ST. JOHN'S, N.L. — The provincial and federal governments say they’ve agreed to talk about a financial restructuring of the Muskrat Falls project to help protect ratepayers.
Premier Dwight and Natural Resources Minister Seamus O’Regan made the announcement Monday.
The Muskrat Falls Project, sanctioned in 2012, if left as is, would have a devastating impact on Newfoundlanders and Labradorians, who would face unprecedented electricity rate increases and economic hardship, Ball and O’Regan said in a joint news release.
They said the solution involves transitioning the Muskrat Falls/Labrador transmission assets revenue model to a traditional cost of service model which will ensure that equity returns from Nalcor are redirected to benefit ratepayers. The change to a cost of service model reflects the approach used for regulated utilities throughout North America, they said.
With the federal government’s involvement, monetizing suitable assets, such as dividends from the Labrador Island Link, is also required to ensure a sustainable long-term solution, the news release said. Related discussions are ongoing.
To reduce cash requirements related to servicing the project’s debt, Ottawa is allowing a deferral of sinking fund and cost overrun escrow account payments if required.
The formal agreement with both levels of government will be implemented by project commissioning. Residents will be further updated once the specifics have been finalized, the news release noted.
The federal government said it is also prepared to work with provincial governments to consider opportunities for further electrification and decarbonization.
In addition to discussions with the federal government, work is continuing on the provincial government’s rate management plan, according to the release.
“Working with the Government of Canada, we have extensively analyzed the true financial structure of the Muskrat Falls Project which was sanctioned by the previous government in 2012. We have identified a long-term solution on behalf of the people of the province,” Ball said.
“We are focused on protecting residents and businesses from increases in electricity rates due to the previous government’s legacy Muskrat Falls Project. In addition to discussions with the federal government, work is continuing on the approach to rate management, including electrification, export sales and cost control,” provincial Natural Resources Minister Siobhan Coady said in the release.
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Premier Dwight Ball, federal minister Seamus O’Regan, and provincial Natural Resources Siobhan Coady are set to make a “significant announcement” regarding rate mitigation at 2 p.m.
The final PUB report on rate mitigation was released late Friday, indicating hundreds of millions of dollars needed to prevent a doubling of electricity rates as a result of the Muskrat Falls project.
Support is expected through direct federal support or through a renegotiation of the financing for the project as a whole.
The Telegram’s David Maher and Andrew Waterman will be covering the event as it happens.
