A panel assigned to review the Lower Churchill hydro-electric project calls the company's analysis of the project "inadequate," while also asking for more information from Nalcor.
The review panel is recommending a new, independent analysis based on economic, energy and environmental considerations. The new analysis would take into consideration domestic energy demand projections, as well as alternate energy sources, such as using offshore gas as a fuel for the Holyrood thermal generating facility.
The panel's summary of their findings states: "The panel has determined that the project would have several significant adverse environmental effects on the aquatic and terrestrial environments, culture and heritage and, should consumption advisories be required in Lake Melville, on land and resource uses."
The report says air pollution and noise would be temporary during the construction phase, and once operational the project "would very likely displace more greenhouse gas emissions than the Project would cause."
In a statement, both governments say it will take time to review the panel's findings and then make their responses public. Nalcor said it would comment on the panel's findings on Friday.
Liberal MHA Marshall Dean said his party's criticisms of the project's economic viability still stand.
"There has to be a much better way to develop Lower Churchill so that it's the economic stimulus for our province that we've always seen it as being," he said.
Premier Kathy Dunderdale said this report isn't what matters when looking for project funding, since the banks will do their own analysis.
"When we go to market, when we go to the banks, they are going to do their own assement," she said.
The review gives government officials a place to start, advising them to "weigh all effects, risks and uncertainties in order to decide whether the project is justified in the circumstances and should proceed in light of the significant adverse environmental effects identified."
During its independent review, the panel received submissions and heard presentations from Nalcor, aboriginal groups and environmental organizations as well as holding a public consultation from March 3 to April 15.