Newfoundland and Labrador Premier Kathy Dunderdale has given the green light to the controversial Muskrat Falls hydroelectric project.

Dunderdale officially sanctioned the project, which will cost at least $7.7-billion, shortly after 6 p.m. local time in the lobby of Confederation Buildilng.

"This is truly a significant day in the history of Newfoundland and Labrador as we prepare to write the next chapter in our province’s future," said a smiling Dunderdale.

“With the development of Muskrat Falls, our province will make the transition from an economy dependent on non-renewable resources to a diversified renewable economy fuelled by clean, renewable power that will provide benefits and opportunity for future generations of Newfoundlanders and Labradorians.”

Surrounded by supporters

Dunderdale was flanked by cabinet ministers, including Natural Resources Minister Jerome Kennedy.

The lobby was filled with people waiting for the announcement, including former premier Danny Williams, who intiated the project, former natural resources minister Shawn Skinner, and many workers with Nalcor, the Crown-owned energy corporation.

Dunderdale's announcement was timed to allow for live television coverage, and also to coincide with the day's closing of the Toronto Stock Exchange.

Halifax-based Emera Inc., a partner in the project, is a publicly traded company.

Most expensive in N.L. history

Muskrat Falls will be the most expensive capital works project in the province's history.

It will take several years to dam falls and build an 824-megawatt generating station.

Subsea cables will transmit the power from Labrador to Newfoundland, with the island using 40 per cent of total power produced.

A 20 per cent block of the power is earmarked for Nova Scotia, via an additional set of subsea cables.

Nalcor will look for markets for the remaining 40 per cent of the power. Options include industrial use in Labrador, or sales to other energy markets through Nova Scotia, using Emera's transmission assets.

The government has introduced two bills — Bill 60 and Bill 61 — to enable Muskrat Falls, and Dunderdale last week indicated formal approval of the project was imminent.

Both the NDP and Liberals have threatened to launch a filibuster over the enabling legislation that must pass the house for Muskrat Falls to proceed. In response, Dunderdale said she was prepared to keep the House of Assembly open through Christmas, if necessary.

Project criticized

Muskrat Falls has been steadily criticized by a number of groups, with some alleging it has not undergone an independent review, others questioning whether the province can afford the debt load from the project, and whether ordinary taxpayers will be footing the bill for the development.

The Quebec government has also made it clear that it is furious about the federal loan guarentee, with Alexandre Cloutier, the province's intergovernmental affairs minister, saying that Quebec never recieved that type of help from Ottawa for its hydroelectric development.

But the project was considered to be close to a done deal on Nov. 30, when Prime Minister Stephen Harper signed a term sheet for a $6.3-billion loan guarantee in Happy Valley-Goose Bay. The prime minister was joined by the premiers of Newfoundland and Labrador and Nova Scotia, and executives from their provincial energy counterparts, Nalcor and Emera.

That guarantee will substantially lower the costs of the project.