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.