Chris Huskilson, the CEO of Emera Energy, was in Saint John this week to meet with business leaders and drum up support for the $6.2 billion Lower Churchill Falls energy project.

The Halifax-based power company has signed a deal with Newfoundland utility Nalcor Energy to build an 800-megawatt generating station at Muskrat Falls in Labrador.

Huskilson pointed to a map showing a crescent of new transmission lines stretching from Labrador to the tip of Cape Breton. According to him, the project will reduce CO2 emissions, create jobs and lower electricity prices around the region, including in New Brunswick.

"It's important that all those areas, all those systems work together if we're going to make this regional solution happen," he said.

Previous proposals for Muskrat Falls have foundered on the ability to transfer power through Quebec to energy-hungry U.S. markets. This new project, which may yet draw in New Brunswick and P.E.I., bypasses the Hydro-Quebec monopoly.

The deal involves federal loan guarantees, a freshly-inked deal between the Nova Scotia utility and Newfoundland's Nalcor Energy, and the construction of 1,100 kilometres of high-voltage transmission lines, including two underwater cables.

The first will be used to send power from Labrador to Newfoundland, and the second to transfer electricity to Nova Scotia.

According to the terms of the 35-year contract, 20 per cent of the station's output will go to Nova Scotia, accounting for about 10 per cent of the province's energy requirements, in exchange for building the undersea cable to Nova Scotia.

Nalcor will receive 40 per cent of the electricity in exchange for covering most of the project construction costs.

The remainder could potentially go through New Brunswick to U.S. markets.

Critics

But Ed Hollett disagrees with Emera's economic arguments. He's a Newfoundland consultant who has studied the project for years.

Hollet said that during peak months, Muskrat Falls won't meet the demand requirements for Newfoundland and Nova Scotia alone.

"For the rest of the year, theoretically they could, but if they tried to sell it to you at the market cost of producing it, it's way more expensive than you could afford," Hollett said.

Hollett questions whether the markets are there.

"Bear in mind, over in Quebec they've got so much capacity that they haven't been able to sell into the U.S. either. So there's a whole bunch of free, or cheaper, electricity available in Quebec."

Meanwhile in Newfoundland, a group of five high-profile lawyers from all political stripes has formed to oppose the project, saying it could bankrupt their province and that the provincial government ignored its own Public Utilities Board.

Many prominent Quebec politicians have also criticized the project, saying it threatens current energy exports to the U.S.

The project is expected to start generating power in 2017.

Background

In early 2008, N.L. and Nova Scotia began research into the possibility of two new generating stations on the Lower Churchill, at Muskrat Falls and Gull Island.

In November 2010, they formally agreed to move ahead with the first phase, a 825-MW hydro project at Muskrat Falls, which is to be partnership between their respective energy corporations.

The Lower Churchill Project is a two-phase initiative, with the second phase being the construction of a much bigger generating station (2,250 MW) on Gull Island, off of Labrador. There is no firm date for construction on Gull Island.