Nfld. & Labrador

Lower Churchill deal draws praise, criticism

A plan to develop a hydroelectric megaproject in Labrador is being warmly welcomed by businesses, but dismissed by some politicians.
Premier Danny Williams is dismissing reaction from Quebec politicians who dislike federal support for the Lower Churchill megaproject. ((CBC) )

A plan to develop a hydroelectric megaproject in Labrador is being warmly welcomed by businesses, but dismissed by some politicians.

Newfoundland and Labrador's Crown-owned Nalcor Energy and Nova Scotia's Emera Inc. have agreed on a $6.2 billion plan to generate 824 megawatts of power at Muskrat Falls on Labrador's Churchill River. Electricity will be moved first to Newfoundland, with much of it later relayed to Nova Scotia by underwater cables.

Premiers Danny Williams and Darrell Dexter joined other officials in a packed hotel ballroom in St. John's, where hundreds of supporters applauded the move, one of the largest energy projects now underway in North America.

"We're very excited. It's an announcement that's much anticipated by our membership," said Kevin Sullivan, chair of the St. John's Board of Trade.

"We think it's a solid move in economic development for the province."

Williams and Dexter took delight Thursday in underscoring that the deal bypasses Quebec, which had refused to allow Newfoundland and Labrador to move energy from the project across its borders to markets in Ontario and the U.S.

Quebec Premier Jean Charest on Thursday reiterated his opposition to a request now before the federal government for infrastructure support. As well, the Bloc Québécois accused the governing Conservatives Thursday of being "hell bent on penalizing Quebec," and called Williams a hypocrite for criticizing Quebec's requests for aid in other areas while seeking taxpayer assistance on the Lower Churchill.

"We fund projects according to their merit," said Natural Resources Minister Christian Paradis the House of Commons, speaking in French.

Criticism brushed off 

Williams dismissed the political reaction from Quebec.

"They're not satisfied to share in these opportunities. They want to have them alone," Williams said.

'People have been waiting and instead of getting a car for Christmas they got a toaster.'—NDP Leader Lorraine Michael

"But that doesn't work me, and that doesn't work for my province. So, therefore, we will seek alternate opportunities and are delighted to have a great partner in Nova Scotia."

In St. John's, Liberal critic Kelvin Parsons said many questions need to be answered, such as exactly how the Lower Churchill project will be financed, particularly if a request for a federal loan guarantee is turned down.

"What's it costing the taxpayers of this province? Are we able to pay for it? Are we going to benefit from it in the end?" Parsons asked.

Lorraine Michael, leader of Newfoundland and Labrador's NDP, said she will support the deal when it is put to a vote in the legislature, although she is disappointed that the project's Gull Island component — which is about three times as powerful as the Muskrat Falls site — is being left undeveloped for now.

"People have been waiting and instead of getting a car for Christmas they got a toaster," Michael said.

The document signed on Thursday is a term sheet, which will now be drafted into legal language for a formal contract to be signed next year.

Nalcor and Emera are not waiting until then, or for an announcement from Ottawa on whether it will support either a $375-million infrastructure support request or a loan guarantee, the latter of which would make financing the project easier.

The deal will see Emera guaranteed 20 per cent of the energy from Muskrat Falls, with Nalcor using 40 per cent to replace the oil-burning generator at Holyrood in eastern Newfoundland. The partners would then sell surplus energy to other markets.

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