Deal Inked on Lower Churchill Development

After decades of waiting and wondering the people of Newfoundland and Labrador learned today that the Provincial government has inked an agreement with Nova Scotia for development of a portion of the Lower Churchill Falls hydro project.

The agreement was announced at a press conference today attended by representatives of NALCOR (Newfoundland and Labrador’s energy company), Emera (owner of Nova Scotia Power) and the Premiers of Newfoundland & Labrador and Nova Scotia, Danny Williams and Darrell Dexter.

At this point all that is publicly known is that both NALCOR and Emera will partner in the development which will see 800 megawatts of power produced from the Muskrat Falls section of the Lower Churchill. The Larger Gull Island generating station which had been a part of the original development plan for the river will not be developed at this time and no timetable for its development was given.

NALCOR will build a generating facilities at Muskrat Falls (Cost 2.9 Billion). This facility will be fully financed and owned by Newfoundland and Labrador.

Emera, a publicly traded company, and NALCOR will jointly develop the transmission route to wheel the power from Labrador, through Newfoundland and on to Nova Scotia.

The subsea link between Labrador and Newfoundland will be built as a joint venture 71 per cent owned by NALCOR (cost 2.1 Billion) and 29 per cent owned by Emera (Cost = 600 million). Emera has agreed to finance 20% of the ongoing maintenance costs for the life of the agreement.

The subsea link, also known as the Maritime route, between Newfoundland and Nova Scotia will be built and wholly owned by Emera. (Cost 1.2 Billion)

It would seem there are still details to be determined relating to the Maritime link itself as officials with Emera have said that they are still negotiating agreements with NALCOR to build the subsea transmission link between the two provinces in return for access to 20 per cent of the energy from Muskrat Falls for a period of 35 years.

At the end of the 35 year contract the undersea transmission line will revert to Newfoundland and Labrador ownership for the sum of 1 dollar.

Investments by all parties into the project total an estimated $6.2 billion.

Click here to view Fact Sheets (NALCOR and NL Govt.)

Although both Provinces have asked the federal government for a loan guarantee and funding assistance to develop the sub sea link they announced today that they will move forward even if funding itself is not provided.

The entire development is still subject to regulatory approval in both provinces as well as to the approval of the boards of directors of NALCOR and Emera. In addition a native land claims treaty in Labrador must be ratified by Ottawa before the project can proceed.

Based on past history and the political implications of any Churchill Falls power contract, one might also expect that the voters of Newfoundland and Labrador will also have their say in the future of this deal.

Construction is expected to begin in 2013 with first power transmission by 2017

Based on what is known so far there are still many outstanding questions the people of Newfoundland and Labrador will be asking in the coming days.

The answers or lack of them is likely to have serious implications, either positive or negative, for the current Provincial government in the next election, scheduled for less than a year from now. Far more importantly they will have a far reaching impact on every individual in the Province for generations into the future.

Some of those questions include:

1) What are the remaining issues to be addressed in the reported “agreements” to be reached between EMERA and NALCOR for building the Maritime Link?

2) What is the overall capacity of the Labrador to Newfoundland link and the Maritime Link to Nova Scotia? Will one or both have the capacity to wheel at least a portion of the undeveloped portion of Lower Churchill Power if Gull Island is developed?

3) How will the proponents (NL and EMERA) finance their shares of the project? Is this financing in place or is the project contingent on finding financial backing?

4) Putting aside the employment created by this development, what is the actual return on investment for Newfoundland and Labrador in the short and longer term? In other words, will this project provide the Province with increased revenues in its coffers?

I’m sure as the next few days and weeks go by and we begin to learn more about this agreement a longer list of questions will begin to form. Hopefully answers will be given when those questions are asked. As they say, the devil is often in the details and while an agreement has been announced one has to wonder exactly what those details include.

At any rate, today is a time to have a quick (and well deserved) celebration before digging into the details in earnest (as we all should) to ensure that our future is as bright as it appears today.

Each and everyone in Newfoundland and Labrador needs to take some time to look at this with their eyes fully open and unfiltered by political bias or spin from any direction.

It does nobody any good to simply attack the deal for the sake of attacking. It also does no good to approve of it simply because it’s being presented by a popular government. Remember, nothing is written in stone until the people of Newfoundland and Labrador say it is. The strong people of New Brunswick proved that point not so long ago when the Provincial government there tried to ink a deal with Hydro-Quebec.

On the surface the agreement seems reasonable, and I hope it is, but until all the questions are answered nothing should be allowed to proceed. Nobody should ever forget the Upper Churchill. NEVER. If more questions were asked back then perhaps things would be far different in the Province than they are today.

Ask informed, unbiased and non-politically motivated questions. Probe the situation fully and rationally to determine where this deal ranks among past options.

the Province can’t run away from this or any deal because it has been burned in the past but neither can it simply accept the deal on blind faith.

Once bitten, twice shy. The outcome of this, for good or for bad, rests squarely on the shoulders of the public. If Newfoundlanders and Labradorians have learned anything from the Upper Churchill it’s that once a final agreement is in place there’s no going back.

This time around can be no excuses and nobody else to blame for not ensuring a better outcome.