There’s no going back on Muskrat Falls

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Should Dwight Ball become the  next premier of Newfoundland and Labrador, he could be on the horns of a dilemma with respect to his position on Muskrat Falls. After the 2015 election — assuming, of course, that the construction of Muskrat Falls stays on schedule — $5 billion or $6 billion may already be spent or committed by legally binding signed contracts. How would he back out of Muskrat Falls then?

It would be, without doubt, more costly to back out at that stage than to finish the project, which I understand is scheduled for completion in 2017. Actually, the lenders for the project, via legally binding signed financial agreements, might make it impossible to back out.

Muskrat Falls will either work or be the largest bankruptcy in Canadian history. Either way, there is no doubt, the Newfoundland ratepayers of electricity and/or the Newfoundland taxpayers will be stuck with the bill. The Public Utilities Board’s hands will be tied; it will have no choice but to increase rates to offset all relevant capital and operating cost, plus a fixed percentage rate of guaranteed return to Nalcor Energy and Newfoundland Power.

No question the train has left the station and, at this stage, regarding Muskrat Falls, we have to extend the metaphor to say we now have a “runaway train” on our hands. This project is moving in such a way that it cannot be stopped. Let’s all hope the next station stop is not Lac-Megantic, the Superior Court of Québec, or the Supreme Court of Canada.

Québec has several trump cards to play here: (1) The courts in Québec (not the courts in Newfoundland and Labrador) have full jurisdiction to adjudicate any disputes on the Churchill River in Labrador related to hydro; (2) if Newfoundland and Labrador appeals to the Supreme Court of Canada, Québec has three judges on the Supreme Court of Canada, as per the Supreme Court of Canada Act, while this province has had zero judges on the Supreme Court of Canada in the past 64 years; (3) this province, to date, has had a zero success rate with respect to all of its court cases with Québec since the development of hydro projects on the Churchill River in Labrador in the 1960s.


Terry Burry


Organizations: Supreme Court of Canada, Public Utilities Board, Superior Court Supreme Court of Canada.Québec

Geographic location: Newfoundland and Labrador, Muskrat Falls, Québec Churchill River Lac-Megantic

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Recent comments

    September 02, 2013 - 12:12

    The muskrat falls and the Churchill Falls are the cleanest most reliable and and long time CHEAPEST source of power in THE WORLD. Oil will run out. and will increase in cost steadily each year. Plus it is in the top TEN air polluters in the WORLD! Canada has TEN + {10} Atomic powered Generators like the one that caused all the problems in Korea ? or Japan ? A short time ago, one of them is in Quebec . This Can Be Found ONLINE. HYDRO GENERATED POWER IS the Cleanest Most Reliable And Most Dependable Source Of Power In The World. THIS IS WHY THE MUSKRAT FALLS AND CHURCHILL FALLS IS SO RELIABLE AND NEEDED FOR FUTURE POWER.

  • Jon Smith
    August 28, 2013 - 12:40

    Muskrat is a loss leader -a big gamble that in the future there may be profits available from Gull Island if it can be transmitted to paying customers and for the Upper Churchill when it is available, if it can be transmitted. But the stakes are high with the with water use committed to Hydro Quebec and Nova Scotia wanting the big windfall like Quebec has already for the Upper Churchill. Things that are for sure are; future governments will have to find ways to protect fixed income consumers from rapidly increasing rates and the fall out from the huge risk will be unknown for a long long time. The overall cost to Newfoundlanders for Muskrat will likely exceed the total windfall that Hydro Quebec gained already from the Upper Churchill. The uncertainty without a nailed down deal with Nova Scotia and with water rights for Quebec is definitely a repeat of the history of the Upper Churchill.

  • Harold
    August 28, 2013 - 05:26

    Joe maybe your right about Charles Murphy, after all if you read his article in the western star on June 24/2013, The man did show leadership materials. Pointing out to everyone, he wouldn't just past over 90 million dollars to CBPP, unless the mill was going to produced the 20 million dollars of products we import each and every year. At the same time creating more jobs at the mill, along with more in forestry. Yes i do agree with you Joe, someone need to do interview with him, concerning Muskrat falls..We will all be surprise with his answer.

  • Maurice E. Adams
    August 27, 2013 - 21:06

    Muskrat Falls has no effect on 92% of the provinces GHG emissions and MF is not cheap power. There simply is NO business case for UNNEEDED high cost Muskrat power. There is however, a case to be made for reviewing the project.

  • Gordon
    August 27, 2013 - 15:42

    Perhaps we should forget about the North American electricity market altogether. If we can bring electricity to the island to rid ourselves of dirty fossil burning generators in favour of clean inexhaustible energy then that would be a step forward. More importantly, we should strive to sell generate and sell cheap electricity not to Quebec but to people and companies in Newfoundland and Labrador. This will automacically increase living standards and lower production costs.This will give residents one less reason to leave, one more reason for non-residents to move to Newfoundland and Labarador, and make the province a more attractive place to do business. It will also be much simpler than these complicated interprovincial deals that always seem to go against us. The hydro deals so far show that Newfoundland and Labrador takes the highest risks to get the smallest rewards. It's simply not worth it. Never mind Quebec, the Maritimes and the USA. Let's develop Newfoundland and Labrador for Newfoundlanders and Labradorians.

  • Eli
    August 27, 2013 - 14:21

    Bill 29 will live as Newfoundland & Labrador's day of infamy. I won't forget my MHA come election day.

  • Winston Adams
    August 27, 2013 - 13:50

    Mr Burry, you say Muskrat Falls cannot be stopped. That is not so. In 1912 the Canadian government undertook to build a rail line and port terminal on the mouth of the Nelson River, in Manitoba, on the west side of Hudson Bay. It was a huge project and many Nflders worked there. There was insufficient engineering studies done in choosing this location, making it impossible to have a deep water terminal there. More than a thousand men worked there from 1913 to 1917. It was a failure, but they kept pouring money in over this time. Many of the civil works remain, a monument to a fatally flawed project. It was phased down and abandoned in 1918. The project was driven by politics. I possess a journal of one of the Nflders who worked there for several years. He travelled north, in 1913, from Halifax, on the steamer with the chief engineer, with hundreds of men and provisions, and states that that engineer believed it was doomed to failure from the start. Fortunately, the Canadian economy was large enough to absorb such a disaster. There were a continuous litany of problems indicating that the project should have been terminated by 1914. So as to Muskrat Falls, yes 2015 will be too late. It is not yet too late. It is a runaway train, because no one is attempting to put on the breaks. We are approaching a point of no return, but we are not there yet. That point require an analysis of the costs to date, the cost to cancel existing contracts, versus the costs and benefits of proceeding. Failing such analysis, no one can say when the point of no return is, and may be as soon as six months. But we are on course to cross this point. And there will likely be much finger pointing in the future as to why there was so little concern at this time, when applying the brakes may be the wisest choice.

  • Joe
    August 27, 2013 - 13:40

    Bankruptcy might be the saving grace for the province wiping out all the debt. But then who would buy the assets and operate them. Fortis has already said it is a no go. And the sticking point was there are no paying customers other than the residents of the province rather than their being a partner with government.

  • Dianne
    August 27, 2013 - 11:15

    Mr Burry, On aug 22/2013, at the liberal leadership debate what took place in Gander. I met one man by the name of Charles Murphy, who explain to me and several more, The benefits of this project for the people, Why can't some one do a story with this man, let him explain it to the people. You will be surprise, then you will get the understanding why the liberal said no to him, Because right now the provinical liberal still don't have a leader, And with the five hopeful, down hill spin all the way to bankruptcy.

    • Joe
      August 27, 2013 - 13:32

      Charles Murphy a noted expert(?) or a Nalcor employee?

  • JM
    August 27, 2013 - 08:40

    The decision now is related to the Emera deal. The UARB has imposed a condition that will likely lead to higher rates to NL ratepayers if adopted by Nalcor. The likely result is that Nalcor and Emera will reach a new deal which will likely (1) extend the term beyond 35 years (2) allow open access across the LIL for Emera to get other energy from Labrador (ie; Hydro Quebec), or give them additional energy for the first 10 years. Are we better off signing the revised deal with Emera, or do we truly go it alone? Are we better just having the power available for use, or exporting whatever we can over the 300 MW capacity agreement with HQ. This is what should be debated now. If the UARB must again review the Emera / Nalcor revised deal, we should ask why would it now also go back to the PUB. If it has the potential to increase our rates, well then we should demand that the PUB be engaged to review the Emera deal. Unfortunately the Provincial Government excluded this from the original PUB process, which hindsight shows to have been a fatal mistake.