Newfoundland premier to announce federal loan details for hydro project: sources

ST. JOHN’S, N.L. – Federal and provincial sources say Newfoundland and Labrador Premier Kathy Dunderdale will announce financing details Tuesday for the Muskrat Falls hydro project.

Her office says the premier will make a “significant” announcement at an evening news conference.

Provincial Finance Minister Tom Marshall has said in recent weeks that a final deal on a promised federal loan guarantee was close.

Backing from Ottawa is expected to save about $1 billion in borrowing costs from the $7.7-billion project under construction in Labrador.

A major hurdle was cleared last month when Nova Scotia’s Utility and Review Board approved the $1.5-billion Maritime Link.

The subsea link would bring Muskrat Falls power to Nova Scotia as part of the joint project to help wean that province off coal-fired energy.

Prime Minister Stephen Harper announced Ottawa’s backing for Muskrat Falls a year ago as long as partners in Nova Scotia and Newfoundland and Labrador are committed to it.

The development is a joint venture between Nalcor Energy, Newfoundland and Labrador’s Crown utility company, and Nova Scotia private utility Emera (TSX:EMA).

A term sheet signed by Harper and both provincial premiers says Ottawa would guarantee up to $6.3 billion in debt over 35 to 40 years for financing of the project. The remaining cash to reach the total cost has been described as the two provinces’ initial down payment.

Muskrat Falls will be capable of generating up to 824 megawatts of electricity with first power expected in 2017. About 170 megawatts would go to Nova Scotia annually for 35 years, serving around 10 per cent of that province’s power needs.

The revised Maritime Link deal also grants Emera a commercial guarantee from Nalcor for access to cheaper market-priced power above that amount.

Nalcor is building the dam and power station in Labrador as well as transmission lines on the island of Newfoundland at an estimated cost of $6.2 billion.

Emera would build the 180-kilometre subsea Maritime Link to bring power from Cape Ray in southwestern Newfoundland to Lingan in Cape Breton.