Study finds Muskrat Falls is cheapest energy option for Nova Scotia, sources say

HALIFAX – A study conducted for the Nova Scotia government to be released Thursday concludes that the Muskrat Falls hydroelectric project in Labrador is the cheapest option to meet the province’s future energy needs, senior government officials say.

Commissioned last September, the study examined whether getting electricity from Muskrat Falls through subsea cables would be cheaper than getting it from wind turbines, natural gas plants or Quebec hydro dams.

Government sources who spoke on condition of anonymity said the study found that shipping energy from sources other than Muskrat Falls was “significantly more expensive.” They declined to provide the difference in costs as reported in the study.

The officials said the $85,000 untendered study by John Dalton, president of Power Advisory in Carlisle Mass., compared Muskrat Falls with two alternatives he thought would be the least expensive and capable of meeting environmental objectives.

The report ranked importing electricity from Quebec as the second cheapest option, while a mix of wind power combined with natural gas was deemed the most expensive.

“When you are replacing coal plants you need a certain amount of firm electricity, so obviously hydro is capable of doing that,” one source said.

The source said wind on its own wouldn’t provide enough electricity to meet the province’s needs and would require natural gas as a supplement source.

“Natural gas on its own would be too expensive an option and would have trouble meeting the environmental requirement.”

The officials said the study projected costs over a 35-year period, which is the life of the commercial agreement on Muskrat Falls between Newfoundland and Labrador’s Crown corporation Nalcor Energy and Nova Scotia private utility Emera (TSX:EMA).

They also said Dalton’s study would be entered as evidence at regulatory hearings to be conducted by the Nova Scotia Utility and Review Board, meaning it would be subject to questioning by intervenors.

“It allows anybody who chooses to become an intervenor in the proceeding to question assumptions and to test those in a regulatory tribunal,” a source said.

Nova Scotia Premier Darrell Dexter announced last month that the report was ongoing, three months after it was launched.

When asked why he kept the study under wraps, Dexter initially indicated he did not want the media pestering Dalton’s company. The premier later said that the only thing that mattered was that the work was being done.

Dalton’s report follows several 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 efficacy of reports that weren’t vetted by a public regulator and 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.

Emera’s role in the project is to 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.