Study that touts Muskrat Falls for Nova Scotia fails to convert opposition

HALIFAX – Buying electricity from the Muskrat Falls hydroelectric project in Labrador would be $402 million cheaper for Nova Scotia than importing it from Quebec, says a new study released Thursday that failed to convert opposition skeptics on the merits of the proposal.

The study by consultant John Dalton of Power Advisory also concluded that building a subsea transmission link to Newfoundland would cost $1.5 billion less than using a mix of wind and natural gas over the 35-year life of the commercial contract for the hydroelectric development.

The projected costs are based on 2017 dollar values, which is when Muskrat Falls is expected to be producing power.

The opposition parties attacked the report, saying its scope was too narrow and it fails to look at the cost of the project to consumers.

Liberal Opposition Leader Stephen McNeil said there are too many assumptions in the report without hard figures on costs.

“What we need is an independent review,” said McNeil. “One looking at not only Hydro-Quebec, but whether or not there’s a potential around wind and natural gas — all of the options that are available to Nova Scotians.”

He cautioned that the Nova Scotia Utility and Review Board should be given ample time to conduct that kind of review.

Progressive Conservative Leader Jamie Baillie said Dalton’s hands were tied by the government’s terms of reference for the study.

“The biggest problem is that we still don’t know how much that power will cost when it gets to our homes,” said Baillie.

“Until we have an independent assessment of that cost, it is not right to endorse this project.”

The study used a computer model to compare the differences in the costs between the three options considered, although it doesn’t provide a total cost estimate for each.

Dalton said receiving energy from Muskrat Falls would help Nova Scotia avoid transmission tariffs from Quebec, which he described as “relatively high.”

He said he believed it would be “highly unlikely” that Nova Scotia would be able to secure a deal from Hydro-Quebec to bring the $402 million difference in costs down.

“(Hydro-Quebec) are going to do what’s in their best commercial interests,” said Dalton.

Dalton said his study’s assumption took into account Hydro-Quebec’s recent contracts with jurisdictions such as Vermont. He said while he didn’t talk to the utility, he also used data provided by the Nova Scotia Energy Department and Nova Scotia private utility company Emera Inc. (TSX:EMA).

The study said the greatest uncertainty in generating more power through wind and natural gas would be the cost of upgrading pipelines, which it estimated to be in the hundreds of millions of dollars.

The opposition have doubted the government’s motives since NDP Premier Darrell Dexter unexpectedly revealed last month that the $80,000 study had been ongoing since September, when Dalton was hired through an untendered contract to do the study.

Dexter declined to answer questions on whether his delayed acknowledgment of the report’s existence may have harmed Dalton’s credibility. Instead, he attacked the opposition.

“They oppose everything and propose nothing,” Dexter said.

“This report will be before the Utility and Review Board. If they want to commission their own expert’s report they can do that, and if they want to appear before the board and challenge Mr. Dalton, they can do that.”

Dalton’s report follows several others commissioned on behalf of the government of Newfoundland and Labrador, which approved the $7.7-billion project last month.

Critics in that province have questioned the legitimacy of reports that weren’t vetted by a public regulator. They also accused the government of ignoring other reports by the province’s Public Utilities Board and a joint federal-provincial environmental review panel.

Those reports concluded that Muskrat Falls had not been proven to be the cheapest or even necessary option to meet Newfoundland and Labrador’s needs.

As part of the development, Emera would build a 180-kilometre subsea cable known as the Maritime Link, which would ship power from Cape Ray in southwestern Newfoundland to Lingan, N.S., in Cape Breton. That is estimated to cost about $1.5 billion.

Muskrat Falls would be capable of generating up to 824 megawatts of electricity, 170 megawatts of which would go to Nova Scotia annually for 35 years. That would serve about 10 per cent of that province’s power needs.