Muskrat Falls has long been a done deal

Russell
Russell Wangersky
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Live through enough winters, and you know what they look like on the horizon. You know the wet black of the branches, the way the light in the sky goes flatter and whiter, and even if some mornings lie a little, you know by the feel of the air that snow’s already a given.

Reading between the lines of a host of different publicly available documents, you see something just as clearly: Muskrat Falls, for all intents and purposes, was fully sanctioned months ago, and any debate we’re having now is only window dressing.

Now, reading between the lines can be a dangerous thing; sometimes, though, you can see when decisions have clearly already been made.

There’s this, from Alderon’s environmental impact statement (EIS) for the Kami iron ore project in Labrador: “Electrical transmission line from terminal to be located by Nalcor to the mine site.”

It’s just one of 26 mentions of Nalcor in the first volume of Alderon’s environmental documents.

There’s this: “Alderon has also changed the location of its transmission line to avoid interference with recreational areas and housing developments. Alderon has proposed to Nalcor Energy that the power line be rerouted along the rail right-of-way.”

And this: “The operations phase of the project will see an overall demand for electrical power in the order of 100 to 120 MW, with annual electric power consumption estimated to be in the order of 800 GWh. Again, for the reasons outlined above, the supply of electricity to the site from existing hydroelectric generation through a new Nalcor Energy transmission line to the site is the preferred option.”

And this: “The operations phase of the project will see an overall demand for power in the order of 100-120 MW. The project power requirements and the manner in which they will be addressed (options by Nalcor Energy), including responsibility for permitting and constructing any new transmission line(s) are described in Section 2.5.6.”

And most of all, this: “Nalcor Energy is aware of the power requirements for the Alderon Project during its construction phase, as well as power requirements for other projects in western Labrador, and is considering these needs in its system upgrades and transmission line design. The Lower Churchill Hydro Generation Project could also potentially supply more power to the region. As a result, project construction will not affect Nalcor Energy’s ability to supply electricity to its customers in Labrador City and Wabush.”

 

In their own words…

But if Alderon’s EIS is not enough to suggest that the Muskrat train left the station long ago, you could use Newfoundland Hydro’s own words.

The utility is in the midst of a multi-million-dollar capital budget application in front of the province’s Public Utilities Board (PUB).

(You may remember the PUB as the regulatory agency that Natural Resources Minister Jerome Kennedy said the government had no confidence in.) The PUB is a quasi-judicial body where witnesses give testimony — smoke and mirrors are frowned upon.

Have a look at that capital plan, and something becomes obvious quickly. Hydro has some big expenses coming up, including stop-gap work on the Holyrood generating station — which, as you might recall, would be taken out of commission if Muskrat Falls goes ahead.

Here’s what the utility says about the current capital spending: “The Holyrood capital projects contained in this application are necessary to replace assets which are at the end of their useful lives, and which must be replaced to maintain reliability through to the completion of the Muskrat Falls development.”

Dig deeper and you see that Hydro is taking a calculated approach, doing only short-term work that would make sense regardless of whether Muskrat Falls goes ahead or not.

Still, there are blocks of text in the application like this one: “The Muskrat Falls Generating Station and interconnection via the Labrador Island (high-voltage, direct current) HVDC Link will displace the current power and energy needs from Holyrood and change Newfoundland and Labrador’s electricity system. In addition, the interconnection to Nova Scotia via the Maritime Link will potentially provide options for a short term supply through reserve available outside of the province. For the purposes of this capital budget submission first power was anticipated to be available in late 2016. However, sensitivity of the impact of a one year delay is provided regarding the demands on the existing plant. Any delay only serves to increase the importance of maintaining the Holyrood asset at full capability.”

It’s not “may” or “if,” it’s “will.”

And more: “Following the full commissioning of the HVDC interconnections, it is intended to maintain the Holyrood asset as generator ready for three to four years so that in the event of loss of supply from Labrador, it can be called upon to provide power and energy to the island. Following that, the thermal aspect of the station will be decommissioned.”

Or: “The current base case is to operate Holyrood as needed through 2016 and as a backup with minimal operation for 2017 to 2020 (32,000 bbls of oil per year versus 3.2 million bbls during 2016). The plan is to operate each unit for a period of time to ensure they are fully operational, and to ensure that staff retains the skills required to keep the complex plant operational in case of any adverse events.”

“In reviewing the capital needs of the plant, Hydro has considered the time lines discussed above and proposes to submit only those projects necessary for the safe, reliable operation of the plant as a generator up to the time of decommissioning.”

Winter follows fall, and even though the signs can be thin, you know what’s coming.

The sanctioning of Muskrat Falls is a fait accompli for everyone inside the business.

It is nothing more than a formality now, unless something happens in Nova Scotia and that province walks away. After all, you don’t sign five-year contracts for services if you don’t plan to use those services.

It’s only those of us outside government, mining companies and Nalcor who imagine there’s any possible debate left.

 

Russell Wangersky is The Telegram’s

editorial page editor. He can be reached by email at rwanger@thetelegram.com.

Organizations: Federal Express

Geographic location: Goose Bay, Happy Valley, Halifax Labrador Nova Scotia Mud Lake Road

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Recent comments

  • madan rana
    November 20, 2012 - 07:38

    I agree, debate is for show only, decesion is already made, long time ago. With all these reports available we still don't know the "Bus Bar" cost at, Muskrat FallsPlant ,St John's terminal and most important at take off point For Emera, so one can figure out what it would be costing Newfoundland rate payers to provide free energy to NovaScotians. Plus we will know if the energy sold beyond NovaScotia is at subsidised rates , paid by ,you guessed right by Newfoundlanders.

  • Casey
    November 18, 2012 - 17:18

    To bad the author didn't put as much effort into bashing the managers of NL's fish resources as he is with this Muskrat Falls project. I guess the fishery just wasn't worth the effort huh.

    • Joe
      November 19, 2012 - 15:18

      Yep, you won't win journalism prizes writing about fish plants

  • The muppets danny boy
    November 17, 2012 - 16:09

    Did danny promise the mining companys cheap power when he was premier? This is a deal thats gone off the charts. There couldn't be a debate in the house with experts because they would truly show the unecomonics of the deal and just how much nalcor and governmnet has not completed on the deal. We still don't know about the loan from ottawa and Emera( the MOU is 2 years old) Then you have the likes of jerome kenndey, with all his years as a lawyer, trying to legeally take our rights away on infomation and rules we have in place to protect us from such a blanket being thrown on our rights. He's been married to this for a long time and this MuskratFalls is his Oj Trial. That and Ed martin said this deal had to be done by Xmas. They have figured how Nalcor will get its return back, NL Hydro will get its cut, emera will proft from it by just by plugging in their extension cord for 30 yearst, the mining companies from basicially free power and our very own disrespectful arrogant governmnet will sell our power, if there's any left for what seems to be an award for all their hard work, rather then paying on the debt, even with all the so called tax dollars they'll be getting. But they can't to this very day say how much it will cost us, the REAL PEOPLE who are paying for it. This is from years of tunnel vision and they wayt to blame Quebec for their out of control spending.

  • crista
    November 17, 2012 - 13:12

    we read an article about israel opening the gates of hell are they sure israel are the ones opened them????

  • Joe
    November 17, 2012 - 13:10

    Russell get over yourself. Your editorials on Muskrat Falls have been the most lop-sided, consistently negative journalism I have ever experienced. You have a large audience of readers and it is completely wrong how you have presented Muskrat. I feel bad for those that believe you have journalistic integrity, because all you are doing is ruining their chance to make an informed, unbiased decision.

  • Maurice E. Adams
    November 17, 2012 - 11:23

    70% of the so-called cost advantage of Muskrat Falls is based on Nalcor's outlandish oil price forecast........ Quote from today's Globe and Mail..." In the third quarter, Connacher Oil and Gas Ltd.s sold its oil sands crude for just $38.12 a barrel"...... At that price, Muskrat power would be about 7 to 8 times more expensive that the oil cost of production at Holyrood...........Also, from today's G & M, "The International Energy Agency predicted this week that the U.S. is set (by 2017) to become the largest oil producing nation on earth, more prolific than Saudi Arabia"...... And our politicians are about to lock us into a 50-year high cost take or pay contract so that mining giants can have power at 10% of what it will cost island ratepayers to produce?

  • crista
    November 17, 2012 - 10:21

    russell,there is more to this that we want to comment on for now. but there is to many bad apples that over flowed the barrel and when it comes back at the ones that pushed these deals and projects???? what and how are they going to do it then, live off the hard paying tax dollars or what invest there own money???? get share holders and investors dollars or what are they going to ask for another loan for who to pay back???? build and destroy do that sound about right???? if you under stand the government like we do ,not enough info and to much bad politics and no justice????

  • Pierre Neary
    November 17, 2012 - 08:58

    Agreed, but I think you were a little generous in describing the upcoming debate as window dressing. I am having trouble understanding Minister Kennedy’s comments on the PUB seeing that his former boss appointed the CEO??

  • Want it Over
    November 17, 2012 - 08:26

    The question which has not been answered. What is the impact on our rates if we sell 120 MW of capacity (800 GWh of energy) to Alderon and give 167 MW (1000 GWhr) to Emera. The DG2 and DG3 numbers both exclude the integrated demand. In the peak winter periods who is paying for the oil to burn to meet this integrated demand. What will the power purchase agreement look like between Nalcor and NLH? Or in 3 years will they be arguing to build Gull Island to meet the mining demand, and to ensure we can shut down Holyrood. I find this afront on due process to be appalling. This project better come in on budget, or there will be a royal commission. The results wont be pretty, based on the litany of poor decision making. The results would likely be very similar to the findings of the royal commission on Sprung. I want this to be over. I am becoming too cynical.