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Muskrat Falls Inquiry witness describes loan guarantee benefit

The Muskrat Falls Inquiry heard testimony Friday about the federal loan guarantee for the project. — Telegram file photo
The Muskrat Falls Inquiry heard testimony Friday about the federal loan guarantee for the project. — Telegram file photo - Ashley Fitzpatrick

Tom Garner of PwC says exports were considered in financial modelling

The Muskrat Falls Inquiry heard Friday about the benefit of the original federal loan guarantee to ratepayers, in a presentation on various considerations in the hydro project’s financing.

Tom Garner with PwC (formerly PricewaterhouseCoopers) testified via video link about the numbers prior to the project’s final approval in 2012.

The numbers considered included a federal loan guarantee, expected to provide a benefit of about $612 million (in 2010 dollars) to ratepayers.

“We were advised by Nalcor that the purpose of the federal loan guarantee was to improve the economics faced by ratepayers of Newfoundland and Labrador,” Garner testified, saying the number-crunchers were specifically directed to model a case where benefit from the guarantee went to ratepayers (through the supply price for power), as opposed to only flowing to Nalcor Energy.

That was the plan, as reflected in the final numbers considered by the province and Nalcor at the time of the sanction decision.

The testimony also corrected an earlier statement by Nalcor Energy’s Bob Moulton, during his time on the stand. Covering many topics on Sept. 25, Moulton was asked about the financial analysis (the “cumulative present worth,” or CPW, analysis) and testified the Maritime Link project was not considered in that, which was correct. However, he also said there was no export of Muskrat Falls power considered.

Co-counsel Kate O’Brien had specifically asked Moulton if it was assumed that the power exceeding whatever was needed for domestic use would be “spilled” — in other words, water that could otherwise be used for power would be flowed through at the dam site and not used for generation.

“That’s correct,” Moulton said at the time.

But the final numbers did factor in limited export of power from Muskrat Falls, Garner testified.

The idea was some space on the route through Quebec, not used for the “recall block” of power from Churchill Falls, could be used to send out power from Muskrat Falls. It amounted to an estimated $69 million in assumed benefit from exports being part of the final numbers.

With that correction made for Commissioner Richard LeBlanc, and a better view provided on the project numbers at sanctioning, testimony finished in the morning for the day.

LeBlanc said the session was being followed by a private session with lawyers to address a planned future day of testimony on the subject of water management on the Churchill River. It’s a topic LeBlanc has isolated, given it is the subject of an ongoing court case involving the province.

Next week the inquiry is scheduled to hear from a panel from Manitoba Hydro International, Nalcor Energy chief financial officer Derrick Sturge, representatives for SNC-Lavalin and former Natural Resources minister Shawn Skinner.

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