During my lifetime, I have been witness to the pride of Newfoundlanders and Labradorians in the technological marvel which is (and continues to be many years later) the Upper Churchill hydroelectric project.
I have shared in the collective deep disappointment of the people of the province when it became apparent that, despite the technological and financial success of the project itself, our province would not until 2041 receive any meaningful return from our asset.
Since the 1960s, Newfoundland Hydro (now a part of Nalcor) has built a world-class capacity in hydroelectric development. They have explored and intensively studied options for further hydroelectric development of the Lower Churchill River. Such hydroelectric development, as demonstrated by the success of the Upper Churchill project (which has resulted in massive profits to its monopoly customer Hydro-Québec) brings with it tremendous opportunity for power and revenue generation and adds the benefit of environmentally sustainable and renewable power.
Yet the fact that there has been a single monopoly customer for power generated from the Upper Churchill cannot hold us back from harnessing the Muskrat Falls opportunity before us and getting it right this time.
I remember the pride that I, and those I was with at that moment, felt on a day in November 2010 when Premier Danny Williams announced the further development of the Churchill River at Muskrat Falls.
It provided for a provincial asset producing revenues at stable cost together with clean and sustainable power for our province’s domestic needs for many years.
It would facilitate development of industry in Labrador and on the island.
Equally, by virtue of the deal with Emera to build a link to the North American power grid through Nova Scotia, we would now be able to bring competition to the market for this power from the rich hydroelectric capacity of our province.
The monopoly would be broken, and we could unlock the real and substantial value of the power excess to our needs in the North American
marketplace which demands exactly what we can have — large amounts of clean power at stable rates.
Not only for pride
This is not to say that this project should proceed only for reasons of provincial pride and redemption. If the people of this province are to support the development of their prize asset, as proposed, they need to be confident that this is a risk worth taking and the benefit is clear.
The recently released Decision Gate 3 numbers justify this risk.
Nalcor, after years of research and development, has settled upon a balanced and achievable plan to develop hydroelectric power at Muskrat Falls and transmit it to the island and beyond. This plan (which independent experts confirm is far superior to other options) has been in the works for many years.
It has been subject to intense study — unprecedented in major construction projects, some 50 per cent of the engineering has already been completed as a part of the preparatory work allowing for more precise project cost estimates.
Internal and external analysis continues to support the fundamental viability of the project.
Financial institutions (which do not provide financing where they believe the risk to their investment is not worth taking) are prepared to offer non-recourse financing to this project, demonstrating their confidence that this project is economic solely on the basis of the revenues it will generate.
The federal government shares this view, as it is prepared to offer a guarantee to the institutions financing the project.
Most importantly, this will mean long-term, stable electricity rates and continued economic development for Newfoundlanders and Labradorians and their children and grandchildren.
This project is an investment in our future and it comes with manageable risk — risk that is well worth taking.
When the decision to proceed is taken, it will be the next step in the economic maturation of our province and one in which we can be justifiably proud.
Brad Wicks writes from St. John’s.