In an arrangement that sounds almost Kafkaesque, because Nova Scotia’s Emera Inc. has kept the Maritime Link portion of the project on-time and on-budget (while Muskrat Falls and the Labrador-island power link — the LIL — have failed to stay on budget or on schedule), the Nova Scotia utility is set to end up owning 59 per cent of the LIL. As a result, it will also receive 59 per cent of the LIL’s profits, even though the LIL is 100 per cent inside this province. The LIL, by the way, is allowed to earn an 8.8 per cent rate of return, meaning that the lion’s share is expected to head off to Emera in Nova Scotia.
Originally, Emera was only supposed to own roughly 29 per cent of the LIL.
Can it get any worse? (And we ask that question rhetorically and nervously, because every time it looks like we’ve seen the worst, we get more bad news.)
We’ve moved from having the project defended by the government as the best and least-cost option for the province — the reason it was sanctioned in the first place — to the circumstances now, where the provincial government is actively talking about the need to find a way to cushion consumers from what is now seen as a doubling, or more, in the price of domestic electricity.
It’s a far cry from the “world-class project” promised by past premiers like Danny Williams and Kathy Dunderdale. World-class mess might be a better description.
With this latest information, it also looks like the direct opposite of the commitment for “no more giveaways.”
Emera’s shareholders may well be delighted with the new source of cash — after all, Emera is talking about an eight per cent hike in dividends for its shareholders, and an anticipated 8.5 return on equity on the LIL is a part of that financial plan — but nowhere in the hype in favour of Muskrat Falls was it ever suggested that we could end up paying millions of dollars to Emera to bring power from Muskrat Falls to the Avalon.
We, it must be pointed out, already will have to pay even more if we want to send that power south to unload it far below cost on the pennies-per-kilowatt-hour northeastern U.S. market.
Oh well. With the Upper Churchill, we only have to wait another 24 years, until 2041, for Churchill Falls power to revert to this province’s control. We’ll be paying for Muskrat Falls, it seems, for long, long beyond that.