Muskrat Falls: Where they stand

“Therefore be it resolved that this House now supports the development of the Muskrat Falls Hydro Project.”

James McLeod jmcleod@thetelegram.com
Published on December 8, 2012
An aerial view of Muskrat Falls taken in August. — Photo by Ashley Fitzpatrick/The Telegram

This week, the political leaders of the province went into the House of Assembly to stand and be counted on the issue of Muskrat Falls.

It’s been more than two years since then-Premier Danny Williams announced a deal in mid-November of 2010, and since then, the essence of that deal is unchanged.

If the project is sanctioned, the provincial government will build a dam at Muskrat Falls on the Churchill River to generate more than 800 megawatts of electricity.

In a deal with Nova Scotia utility Emera, Nalcor will build transmission lines from Labrador to Soldier’s Pond, just outside of St. John’s.

Roughly 40 per cent of the electricity will be used to meet electricity demands in Newfoundland and replace the Holyrood thermal generating facility, which burns fossil fuel, to create electricity.

Emera will also build a subsea cable running from Newfoundland to Nova Scotia, and in exchange they’ll get 20 per cent of the electricity generated by Muskrat Falls.

The remaining 40 per cent of the power will either be sold to Nova Scotia or elsewhere in the Maritimes or the United States. The electricity could also be used in Labrador to fuel future mining developments.

The current cost estimate for construction and financing of Muskrat Falls is more than $8 billion — larger than the entire provincial government’s 2012 budget.

In the past two years Muskrat Falls has been the single dominant political issue in the province. In the spring of 2011 the opposition Liberals raised the issue every single day in the House of Assembly.

In the next few weeks, Premier Kathy Dunderdale has said her cabinet will move to make the final decision on whether or not to sanction the project.

On Wednesday in the House of Assembly, politicians held a two-hour debate on the project before they held a symbolic vote.

Here’s what they had to say.

•••

Premier Kathy Dunderdale’s speech laid out the core arguments that she's been making over the past two years, but it also relied heavily on Newfoundland and Labrador pride:

“Newfoundlanders and Labradorians are an incredible people with a storied legacy of hard work, heroism and survival. Strength and resiliency have been bred into us through centuries of adapting to challenges and overcoming hardship. Our people are resourceful and innovative, having coped in the face of scarcity and limited economic means.

“We are determined and tenacious, with 500 years of persistence in spite of our harsh climate and geographic location. Newfoundlanders and Labradorians, Mr. Speaker, have a remarkable optimism and an unparalleled work ethic and, throughout history, we have been adventurous and courageous.

“Now, as we look unflinchingly into the future, we must hold fast to those characteristics. This is the time like never before to focus our resourcefulness, resilience, innovation and work ethic.”

Dunderdale concluded her speech by saying that Muskrat Falls, and what comes after its development, will shape the future of the province.

“We will achieve energy self-sufficiency and break the stranglehold Quebec has had over future economic development in Newfoundland and Labrador, Mr. Speaker. This development will open doors to future clean energy developments at Gull Island, which we will move to after we sanction this project.

Mr. Speaker, we are truly, truly an energy super-warehouse and this project is a game changer for Newfoundland and Labrador. This is the new Newfoundland and Labrador: bold, confident, self-assured, and increasingly self-reliant. Now we are ready to take this Province to the higher plateau of prosperity and self-reliance.”

Liberal Leader Dwight Ball, in his response to Dunderdale, said when the project was first announced he was hopeful. But he said the government has taken shortcuts, and that the deal will likely hurt the people who finally have to pay for electricity generated at Muskrat Falls.

“The Premier, as she spoke today, mentioned that one of the things that were key to this project was protecting the people of the Province. There is an institution that we have had in place since after Confederation. Their mandate was to protect the ratepayers of this Province.

“Now, I am not going to ask members opposite or members on this side who that group was. I think we all know who that group was. It was the Public Utilities Board right here in our own Province. Their job was to make sure that we had the best rates available.

“This particular project, for the first time in our history, that will not happen. Our rates will be decided by someone else. It will be decided by a power purchase agreement that will be put in place by Nalcor and Newfoundland and Labrador Hydro. It will not be the PUB in this particular case. That power purchase agreement will be done for 50 years, and it will have to include the overruns on the project. The ratepayers of this Province will be responsible for 100 per cent of the overruns on the project, and that will have to go back into the rates, because the federal government says that we must generate enough revenue to cover off these costs. That will be in the power purchase agreement.”

•••

Because of delays and the debate format, New Democrat Leader Lorraine Michael got less than eight minutes to speak on Wednesday — compared to 15 minutes for Ball and half an hour for Dunderdale.

Michael talked about the need for more debate, and more scrutiny as well. And for the first time, she explicitly opposed the project in its current form. Up until Wednesday, New Democrats said they were unconvinced, and needed more information to prove Muskrat Falls is the best option for Newfoundlanders.

“We are into a totally non-democratic process with this discussion here today. It is the largest expenditure this province will ever make and what I have to point out, Mr. Speaker, because there are people in this Province who are not aware: every single cent of this project is on the backs of the people of this province.

“The debt will be paid on the backs of the people of this Province. All of the cash that goes to Nalcor will be cash from the money of this province, which is the people’s money. It is the people of this Province who will be the ratepayers who will be paying the exorbitant amount for electricity that will be demanded by Muskrat Falls.”

•••

In the end, just after 5 p.m. on Wednesday, the House of Assembly voted to support the Muskrat Falls project 36 yeas to 10 nays. The 35 members of the PC Party voted in favour. Ten members of the Liberals and the NDP voted against — Liberal MHA Jim Bennett was absent.

Independent MHA Tom Osborne voted in favour of the project. He was not given a chance to speak during debate. Outside the House of Assembly afterwards, he said he voted in favour because he believes Muskrat Falls is likely the best option to meet Newfoundland electricity demand, but he still has serious misgivings.

“In principle, you know, I think most people in the province support the project. I had a tough time even standing today, but overall, … the project is a good project for the future. My concern, and it’s a very real concern, is what the ratepayers of the province are going to pay. We saw a $1.2 billion overrun on the project before it’s even sanctioned.

“The project now is at $7.4 billion. That’s $14,000 for every man, woman and child in this province. A family of four: $56,000 that they’ve got to pay back on their utility bills. So I’ve got a very real concern about the cost overruns.

“There’s still a potential — a very real potential — for cost overruns on this project.”

jmcleod@thetelegram.com

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