With a partially completed electricity generation plant running over budget and behind schedule, what are the residents of Newfoundland/Labrador doing about the troubled Muskrat Falls project?
Muskrat Falls, you may recall, is the controversial 824-MW hydroelectric facility being built by Nalcor Energy on the lower Churchill River in Labrador. Encumbered with environmental and public safety issues, Nalcor doesn’t even have certain access to the water it plans to harness. To bring its energy to consumers in Newfoundland and Nova Scotia, the facility requires 1600 kilometres of new transmission line built across an unforgiving landscape. Two stretches will employ expensive underwater cable, one beneath the Strait of Belle Isle and the other beneath the St..Lawrence River.
Before looking into how Newfoundland/Labrador is dealing with this challenging project, let’s make some comparisons with Manitoba’s eerily similar Keeyask, Bipole III and Minnesota transmission projects.
First, the similarities. The brainchild of politicians? Check. Better alternatives available? Check. Generation remotely located with an expensive transmission requirement? Check. Project planning and management the responsibility of a crown corporation? Check. Regulatory review processes flawed? Check. Projects partly complete and running behind schedule? Check. Projects over budget? Check. Contractor problems? Check. Unprofitable short-term export contracts? Check. Rates likely to double to pay for projects? Check. Province’s own finances stretched? Check.
What are the differences? The big one — the vocal residents of Newfoundland/Labrador are telling the world about Muskrat Falls. By contrast in Manitoba, we have essentially kept the Keeyask and Bipole III projects our deep dark secret well beneath the national radar. The residents of Newfoundland/Labrador have made enough noise that a public inquiry has been called. Here in Manitoba, a public inquiry for Bipole III led by the PUB was promised during the 2016 election campaign but never launched.
With a 2019 in-service date, construction at the beleaguered Muskrat Falls project in Labrador is in its wind-down stages. Here, with a 2021 completion date, it’s get ‘er done and damn the torpedoes.
In Newfoundland/Labrador, an equity write-down (for starters, $4 billion from provincial coffers) has been proposed. In Manitoba, a suggestion for an “equity injection” of $5 billion was dismissed out-of-hand.
In Newfoundland/Labrador, a doubling of rates is expected to cause a decrease of between 30% and 40% in domestic use with an accompanying decrease in domestic revenue. By contrast in Manitoba, Hydro is counting on domestic load actually increasing during the next six or seven years, despite planned 7.9% annual rate increases. The short-term load forecast has been offset by only a feeble downward adjustment for price elasticity effects. Beyond that time frame, Hydro is forecasting load growth at least twice that in neighbouring jurisdictions.
In Manitoba, we are compounding our problem with a badly timed conservation and efficiency plan. The cost to Hydro ratepayers of delivering the aggressive Efficiency Manitoba plan is unknown but will likely be in the hundreds of millions annually. Worse, Hydro will need to find an additional $5 billion in revenue over the next 20 years to replace domestic revenue displaced by the plan.
Garland Laliberte is a member of the Bipole III Coalition