Nfld. & Labrador

Muskrat Falls 'lowest cost alternative' says former Nalcor chair

The former chair of Nalcor Energy says another agreement with Quebec was not an option, and other power sources were not reliable, when the province set out to build Muskrat Falls.

Ken Marshall says other options would cost as much, or more, in the long run

Muskrat Falls, under construction in December 2016. (Nalcor)

The former chair of Nalcor Energy's board of directors says Muskrat Falls was the "lowest cost alternative, by a long shot" for meeting the power needs of customers in Newfoundland and Labrador.

Ken Marshall told CBC Radio's Crosstalk on Tuesday there were no better options on the table when the provincial government made the decision to sanction the project.

He said another agreement with Quebec to buy power was "not an option." 

He also said that other sources of power, such as wind, are not reliable and something had to be done to repair or replace aging assets in the province — like the 50-year-old oil-fired generating unit at Holyrood.

"There were alternatives that would not have cost $11 billion in the short run but would have cost a lot more than $11 billion in the long run," Marshall said.

"We could have upgraded Holyrood, burned natural gas, instead. It would have cost billions and you'd have been buying power and spilling it. You'd be buying gas. You'd still be a dirty provider and you know that is not an option."

Ken Marshall, a cable executive who chaired the board of directors at Nalcor, says Muskrat Falls is still the best option for power development in this province. (CBC)

Marshall, who resigned from Nalcor along with other directors in a dispute with the Dwight Ball government over the leadership of CEO Ed Martin, said the rationale for the Lower Churchill Project megaproject is not well understood.

"The economics of Muskrat Falls were built without any recognition for the excess power that's going to be sold — so there's a lot of benefits here that people don't see," he said during a discussion with Ian Lee, from the Carleton University School of Business.

N.L. 'got taken to the cleaners'

"I'm not disputing that Newfoundland and Labrador needed energy in the future," replied Lee, a critic of the Muskrat Falls deal.

"What I'm saying is that they could have sourced it from Quebec [at a lower cost] ... They chose not to."

At five cents per kw/h from Quebec, compared to 22 cents from Muskrat Falls, Lee said "Newfoundland and Labrador got taken to the cleaners ... It's the underlying economics we have to confront."

Ian Lee, who's with Carleton University in Ontario, says the costs of Muskrat Falls are getting so high that the federal government will have to offer some sort of financial assistance. (CBC and Nalcor Energy)

He said a transmission line could have been built to bring the power to the island, without incurring the costs of a generating station.

"Just because there is going to be green power, doesn't make this specific project the best," Lee added, suggesting that the province "cut off its nose to spite its face" because it is angry at Quebec over the Upper Churchill contract.

"Disingenuous," Marshall shot back, citing the history between the two provinces, as well as lawsuits and appeals now before the courts.

He said energy rates in the province will go up with or without Muskrat Falls.

With files from Crosstalk