Price tag for hydro megaproject rises by another billion, CEO says
Costs for the beleaguered Muskrat Falls hydro development in Labrador are up by another $1 billion.
Nalcor Energy CEO Stan Marshall said Friday the new price tag is $12.7 billion with financing.
That’s up from the estimate last year of $11.7 billion and is about $5 billion higher than when the project was sanctioned five years ago.
Marshall took over as head of Nalcor last year and said at the time the Crown corporation’s Muskrat Falls megaproject was a “boondoggle” he would try to fix.
“I knew this was a boondoggle,” Marshall said again Friday of a project he has repeatedly stressed should never have been built.
“As long as I’m here I’ll do my best,” Marshall said, vowing that it can still “finish strong.”
“The only way to solve it was not to have built it in the first place ... It was too late to stop. We couldn’t get a refund.”
The initial cost projections were drastically low-balled, he said: “Either intentionally or unintentionally, the costs were significantly underestimated.”
Marshall blamed the increases 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 is more than double recent rates paid by consumers.
Marshall and Premier Dwight Ball have said they’ll look at ways to lower those rates to ease average monthly bills that could otherwise go up more than $150 per month.
The previous Progressive Conservative government approved Muskrat Falls, a joint venture with Nova Scotia utility Emera championed by former premier Danny Williams.
Marshall said Friday its supporters gambled that energy values would stay high.
They lost. And costs could rise again, Marshall said.
“Muskrat Falls has had its surprises. I’m not going to say that there won’t be any more.”
He said Nalcor is working with Labrador aboriginal leaders to address methylmercury concerns.
“I’m not looking to do anything that will endanger people.”