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Natural Resources Minister Shawn Skinner defends exempting Muskrat Falls from a PUB review that might question the megaproject's costs and benefits. (CBC )

Significant parts of the proposed hydroelectric megaproject planned for Muskrat Falls in central Labrador will be exempt from regulation through the Public Utilities Board, CBC News has learned.

The exemption means that Crown-owned Nalcor Energy and the Newfoundland and Labrador government will not have to submit the Lower Churchill project to scrutiny by the PUB, which normally can assess an electricity project and determine whether it is the cheapest option for providing power to the consumers.

"Governments have the power under the acts that are available to us to be able to exempt projects," said Natural Resources Minister Shawn Skinner.

The exemption means there would not have to be public hearings, although government officials say they may still happen.

The PUB will not be able to conduct the sort of costs-benefits analysis that has been conducted on previous hydroelectric projects, nor will it have the authority to order Nalcor and the government to look at lower-cost options that could meet the province's electrical needs.

The PUB will still have oversight in setting electrical rates.

[CBC News had erroneously reported that this power, too, would be exempt.]

However, decisions that would determine the size, scale and cost of the Muskrat Falls project will effectively fall to the provincial government and Nalcor, making Muskrat Falls development a government policy decision rather than a regulatory one.

The issue of the cost of delivering power from Muskrat Falls to domestic customers has been a burning issue in the spring session of the house of assembly, where the Liberals have claimed consumers' bills will double because of how the proposed development is structured.

The exemption actually dates back to 1999, when Brian Tobin's Liberal government passed legislation exempting any Lower Churchill project from PUB oversight.

At the time, it was intended for a Lower Churchill development that Tobin's government was pursuing with Quebec.

It legally applies to the project that Danny Williams announced last November, shortly before he retired from politics.

Skinner told CBC News that the rationale is that projects of this scope exceed the PUB's mandate, as they are as much about economic development and job creation as they are about electricity.

"So, it's not just about the rates," he said. "It's also about things like economic development and government policy."

Corrections

  • A previous version of this story reported that the Public Utilities Board would not have the authority to set electrical rates related to power generated at Muskrat Falls. This is inaccurate.
    Oct 12, 2013 5:23 AM NT