The Muskrat Falls project is two-thirds of the way through construction. Cost estimates are running in the ballpark of $12 billion, including financing costs.
As in years past, a more specific update on cost and timeline was not offered during the AGM. Nalcor Energy president and CEO Stan Marshall said it will come by the end of June.
The update will take the $11.4 billion figure from the update in June 2016 and factor in elements including: added costs associated with settling the contract with Astaldi Canada, cost of steps to protect the generation site from flooding this winter and costs associated with any deviation in the schedule for specific pieces of construction (including any costs associated with delays due to the fall protests at the generation site).
“Right now, unless something brutal happens in the winter in Labrador or something hits me out of the sky, I’m not expecting anything major … We’ve reduced a lot of the risk,” Marshall told reporters, while noting time is a key consideration going forward.
Power from Churchill Falls and timelines
The Muskrat Falls contracting never took into account the situation Nalcor Energy is currently in, Marshall said, and there’s still a lot to work to do to make it possible to use the Labrador-Island Transmission Link (LIL) to feed power from elsewhere, before the Muskrat Falls power plant comes online.
There are the contractual considerations, with the demands of Nova Scotia.
There are regulatory considerations, in terms of reliability for end users and cost control, involving the Public Utilities Board.
There are technical considerations in the plan, also to run through regulators.
“This system was never designed to operate this way,” he said, specifically on the initial operation of the LIL without Muskrat Falls online.
“There’s a lot of work to be done here.”
At last update, the LIL was expected to be in operation mid-2018. At the AGM, Marshall said power-up of the line and system integration was likely to start early in 2018.
The Muskrat Falls power plant is expected to be producing by mid-2020 and Marshall said he has no indication that date has changed.
The Labrador-Island Link and Emera
Nalcor didn’t announce Emera’s 59 per cent stake in the Labrador-Island Link to the public because, he said, the change is immaterial to the province and end users.
“It has no consequence,” he told reporters, reiterating a statement also made during the meeting. “It’s purely a financing vehicle.”
He said if the province had put in more equity to avoid the new percentages, as was an option, it would have been “for optics” only and ultimately be an unecessary cost, while Emera has spent to secure its rate of return.
On providing power to Emera as the Maritime Link comes online, he suggested that was not a given. “There might be opportunities for us to sell them power, there might be opportunities for them or somebody else to sell us power,” he said, suggesting any possible input cheaper than diesel-fueled power from Holyrood would be pursued by Nalcor Energy, with power from Churchill Falls at the top of that list.
Dam stability, safety
Marshall dismissed criticisms speaking to the independence and reliability of a report on dam reliability and safety from consultants with Hatch, made public earlier this month.
The consultants are not independent in the way a judge is independent, he said, noting they get paid for their work. However, he said, they are qualified professionals with a reputation on the line.
“Whether you call that independent or not, I don’t care,” he said.
Marshall added he has performed research himself, asking questions of all of the geotechnical experts involved in the project.
“I got a clear expression of opinion that this thing is safe. No one expressed a contrary opinion,” he said. “So many, many people fully qualified have looked at this, was involved in design, the execution and they’ve told me that this dam is safe.”
On power bills
As for the ultimate question, on keeping rates down — mitigating an anticipated doubling of power rates in the province as a result of the project and added costs at Newfoundland and Labrador Hydro, a Nalcor company — Marshall said he’s working on it.
“Give me some time,” he said.
Meanwhile, Thursday in the House of Assembly Premier Dwight Ball said that the prospect of electricity rates doubling as a consequence of Muskrat Falls is looming large in his mind.
"That just cannot happen, and we’re not going to allow that to happen," Ball said.
"We know it’s coming, so we’re working very closely with Nalcor to use whatever mechanisms they have in place to keep rates competitive."
