An expected announcement Friday on a federal loan guarantee for the controversial Muskrat Falls plan will clear the final important hurdle to launching the hydroelectric project.
Stephen Harper pledged to support a Muskrat Falls loan guarantee during an election campaign stop in St. John's in 2011. (CBC) Prime Minister Stephen Harper is travelling to Labrador to unveil details of what is expected to be the loan guarantee that he pledged during the 2011 federal election campaign.
The guarantee effectively is the last piece of a complex puzzle that the Newfoundland and Labrador government has been assembling for years to generate power on the Churchill River and launch the $7.4-billion project.
The loan guarantee will substantially lower the costs of borrowing for the project.
Newfoundland and Labrador Premier Kathy Dunderdale has said final approval of the guarantee will clear the way for what is called sanctioning of the project, or the formal green light.
But even without the loan guarantee, Newfoundland and Labrador has been plowing ahead with Muskrat Falls, to the consternation of opponents who see the project as financially ruinous or environmentally risky.
Earlier this year, Nalcor — Newfoundland and Labrador's Crown energy corporation — began clearing forests to build roads and infrastructure for the Muskrat Falls site outside Happy Valley-Goose Bay. Nalcor has argued that costs would mount substantially if it waited a year before launching that preliminary work.
It will take several years to dam Muskrat Falls and build a generating station, which will pump out 824 megawatts of power. Much of that will be funnelled by subsea cables from Labrador to Newfoundland, with as much as 40 per cent of the power marked to head to Nova Scotia by an additional set of subsea cables.
Nova Scotia connection vital
Halifax-based Emera Inc. is a partner in the Muskrat Falls project, and will be responsible for marketing its share of the energy.
Nova Scotia Premier Darrell Dexter, right, appeared in St. John's with then Newfoundland and Labrador premier Danny Williams to announce a tentative agreement on Muskrat Falls. (CBC) Harper and Dunderdale will be joined by Nova Scotia Premier Darrell Dexter. While Nova Scotia is not a partner in Muskrat Falls, Dexter's support has been critical in the development of the project.
Muskrat Falls has come in for steady criticism from a number of groups, some alleging that it has not undergone an independent review through the Public Utilities Board, which ruled this winter it could not proceed because Nalcor had turned over too little information in time for it to meet a government-imposed deadline.
Other concerns have been raised about whether Newfoundland and Labrador, which is poised to launch the most expensive project in its history, can afford the debt load that will come from the project, and whether ordinary ratepayers will in effect be footing the costs of the project.
As well, the leaders of Newfoundland's Liberal and New Democratic parties have threatened to filibuster technical legislation that will need to be introduced to clear the way for Muskrat Falls.
They have also criticized Dunderdale for setting only a couple of hours for formal legislative debate of Muskrat Falls, and at that through a private member's bill.
Cheapest option available: Dunderdale
But Dunderdale, who has said Muskrat Falls has undergone intense scrutiny by experts and the public, has consistently said Muskrat Falls represents the cheapest option to supply power to Newfoundland and Labrador consumers.
The government has launched a public relations campaign to help persuade the public that Muskrat Falls represents a stable source of renewable energy that will be cheaper than relying on alternatives, including burning oil at the Holyrood generating station the government would soon like to decommission.
Muskrat Falls has been more than three decades in the making, and is a key part of what is known as the Lower Churchill energy project. The current plan does not involve another site at Gull Island, which if developed could generate substantially more power.
Interprovincial politics have played a key role in Muskrat Falls, as Newfoundland and Labrador and Nova Scotia have partnered to find a way deliver power to other markets while bypassing Quebec.
Newfoundland and Labrador has had a strained relationship with Quebec for decades, due largely to the 65-year contract with Hydro-Quebec over the Churchill Falls generating station. Under that deal, which expires in 2041, Newfoundland and Labrador sells power at a flat, inexpensive rate to Quebec, which has been able to resell the power to other markets while keeping the profits.
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