Questions to be answered about the Muskrat Falls deal

Congratulations to the Williams government and Nalcor on the signing of a term sheet, a new beginning to the potential development and sale of Muskrat Falls hydro power. It’s clean energy, and as far as financial expectations go, history will determine if these expectations are attainable.

A cult-like following, an 80 per cent satisfaction rate and the premier has been flaunted as assembling good deals. However, were these deals the best ones available? The premier and his government are obligated to get the best arrangement possible in negotiating arrangements in utilizing our non-renewable and renewable resources. The government is obligated to have residents feel comfortable and confident that the prospective deal is the best for the province.

In trying to simplify the deal, there are many questions; however, this government has promised an open and transparent approach. The following questions are asked on the premise that no question is a stupid question and that all questions are worthy of an answer.

It appears that a $1.2-billion Emera investment will provide ownership of the transmission line from Bottom Brook to Port aux Basques and the Gulf subsea cable, and that Emera will receive 162 MW of energy free at point of delivery, Bottom Brook.

At the end of the 35-year term, this province will inherit the transmission line and subsea cable. As well, for an additional $800 million, Nova Scotia will receive 20 per cent ownership of all transmission lines associated with the project and The Straits subsea cable, and collect 29 per cent profits initiated over this transmission network. At the end of the day, to use a common term of government, what will be our remuneration? What is the life of the cable and the transmission line structure and the expected maintenance cost of such a configuration, and will the province require this infrastructure? Are there other financial benefits that may be overlooked?

Newfoundland and Labrador — through Nalcor — will receive, for our $4.2 billion investment, ownership of the dam and powerhouse at Muskrat Falls, 80 per cent ownership of the transmission lines associated with the project and The Straits subsea cable, however we will receive only 71 per cent of the profits. Also, Nalcor will receive 325 MW to replace the bunker C generated energy at Holyrood. The province will also receive the 350 MW excess for sale or for industrial use within the province.

It appears the consumers of this province will be responsible, via increased electrical rates, to finance the entire $4.2-billion cost of the project. The current domestic rate in the province is $0.10 per kilowatt hour, but we are to expect a large increase, as the cost of generation and delivery of the Muskrat energy is dubbed at $0.14 per kilowatt hour.

Why was the announcement of a customer not included in the news conference for the excess 350 MW? Was the option to sell the excess at the Quebec border similar to the 130 MW that had been previously sold at New York market prices entertained, and if so, what was the comparison in profits between both options?

What will the cost be per kilowatt hour to the Newfoundland and Labrador consumer  at the completion of the Muskrat development?

Nova Scotia appears to be starved for energy — why is Nova Scotia not the customer for the excess 350 MW? The estimate of $6.2 billion appears to be quite large for the development of 825 MW — the prior estimate to complete the entire Lower Churchill project was $13 billion for 3,000 MW. Using the Muskrat cost numbers, the Gull Island phase will cost $18 billion. As a result of the new numbers, is the Gull Island phase realistic or has the project inflated beyond market value?

Was the Gull Island phase of the project not included due to the failure to obtain a market through or within Atlantic Canada? Will the cost of the Muskrat Falls development be a liability to the rate-payers of the province? The hydro development has been projected to cost approximately 25 per cent of the cost of thermal generation — with these numbers, why are domestic rates increasing by 50 per cent on the completion of Muskrat Falls?

Would obtaining a market and higher energy prices become more realistic if the energy was sold through the Quebec route to the Ontario market, which is starved for power? Is this another typical development of our resources for jobs?

Do we assume that Nalcor estimators are more competent than the estimators used by the city in the construction of the sewer plant, which had a 60-70 per cent overrun?

Was the premier turning his head from Quebec for fear of being dragged into a deal in which he may be outfoxed by Quebec? The premier appeared to be negotiating on emotion, leaving behind sound judgment and rationalization, but is it best for the province?

Was this news conference  a performance for Quebec? The premier couldn’t resist the opportunity to taunt and make distasteful comments — that will certainly not help to seal the deal. What is more important, the ego of the premier or the benefits to Newfoundland? 

My father always said regardless of the conflict or disagreement, don’t burn the bridges — you know not what awaits you around the turn.

Is this merely about a legacy for the premier, something he promised in 2003? A little advice for acting premier Kathy Dunderdale: save the celebration, keep one foot on the ground, don’t stretch for the stars or you may find yourself among the clouds.

At the end of the day, what will be the additional revenues to the province from the replacement of Holyrood, and from the sale of the excess energy?

Boyd Legge writes from Mount Pearl.