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Notwithstanding the construction crews now swarming Labrador’s Muskrat Falls power dam site, sunk costs in excess of $1 billion and a federal loan guarantee standing behind the project, the future of the Newfoundland & Labrador (NFLD) government’s pet megaproject suffered two blows Monday so grave that they threaten the entire project.
Muskrat Fall is seen as a Newfoundland’s new destiny project. The project involves building a new 824 MW power dam on the Lower Churchill River near the town of Goose Bay. The power would be transmitted to the island of Newfoundland by means of a transmission line tunnelled under the Strait of Belisle. Another submarine transmission line would link the island of Newfoundland to Nova Scotia’s Cape Breton.
The project’s cost is usually reported as $7.7 billion, a price tag that includes almost no contingency and no interest expense during construction, which could add another $1 billion. The provincial government’s plan is to sell a large portion of the production from Muskrat Falls to Nova Scotia.
But Hydro Quebec on Monday filed a motion with the Quebec Superior Court seeking clarification of its rights under the Quebec’s existing 1969 Churchill Falls Contract. The core of Hydro Quebec’s case is to claim that it has an exclusive right to purchase virtually all of the power and energy produced by Churchill Falls Generating Station until August 31, 2041, and that Hydro Quebec has the right to control the output of Churchill Falls to optimize the operation of its own power needs.
Hydro Quebec’s court application responds to a plan by the NFLD government’s crown utility Nalcor to take a large block of power from Upper Churchill during the winter, replacing that power with excess production from the downstream Muskrat Falls project during the spring run-off.
When I published my concern that Nalcor’s production plan for Muskrat Falls was not going to work almost 2 years ago, Nalcor responded by claiming that they had secret legal and engineering opinions supporting their plan and went on to demand an apology. The government of Newfoundland and Labrador later changed its access to information legislation preserving the secrecy of those studies.
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