ST. JOHN’S, N.L. – A flurry of government commissioned reports supporting the proposed $7.4 billion Muskrat Falls hydro project in Labrador should be reviewed by an independent regulator, critics say.
“Who is to scrutinize these reports on behalf of the people of the province?” asked St. John’s lawyer Dennis Browne, a member of the 2041 Group that includes Muskrat Falls skeptics of all political stripes.
“The public is not being safeguarded in any way.”
Browne was responding to a barrage of documents released this week by the province in favour of the development. They come as preparation work at the Labrador site continues apace even though the project has not been officially approved.
Crown corporation Nalcor Energy and private utility Emera (TSX:EMA) of Nova Scotia plan to bring power from Labrador’s lower Churchill River to Newfoundland and Nova Scotia using subsea cables.
Premier Kathy Dunderdale says Muskrat Falls is the best option for meeting future energy needs even though estimated costs are up to $7.4 billion since the project was announced two years ago at $6.2 billion.
Her majority Progressive Conservative government is expected to formally approve the development in the coming weeks.
Preliminary work to build a road and construction camp for the development has already begun, and Nalcor announced Thursday that excavation will start before year’s end.
The latest report in favour of Muskrat Falls came Thursday from Ziff Energy Group of Calgary, which said reliance on natural gas for future energy needs would cost far more than Muskrat Falls.
Natural Resources Minister Jerome Kennedy said the province spent $74,000 for the Ziff report plus $60,700 for a report by Manitoba Hydro International (MHI) that wrote off wind power as too expensive, and $245,000 on another MHI report released Tuesday. It found that Muskrat Falls would cost $2.4 billion less over 50 years than if Newfoundland relies on its oil-burning plant in Holyrood and other power sources.
Kennedy dismissed as cynicism calls for more independent regulatory review. Consultants were hired by the province to give expert opinion that should not be diminished because the province paid for it, he told a news conference.
“I don’t think that’s a fair criticism to attach to people because they’re paid for their work,” he said.
“At the end of the day, the only independent report that would seem to satisfy the critics is one which would say that Muskrat Falls is not a good option. And, quite frankly, I haven’t seen those.”
The government commissioned Ziff to study the options of piping natural gas from offshore oil sites and importing liquefied natural gas to power a power plant at Holyrood, N.L.
It concludes that a subsea pipeline would be at risk from icebergs, and that new wells and equipment required offshore plus onshore infrastructure would cost $4.1 billion more than Muskrat Falls over 50 years.
Buying liquefied natural gas for a small island on competitive world markets would cost at least $2.3 billion more than Muskrat Falls, it says.
The government released the arm’s length report in response to critics who said it had not fully explored other power generation options.
Browne says the government is relying on reports that are not the independent work of regulators working solely in the public’s interest.
He said the latest numbers on Muskrat Falls must go before a transparent regulatory process such as a related review planned at the Nova Scotia Utility and Review Board.
Without such scrutiny, Browne says Newfoundland and Labrador ratepayers are not getting adequate oversight of a deal that will bind electricity consumers for 50 years.
Members of the 2041 Group — and a long list of former politicians and public servants including former Tory premier Brian Peckford — say Muskrat Falls is a high-risk venture that relies on public funds. They have urged the province to consider incremental projects or other options to meet power needs.
Browne said the Dunderdale government has shrugged off reports from both the Public Utilities Board and a joint federal-provincial environmental review panel that Muskrat Falls has not been proven to be a least-cost or even necessary option.
The 2041 Group name refers to the year that the province’s contentious Upper Churchill power deal with Quebec comes to an end. The 1969 agreement to ship power from Labrador to Quebec for sale did not reflect rising energy values and has reaped about $20 billion in profits for Quebec, versus $1 billion for Newfoundland and Labrador.
Gordon Weil, former director of the Maine energy office who led the national group of state energy agencies, recently wrote a paper entitled “The Muskrat Falls Hydro Project: Opportunities and Risks.”
In it, he called for greater oversight.
“Nalcor is part utility, serving as the principal supplier of power in the province. The relationship of any utility to its customers should be regulated. The opinion of one outside expert like Manitoba Hydro International is not a substitute for that oversight and does not offer customers enough protection.”
Dunderdale brushed off Weil’s report, saying it was written for the Atlantic Institute for Market Studies which she described as right-wing.