Premiers’ meeting prompts plenty of questions

The

cost of developing the massive hydroelectric project at Muskrat Falls is rising, but no one should be surprised.

The original estimate, when the project was first announced, was $6.2 billion. That number is now two years old and not considered accurate anymore.

So, how much is it really going to cost?

Nalcor is in the process of drawing up what is termed “Decision Gate 3” numbers, which are supposed to be released soon. They will be used to either give the project a green light or kill it. Realistically speaking, the idea of killing Muskrat Falls is simply not on. The project’s a go.

Nova Scotia Premier Darrell Dexter was in the province last week for a meeting with Premier Kathy Dunderdale, and Muskrat was the sole agenda item. He wanted a face-toface with her but we don’t really know why, and while both leaders spoke with the media after the meeting, they revealed little. Still, there were some hints.

Dexter said he has concerns about cost overruns but hasn’t given up on the project.

“Whenever costs go up there is always a concern and you take that into account,” he said.

No doubt he was given assurances on the methodology being used by Nalcor to compile the Decision Gate 3 figures, and you can bet he has a rough idea of what those numbers are, as does Dunderdale.

One of the things she revealed is that the cost estimates for Muskrat are going to be higher than the orig- inal price tag.

“The numbers that we are working with are almost two years old, so costs certainly would have changed,” she says.

Well, define change. How much of a change?

“I can tell you there’s nothing startling in terms of the information that we’ve had so far. There’s nothing unexpected or nothing to panic about.”

No doubt the Dexter/Dunderdale meeting included some discussion of the Nova Scotia circumstance. It’s a province in need of new energy and one that has to reduce its dependence on coal.

Unlike Newfoundland and Labrador, where Muskrat is being sold on the basis of us needing more power, our cousins across the Cabot Strait have to find replacement energy and at a price that works for their ratepayers.

As the price tag rises on Muskrat, so does the potential cost to Nova Scotia power users. You can appreciate Dexter’s dilemma.

Back in November 2011, Emera Energy CEO Chris Huskilson told a legislative committee of the Nova Scotia government that asking his ratepayers to pay upwards of 14 cents a kilowatt hour for Muskrat power was not on.

“That kind of number won’t make it. It’s too high …,” he said.

In our province, the story was different.

At that time, we were told the cost would be something like 16 cents per kilowatt hour. That rate has gone up as well. Where will it be by the time sanctioning occurs?

Muskrat opponents are enjoying all of this. The original term sheet with Emera has yet to be turned into a final contract. It was supposed to be done within a year of the announcement, but in November 2011 the deadline was moved to Jan. 31, 2012.

In January,

the

deadline was dropped altogether. We are now heading into August and a final agreement is still not in place. Did that get talked about at the premiers’ meeting?

When Dunderdale was asked about it, she said, “It’s going to take whatever time it needs to take. Some time before November, I hope.”

Muskrat is mired in problems — some of them financial; time is money, after all. And some of the issues are political.

Hastily called meetings of provincial leaders about the project’s increasing costs may not be anything to panic about, but we can be forgiven if we have some concern.

Dexter and Dunderdale are both facing a tough sell this fall. Expect more meetings soon.