Oops, Nalcor and Emera Did It Again (Maritime Link)

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The estimated cost of the Maritime Link, electrically connecting Cape Breton to Granite Canal on the island of Newfoundland, has risen from $1.39 billion to $1.58 billion, an increase of 13.6%.

The increase is reported in a filing today on behalf of Nova Scotia Power Maritime Link, a subsidiary of Emera. The Quarterly Report can be found on the Nova Scotia UARB website under Matter No. M06024.

Maritime Link is a portion of the Muskrat Falls project.

Yesterday, Muskrat Falls critic Ed Hollett presented analysis indicating that the estimated cost of the Newfoundland portion of the project has risen from $5.0 billion in 2010 to $7.2 billion now. Neither of these figures include interest during construction, which is normally included in utility capital project reporting.

The NL government has ramped up spending aggressively on Muskrat Falls. In the period between January 2013 and September 2013 alone, $275,509,951 has been spent on the project.

One of the uncertainties hanging over the Muskrat Falls is whether Nalcor — NL’s crown energy holding company — will be able to execute its production plan for the facility. Muskrat Falls will generate very little power in the winter, when power is required both on the island of Newfoundland and also to satisfy Nalcor’s commitments to Emera. Nalcor’s plan requires taking winter delivery of a large block of power from the Upper Churchill generating facility controlled by Hydro Quebec pursuant to a 1969 agreement. Hydro Quebec has filed an application in Quebec Superior court defending its contractual rights at Upper Churchill.

A federal loan guarantee to the project, promised by Stephen Harper during the 2011 election campaign, was finalized this week.

Hydro Quebec is building the Romaine project about 300 km closer to eastern markets than Muskrat Falls. That project will cost about the same as Muskrat Falls, will be completed years earlier, and will deliver about twice as much energy but is widely considered to be uneconomic.

21 Comments

  1. A little irony in all of this is that Danny Williams has a ground-source heat pump installed at his house, and will suffer little of the pain that will be thrust onto ratepayers through increasing electricity rates. By 2030, my guess is that Newfoundlanders will be looking back at this the same way they now look back at the Churchill Falls deal – as an unmitigated disaster.

  2. (This comment was authored by Mike Hilson, but my site was not operating properly so I have had to post it.)

    Hilson writes:
    The Churchill Falls deal was mitigated by the fact that it represented only lost opportunity to NL, not complete economic ruin, eventual default on government obligations, and an inevitable humiliating bailout from Canadian taxpayers.
    Muskrat Falls, on the other hand, fits my definition of an unmitigated disaster. All of the forseeable uncertainties in this deal present only aggravation, not mitigation. I suppose there are unforeseeable events (largescale nuclear war, asteroid impacts, etc.) which could improve the economics of the project by making money and debts less important. There is always a bright side.

  4. Use the above Bangor Daily News website to link to:
    “Bangor Hydro’s parent company bids on Aroostook utility”, Mar.12, 2010
    Maine Public Service Co..
    Northern Maine is part of the Maritimes control area and is directly connected to the electrical grid operated by New Brunswick Power and not connected to the New England grid.

    U.S. Department of Energy
    http://energy.gov/oe/downloads/pp-12-maine-public-service-company
    PP-12 Maine Public Service Company
    “Presidential permit authorizing Maine Public Service Company to construct, operate, and maintain, electric transmission facilities at the U.S-Canada border.”

    • Presidential Permits/Executive Order 12038 has been in effect for a number of years.
      Permits issued after compliance with NEPA, concurrence from the Secretary of State, and the Secretary of Defense for across border connections.
      The U.S. Department of Energy has a list of all the permits issued plus those pending approval.

  7. Quanta Services Inc. was selected by Nalcor Energy for Muskrat Falls HVac Transmission Project, Dec.18
    http://investors.quantaservices.com
    Business Week
    Quanta Services Inc.
    Paul M. Daily, Executive VP & also CEO of Infrastructure & Energy Alternatives LLC which owns H.B. White, Canada. H.B. White is a contractor on the Northland Power Inc., Manitoulin wind project.
    http://investing.businessweek.com/research/stocks/people/people.asp?ticker=PWR
    Pat Wood lll serves on the Quanta Services Inc. Board with 81 connections.

      • Now Emera is in both the generation of electric power and the transmission of electricity which have been separated in the U.S. since about 2000.

        • A Board member of First Wind is also on the Quanta Services Inc. Board which got the cable contract.
          Nice cozy relationship.

    • Yes, and perhaps one of the most disheartening events was the almost loss of electric supply for 60 million Americans in early January.
      Ontario should take steps to prevent this from happening here as well. Seems that many just want to hide and pretend this event didn’t happen.

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