Muskrat Falls costs up again, project further behind schedule

The cost of the Muskrat Falls project has gone up and has fallen even further behind schedule, Natural Resources Minister Siobhan Coady told the legislature Tuesday.
Natural Resources Minister Siobhan Coady says the cost of the Muskrat Falls project has gone up and has fallen even further behind schedule. (Gary Locke/CBC)

The cost of the Muskrat Falls project has gone up again, and the project has fallen even further behind schedule, Natural Resources Minister Siobhan Coady said Tuesday.

An interim report from EY, formerly Ernst and Young, indicates the hydro project is behind schedule and is costing more than what was originally forecast.  

"Right now we are doing a re-baselining of the cost and schedule as indicated," Coady told reporters outside the House of Assembly Tuesday.

The EY report recommends governance and oversight be re-evaluated by the provincial government.

It also states the Muskrat Falls generation contract is significantly behind schedule and that the current contingency level is low for the project's current stage.

"We certainly want to ensure that the effective governance is there, the effective oversight is there, that we look at contingency in a proper light," Coady said.

"So those are the kinds of things that we want to ensure that we have in place. The Labrador island link is something that is going along well, the Labrador asset is going along...we wanted to get into the cost and the schedule of those."

Coady said discussions still ongoing between Nalcor and one of its contractors.

"And that will inform, of course, the total cost. We want to make sure that we understand the budget completely and know what exactly this is going to cost the people of the province of Newfoundland and Labrador so we want to get to those numbers as well."

Coady expects it will be the end of May before the government receives a report confirming the numbers for two of the three components of the project.

"It may take a little longer for the Muskrat Falls generation because there are ongoing talks between Nalcor and the contractor, Astaldi," she said. "So that may take even a little longer…and that's why we think it was very important to get the interim report out there."

The reports from EY cost about 1.6 million dollars, Coady said.

While she said this report is just an interim one, she did not break down the cost overruns.

A prior forecast from September 2015, which indicated the project was another 10 per cent over budget and that the project wouldn't be generating first power until 2018, was determined by EY to be unreasonable.

"What they've indicated is that there is schedule slippage and there are cost overruns for a number of the components of the project, in particular the Muskrat Falls generation," said Coady.

Despite costs going up and schedules lagging, Coady stands behind Muskrat Falls.

"Because of the numbers of contracts that are involved, because of our obligations under the loan guarantee, because of our obligations to Nova Scotia, it's not in the province's best interest [to cancel the project]," Coady said.

with files from Peter Cowan