PM pledges $5B to get ‘the Muskrat’ off N.L.’s back
ST. JOHN'S, N.L. • Prime Minister Justin Trudeau announced Wednesday a $5.2-billion deal to help Newfoundland and Labrador cover the costs of its troubled Muskrat Falls hydroelectric project.
The controversial project has ballooned from a $7.4 billion price tag in 2012 to $13.1 billion now. Last year, a scathing report outlined how previous governments were “determined to proceed” despite the costs and the inexperience of people running the project.
Premier Andrew Furey, who has likened Muskrat Falls to an “anchor around the collective souls” of the province, said Wednesday, “We landed on a deal today that I think — I know — is a big deal for Newfoundland and Labrador and will finally get the Muskrat off our back.”
Trudeau announced the aid to the long-delayed, over-budget hydroelectric project as he lays the groundwork for a likely September election. Later, he announced the province will become the fourth to strike a deal with Ottawa for a $10-a-day childcare program. Furey, who joined Trudeau for the hydro announcement, said the federal funding will help Newfoundland and Labrador avoid a spike in electricity rates that had been feared when Muskrat Falls begins generating power this November.
The money will help cover costs set to come due when the Labrador project comes online, preventing rate increases that would have been necessary to pay the bills.
Ottawa is giving the province an estimated $3.2 billion from its share in the Hibernia oilfield off the coast of St. John's, while the remaining $2 billion comes from loan guarantees and a $1-billion investment in the province's portion of the Labrador-Island Link transmission line.
Ottawa previously backed Muskrat Falls with billions in loan guarantees, and in December, Trudeau announced he had appointed Serge Dupont, former deputy clerk of the Privy Council, to oversee negotiations about financially restructuring the project.
Trudeau, whose Liberals hold six of the province's seven electoral ridings, called the agreement “a big step in the right direction.”
Electricity rates in the province will rise when the project comes online, to 14.7 cents per kilowatt hour from the current 12.5 cents, but that's well below the projected 23 cents that officials had said would be needed to cover the project's costs.