Muskrat Falls bill now $12.7 billion

Rate mitigation needed, as more money required for hydro project

Published on June 23, 2017

Nalcor Energy president and CEO Stan Marshall updates the media on the Muskrat Falls hydroelectric project Friday in St. John's.

©Ashley Fitzpatrick/The Telegram

Called a boondoggle as of last update, the Muskrat Falls project estimates have gone up again, standing now at $12.7 billion.

That total cost, including financing, is up from $7.4 billion at the time of the sanction of the hydroelectric project in 2012.

Looking only at capital cost, construction without financing costs, it began at $6.2 billion, but now stands at $10.1 billion.

The dam work continues on the lower Churchill River, while new transmission infrastructure in the Labrador-Island Link should be providing power from the longstanding Churchill Falls power plant to customers on the island of Newfoundland this time next year.

“We remain focused on finishing the remaining 25 per cent of the (Muskrat Falls) construction while pursuing ways to further reduce the electricity rate impact to customers from this project,” Nalcor Energy president and CEO Stan Marshall said in a statement.

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He opened a press briefing at Hydro Place, the Nalcor Energy offices in St. John's, with a moment of acknowledgement on the recent loss of two workers on the construction of a new power line on the island.

Jared Moffat and Tim McLean were working for a contractor for Newfoundland and Labrador Hydro, a Nalcor Energy subsidiary.

On the rising cost on the Muskrat Falls project, the result will be a further expected increase in power rates. The current estimate for Newfoundland Power customers (as Newfoundland Power will purchase from Nalcor) is a cost of 22.89 cents per kilowatt hour as of 2021, without mitigation, as opposed to 15.12 cents per kilowatt hour estimated for the same period back in 2012.

Marshall made a point to raise a red flag on expected operating and maintenance costs for the project, saying those costs were originally underestimated. Once expected to run about $34 million annually, a recent review now suggests a $109 million-a-year cost starting in 2020.
First power from Muskrat Falls is expected by the end of 2019, with full power in 2020.