Loan guar­an­tee was es­sen­tial: Dun­derdale

For­mer premier tes­ti­fies she thought fed­eral govern­ment didn’t at­tach con­di­tions

The Packet (Clarenville) - - Editorial - BY ASH­LEY FITZ­PATRICK tele­[email protected]­

For­mer premier Kathy Dun­derdale says she never would have backed sanc­tion­ing of the Muskrat Falls hy­dro­elec­tric pro­ject with­out a loan guar­an­tee from the fed­eral govern­ment.

But on the stand at the Muskrat Falls In­quiry on Tues­day, Dec. 18, in St. John’s, she also de­scribed hear­ing — only af­ter sanc­tion­ing in De­cem­ber 2012 — that the loan guar­an­tee she be­lieved was in place and a sure thing was not a sure thing.

There were con­di­tions tied to the agree­ment on the loan guar­an­tee, signed by then-prime min­is­ter Stephen Harper in Novem­ber 2012. Dun­derdale tes­ti­fied she had been led to be­lieve there was noth­ing that would have caused the deal to fall apart, but some­thing on the Nova Sco­tia side was flagged.

“We had just done sanc­tion and here we are and this is­sue is not re­solved,” she said.

She re­called the loan guar­an­tee was a sig­nif­i­cant prob­lem and that 2013 was a “very stress­ful” time.

“There was noth­ing to pre­pare me for that piece of in­for­ma­tion,” she said about hear­ing the guar­an­tee might be lost.

As an­nounced, it was ex­pected to save about $1 bil­lion in bor­row­ing costs for the Muskrat Falls and Mar­itime Link projects, guar­an­tee­ing Canada’s AAA credit rat­ing for up to $6.3 bil­lion in bor­row­ing on what was then a $7.5-bil­lion to $7.7-bil­lion col­lec­tive to­tal for the projects ($6.2 bil­lion es­ti­mated for the Muskrat Falls pro­ject and $1.3 bil­lion to $1.5 bil­lion for the Mar­itime Link).

It had all been pitched and bought into on the fed­eral side as sup­port for a re­gional power pro­ject. With­out Nova Sco­tia and the Mar­itime Link pro­ject, there was no guar­an­tee to help Muskrat Falls fi­nanc­ing, driv­ing up the bur­den on ratepay­ers.

The is­sue was set­tled, Dun­derdale said.

But Com­mis­sioner Richard LeBlanc in­ter­jected dur­ing the day’s ques­tion­ing to ask how she and her govern­ment were sat­is­fied at all that the loan guar­an­tee was re­ally in place at sanc­tion­ing, when it re­quired ap­proval for the Mar­itime Link from the Nova Sco­tia Util­i­ties and Re­view Board (UARB), the util­ity reg­u­la­tor in that province.

Dun­derdale of­fered a long re­sponse, with lit­tle clar­ity.

“It was a com­mit­ment, as I un­der­stand it and as I re­call now, be­cause I haven’t turned my mind to this in five years, com­mis­sioner, not for five min­utes,” she said.

“To the best of my rec­ol­lec­tion, it was a com­mit­ment that had been made by Emera around how it was go­ing to meet its con­di­tions prece­dent, or, there was some piece of work around that,” she said.

Fur­ther is­sues did arise at the Nova Sco­tia Util­i­ties and Re­view Board, with its far more open process com­pared to the ei­ther-or re­view at the New­found­land and Labrador Pub­lic Util­i­ties Board.

In June 2013, The Tele­gram re­ported both Emera and the Govern­ment of New­found­land and Labrador were say­ing their megapro­jects could pro­ceed re­gard­less.

“What we said at the (UARB) hear­ing is that if the Nova Sco­tia UARB does not ap­prove the Mar­itime Link we would take this to un­der­stand that Nova Sco­tians don’t want the en­ergy,” Emera’s spokes­woman Sasha Irv­ing stated in re­sponse to ques­tions at the time.

“As per the sanc­tion agree­ment, we and Nal­cor are com­mit­ted to the link, but if not ap­proved by (the reg­u­la­tor), we and Nal­cor are com­mit­ted to find­ing a way for­ward,” she stated in an email.

In Novem­ber 2013, the UARB is­sued its ap­proval for the Mar­itime Link to pro­ceed. With con­struc­tion com­pleted, the link was tested in De­cem­ber 2017, hav­ing come in at a cost of about $1.6 bil­lion.

In Novem­ber 2016, fac­ing bil­lions in cost over­runs on the Muskrat Falls pro­ject, the Lib­eral govern­ment in New­found­land and Labrador an­nounced an agree­ment for a sec­ond loan guar­an­tee from the fed­eral govern­ment, cov­er­ing up to an ad­di­tional $2.9 bil­lion in Muskrat Falls debt.


Muskrat Falls In­quiry Com­mis­sioner Richard LeBlanc.


For­mer premier Kathy Dun­derdale on the stand for a sec­ond day Tues­day at the Muskrat Falls In­quiry in St. John’s.

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