Penticton Herald

Dam expensive: Hydro project’s price goes up by another billion

Price tag for Muskrat Falls hydro megaprojec­t rises by another billion, CEO says

- By The Canadian Press

ST. JOHN’S, N.L. (CP) — Costs for the Muskrat Falls hydro project in Labrador are up another $1 billion, a “boondoggle” the man in charge says is worse than the lopsided Upper Churchill debacle.

Nalcor Energy CEO Stan Marshall said Friday the new price tag is $12.7 billion with financing. That’s up from an estimate last year of $11.7 billion and is about $5 billion higher than when the former Progressiv­e Conservati­ve government approved Muskrat Falls five years ago.

Marshall took over as head of the Crown corporatio­n last year after the governing Liberals criticized oversight. He said at the time the megaprojec­t was a colossal mistake that he’d try to fix.

“I knew this was a boondoggle,” that should never have gone ahead, Marshall said Friday.

“As long as I’m here, I’ll do my best,” he added, vowing it can still “finish strong.”

“The only way to have solved this was not to have built it in the first place ... It was too late to stop. We couldn’t get a refund.”

Initial cost projection­s were drasticall­y lowballed, he said: “Either intentiona­lly or unintentio­nally, the costs were significan­tly underestim­ated.”

Marshall blamed the latest budget bloat on contractor disputes, higher operating costs, a leaky cofferdam and delays, including a worksite occupation last fall by demonstrat­ors concerned about methylmerc­ury.

Marshall said 75 per cent of constructi­on is now done, up from 48 per cent last May.

First power is expected in 2019 at an estimated cost of 23.3 cents per kilowatt hour before tax.

That’s up 8.2 cents from when Muskrat Falls was approved and would double recent rates paid by consumers.

Marshall and Premier Dwight Ball have said they’ll look at ways to reduce that hit and cut average monthly bills that could otherwise go up more than $150 per month.

The previous Tory government sanctioned Muskrat Falls in 2012, a joint venture with Nova Scotia utility Emera championed by former premier Danny Williams. It will bring power from Labrador to the island of Newfoundla­nd then on to Nova Scotia using subsea cables and a vast overland transmissi­on network.

Williams hailed Muskrat Falls as the answer to his province’s long-running feud with Hydro-Quebec over transmissi­on access and the Upper Churchill deal.

Terms of the 65-year contract did not reflect rising energy rates.

As a result, the Upper Churchill dam and powerhouse in Labrador have so far delivered about $27.5 billion for Hydro-Quebec versus $2 billion for Newfoundla­nd and Labrador. The dispute is once again before the Supreme Court of Canada for a hearing on whether the contract should be reopened.

Marshall said Friday that Muskrat Falls is especially painful because it made the opposite gaffe as supporters gambled that energy values would stay high. They lost, and this time ratepayers on the hook, he said. Costs could rise again, Marshall added. “Muskrat Falls has had its surprises. I’m not going to say that there won’t be any more.”

Ball said Friday that Muskrat Falls was “illconceiv­ed and reckless,” but stopped short of calling for a forensic audit.

He said Nalcor is working with Labrador aboriginal leaders on methylmerc­ury concerns downstream as land is flooded.

“I’m not looking to do anything that will endanger people.”

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 ?? The Canadian Press ?? The cost of the Muskrat Falls project in Labrador has more than doubled since it started five years ago. A Harvard University study determined the hydro dam will cause a spike in toxic methylmerc­ury in wild food sources that are crucial to Labrador...
The Canadian Press The cost of the Muskrat Falls project in Labrador has more than doubled since it started five years ago. A Harvard University study determined the hydro dam will cause a spike in toxic methylmerc­ury in wild food sources that are crucial to Labrador...

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