UPDATE: Muskrat Falls capital cost going up

Nalcor Energy not releasing details until all major contracts set

Published on April 15, 2014

Nalcor Energy president and CEO Ed Martin said some costs relating to the Muskrat Falls hydroelectric project are running higher than expected and suggested the overall timeline for the project is likely to change, but provided no further details today at Hydro Place in St. John’s.

In a roughly hour-long briefing with reporters — meant to frame the release of an independent engineers’ report by MWH Americas — Martin was asked question after question about overall project costs, cost overruns and individual contract costs.

While committing to providing an updated, overall cost estimate on the project at some point later this year, he would not commit to having the number by the time the Crown corporation holds its annual general meeting in June with its public question and answer period.

Martin committed to providing a “full picture” of the Muskrat Falls project when a detailed update on costs is provided at some point later this year, but would not commit to providing the estimated cost or overruns for any one contract.

He committed to explaining the reasons for cost overruns arising as the megaproject moves forward, but would not commit to providing the exact amount or even ratios by which contracts run over cost — but added he would confer with the project leaders on that point, to see what information could be released.

“On the $6.2-billion, we are feeling some cost pressure. And I can’t go into too much detail on that, because I want to get past, as I mentioned, finalizing the various cost parameters,” he said

He went on to note that productivity costs, particularly on large contract work in the province, are a consideration.

“There will be an increase on the $6.2 (billion),” he said, adding other cost considerations are in terms of project financing and the full picture include the savings from the federal loan guarantee. But the capital cost number is going up.

The $6.2-billion figure is the standing estimate for the construction, not including the Maritime Link to Nova Scotia.

Meanwhile, a key factor in the federal government’s awarding of a loan guarantee for financing of the Muskrat Falls hydroelectric project was a review of the project site, plans and estimates by an independent engineer.

Nalcor Energy released the report today, after obtaining approval from the independent engineering company - MWH Canada - and from the federal government, who have ownership of the report.

Martin said some information, considered commercially sensitive, was removed prior to the report’s release, but those redactions will be revealed as time and project work allows.

The report was provided to reporters in a paper copy after the fact and is being posted online at the website for the project. Martin said it is the report used by the federal government in making the decision for the loan guarantee.

The Telegram is now reviewing the roughly 200 pages of documentation.

In the legislature, question period started off with the Liberals pressing the government about Muskrat Falls.

Liberal Leader Dwight Ball wanted to know more information about delays in the project schedule and cost overruns, which Nalcor CEO Ed Martin hinted at.

Natural Resources Minister Derrick Dalley wouldn't say if the government is changing it's plan to have first power in 2017.

Dalley said if there are any changes to the project schedule, it'll be to save money.

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(Earlier story)

Nalcor releases Muskrat Falls engineer's report

A key factor in the federal government's awarding of a loan guarantee for financing of this province's Muskrat Falls hydroelectric project was a review of the project by an independent engineer.

Nalcor Energy has announced the public release of that engineer's report today, paired with a briefing for reporters at Hydro Place in St. John's, beginning shortly before 11:30 a.m.

Ed Martin, Nalcor Energy's president and CEO, said approval was sought from the independent engineer - MWH Canada - and from the federal government before the report was released.

He added some information, considered commercially sensitive, was removed prior to the report's release, but those redactions will be revealed as time and project work allows, Martin said.

More to come.