this is going to cost our province.

“What we do know, however, is that Newfoundlanders and Labradorians — the people on the island of this province — will be paying more for power than anybody else who can access Muskrat Falls power.”

At Tuesday morning’s news conference, Natural Resources Minister Jerome Kennedy said he’s convinced any alternatives to Muskrat Falls would face similar cost escalations, and the massive hydroelectric project is the cheapest cost for Newfoundland’s electricity needs.

One specific area of interest for the opposition parties was potential project cost overruns.

If the total construction costs balloon past the Decision Gate 3 estimates, Nalcor — and by extension the taxpayers — are potentially on the hook for most of those increased costs.

“We still have questions here around the overruns,” Ball said. “We’re the ones that are mostly exposed in all of this.”

As for the specific text of Tuesday’s freshly signed legal agreements, that wasn’t actually available to opposition politicians or journalists until late in the afternoon.

Ball said they’ll dig into it as quickly as possible, getting ready for this fall’s debate in the House.

“We’ve got some reading to do, of course.”



Twitter: TelegramJames

Organizations: NDP

Geographic location: Muskrat Falls, Newfoundland and Labrador, Nova Scotia Decision Gate

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Recent comments

  • Concerned tax payer
    August 01, 2012 - 19:53

    I cannot believe that the provincial Government is moving ahead with this project without knowing what it going to actually cost. It's like signing a contract to buy a car or a house without actually knowing how much the car or house is going to cost. If that is the way that this Government conducts all purchases, there is no wonder why our economy is in a tail spin and we are facing such a deficit this year. I bet that Danny wouldn't have signed the contract without first knowing the price thathe was going to have to pay. When the "true figures are finally revealed", the deal that Brian Tobin and Roger Grimes had worked out with Quebec some years ago that the PC opposition party were dead set against will look like a golden deal for NL.

    • Brett
      August 02, 2012 - 06:11

      What nonsense. They're not buying an existing building, they're building a company, building a product. To use your comparisons for buying a car or house - we're not the buyer, NL is the builder. We have to take the risk of the builder. Even GM/Ford etc, don't know what they're selling the car for until after they do some production runs. They have estimates (ie. D3 #'s) but if there are any pieces that are different from existing runs, they need to see how much it costs to build the prototype before they can mass build it and reliably model the cost. The same thing goes for building subdivision houses. Question: Does Danny know how much it'll cost him to build his subdivision over the next 6 years? No - so enough with the back seat driving drivel. I sincerely hope you don't sway anyone with your incompetent rhetoric. FYI - I am not a member of an political party, nor am I a gov't or Nalcor employee. Just a reader tired of the partisan nonsense. I am an interested party only as a NL resident, not professionally.

  • McManus
    August 01, 2012 - 12:51

    Premier Dunderdale did not appear at yesterday's agreement signing, nor did she issue a statement or media availability. She is not attending the Governors and Premiers Conference in New England today (electrical power market). She skipped the July 1 Memorial Day wreath laying and Canada Day Celebrations. She cannot be everywhere and is entitled to time off, but it seems she is missing some of the most important public relations moments for her government. What is going on inside the PC government?

  • Cyril Rogers
    August 01, 2012 - 12:30

    The fact is, oil will NOT be going up to $200 a barrel anytime soon and, if it did, it would send the world into a major recession that would then cause it to plummet drastically. The long term prognosis for oil is for more stable prices in the $80 to $100 range, with occasional spikes caused by natural disasters and political upheaval, especially with the advent of other technologies. Any sudden increase in oil would only spur a reduction in usage and the increase in other means of producing power. NALCOR is practicing voodoo science and economics by projecting oil numbers out over a 50 year period.....they are only doing so to try to make the numbers work for Muskrat Falls to be viable. What they fail to understand, or seem to care about, is that oil will not reach the levels they project nor will the cost of MF come in anywhere close to the initial estimates. As Ed Hollett points out, in his blog, MHI, the so-called experts advising the government and NALCOR, are off by 86% on a Manitoba project and 26 months behind schedule. If you want a nightmare scenario.....just think about that for a few minutes. MF will cost over $10 billion by the time it is completed and severely handicap our ability to function as a province.

    • John Smith
      August 01, 2012 - 15:50

      LOL...yes, let's all heed the prophet of doom Ed Hollet.. hilarious. I did not say oil would go to 200 dollars...I said it easily could go to 200 dollars a barrel. That is why we need to get away from burning dirty, imported crude oil. There are many hydro projects ongoing in Canada today, the Niagra river project just completed in Ontario, included a 4 billion dollar tunnel, and the Romaine project in Quebec is progressing. But nope, not here folks...the brain trust thinks we should keep our oil fired generator going, tell the mines in Labrador they will have to go to QH to get their power, stymie growth here on the island due to lack of power, invest a billion dollars in a 30 year old plant in holyrood, and be in the same boat ten years down the road....genius...LMAO

  • Maurice E. Adams
    August 01, 2012 - 12:10

    Nalcor's own DG2 numbers show that between 2018 and 2041 the operating and debt servicing costs alone for Muskrat Falls is $8.4 BILLION (and another $6.1 BILLION between 2041 and 2067). Whereas a tunnel would be about $2 BILLION LESS THAN a Muskrat Fall dam/generation plant ---- "ZERO" oil for Holyrood, a shift from non-renewable to renewable, a REAL alternative market for the Upper Churchill, a REAL alternative route for the Upper Churchill, a REAL transportaton link between Labrador and Newfoundland, consistent with the province's 'energy plan' ---- and dozens of other advantages. Even Minister Hedderson said government would proceed with a full 'feasibility' study (to complement its earlier supportive pre-fieasibility study) in 2011...... WHERE IS IT?

  • Maurice E. Adams
    August 01, 2012 - 08:59

    70% of the $8.6 billion CPW costs Nalcor came up with for the 'isolated island' option is Nalcor's estimated cost of oil for Holyrood. 70% of the $8.6 billion isolated island cost is $6 billion. But oil prices are down about 25%, so that so-called $6 billion cost for oil could now be $4.5 billion. So instead of there being a so-called $2 billion advantage for Muskrat Falls, we are now down to $0.5 billion advantage ---- not enough to cover interest during construction and cost overruns. This Muskrat Falls 'plan' (it is not a 'strategy') is a house of cards. A tunnel across the Strait would carry people and power, cost $2 billion LESS THAN the Muskrat Falls dam and generation plant alone, and unlike Muskrat, could carry all of the Upper Churchill's 5,428 MWs of power and provide a REAL alternative to Quebec come 2041, see www.vision2041.com

    • John Smith
      August 01, 2012 - 10:24

      Yes, but if oil goes to 200 dollars a barrel next week the advantage will be 4 billion. As I have said before maurice, it is the volitility of oil that we must get away from. You really think that continuing on with burning crude at a 30 year old plant in holyrood is the best idea? Where will that get us? Billions in the hole, and we will still be at an energy deficit, just a little further down the road, when interest rates are higher, and the cost of building higher as well. Now you are talking up a tunnel across the straights? It just gets whackier and whackier.

  • Winston Adams
    August 01, 2012 - 08:04

    Not all alternatives are going up in price. Efficient heating continue to improve giving more heat output for electricity input. the cost per kw of heat has come down. For Nfld the average equivalent cost for heat for the better units is about 5 cents per kwh since they use so litttle electricity.

    • Mark Ham
      August 01, 2012 - 09:41

      The government couldn't give the PUB an extension to complete their analysis yet have allowed the deadline for delivering the DG3 cost estimate to be extended to "another little while". Sadly, I’m seeing similarities between the approach and actions of this government are and my not-so-great parenting skills from 20 years ago. When my children were very young and it was time to finish an activity and move on I’d exert my parental authority by responding to their protests with something like “I don't care how important colouring that picture is to you, its time to go”. And when driving somewhere and they’d ask “When are we going to get there?” I’d respond with something like “in another little while”. I’m starting to feel how my children must have felt when they were 4-5 years old.

  • Maurice E. Adams
    August 01, 2012 - 07:57

    A pre-feasibiity study completed for government in 2005 concluded that a tunnel across the Strait of Belle Isle that could carry recall power from the Upper Churchill (and some cheap power from Quebec, if needed) would cost $1.7 billion (including financing and interest during construction)....... The Muskrat Falls dam and generating plant will cost (including DG3 numbers, interest during construction and cost overruns) at least $4 billion. It also links Labrador and Newfoundland like no other initiative, saves billions of dollars --- and most importantly provides a real alternative route for 2041 Upper Churchill power. It is also in line with government desire to shift from non-renewable to a renewable source of revenue. In 2011 government (Hedderson) said he would proceed with a full feasibility study. That alternative do not seem to be on the table for discussion/debate ---- WHY NOT?

  • John Smith
    August 01, 2012 - 07:46

    Funny how the opposition is all concerned about what we will pay for power after Muskrat, but could care less about what we pay now. Our prices for power here just went up by 7% last week, they went up 8% last year, and have increased by 60% since 1998...yet not a peep from Dwight or Lorraine about that...nope. The folks at Nalcor have said we will be in an energy deficit by 2017, how does the opposition want to address that issue? Dwight Ball keeps talking about contracts to the US, when that was never proposed. The power is to be sold on the spot market for whatever we can get for it, sold hour by hour. Power that otherwise we would have let go down the drain, so anything we get for it is better than the alternative. Dwight and Lorraine are quick to point out the negatives with the muskrat deal, but as usual are clueless when it comes to any alternatives. If not Muskrat, than what Lorraine? Gas? LNG? Butterflies and moonbeams? Give me a break. Go back to sleep for another couple of months and do us all a favour.

  • Don
    August 01, 2012 - 07:38

    What is wrong with Lorraine ???? She was told months she would have the numbers before the debate. If government rush with the number s she will complain government is going to fast. This woman is not fit to run a cigar store.