Canadian Press Buries The Lead On Muskrat Falls Story

Energy Towers

The Canadian Press published a story yesterday about Muskrat Falls which appeared in some version in most Nova Scotia media. Most of the headlines say Nova Scotia will be getting energy for next to nothing from the project. What should be the main concern to Nova Scotians however, is not found in the headline, but is buried a few paragraphs down the story where Nalcor CEO Stan Marshall reveals he is trying to renegotiate the deal – something which should be of concern to every Nova Scotian:

He says Nalcor is talking with Emera about changing the terms of existing contracts for the Maritime Link, the 170-kilometre subsea cable that will eventually carry electricity from southwestern Newfoundland to Cape Breton. (from Global TV version of the CP story)

To start with, it simply isn’t true that Nova Scotia will be getting the energy for free or even nearly free. Nova Scotia is pre-purchasing a block of energy by paying the cost of the subsea cable from Newfoundland to Nova Scotia. Ratepayers in Nova Scotia are expected to see some level of rate increase as a result, something potentially made higher by the deferrals in the government’s current electricity legislation. The net increase to ratepayers is hard to know, as there could be increases and decreases in others parts of the Nova Scotia Power business.

Nova Scotia also has the opportunity to purchase more energy from the project at a price determined through a bidding process, but at a price no higher than the hub market price, minus some of the distribution costs. Nova Scotia essentially gets first crack at buying the energy, at a reduced price compared to the market. This is a good deal for Nova Scotians compared to other potential sources of energy, but it is not free. The net revenue to Newfoundland is similar to what they would get selling it to anyone else in advance (the savings to Nova Scotia is in avoiding some distribution costs which don’t go to Newfoundland anyhow).

In fact, the Nova Scotia Utility and Review Board noted that the price of Muskrat Falls was only marginally cheaper for Nova Scotians than other competing alternatives such as wind. So any talk of changing the deal Nova Scotians have on Muskrat Falls should have already been met with strong and quick opposition from both the Energy Department and Emera. And yet, in some versions of the story, the Canadian Press reported neither responded to requests for comment:

Emera and the Nova Scotia energy department did not respond to requests for interviews. (from CBC version of the CP story)

To the contrary, Nalcor’s Stan Marshall says he is discussing the issue with Emera. We should be asking why Emera is even entertaining such discussions.

In October 2013 I was fortunate to become the province’s energy minister. One of the first things on my plate (even before the official swearing in) was the Muskrat Falls deal. It was quickly apparent there was no way out of the deal entirely, even if Nova Scotia wanted out. The deal was too far along. There was, however, a chance to make improvements in the deal. Those improvements resulted in more fixed costs and less risk to Nova Scotia ratepayers, as well as clarifying exactly how the energy would be priced for Nova Scotia. The changes were ultimately approved by all parties and signed off by the Nova Scotia Utility and Review Board, being made part of the deal through an undertaking by Emera through its subsidiary responsible for the link. I was in Newfoundland for the signing of the final deal and was crucified on talk radio there as being no better than Quebec in the original Churchill Falls deal. You can imagine I didn’t feel it was fair, but my job was to do what I could for Nova Scotia ratepayers in re-opening a deal which has largely been finalized.

That there is any talk about changing the deal and costing Nova Scotia ratepayers more money should deeply concern us all. The fact Emera and Nova Scotia’s own Energy Department didn’t immediately speak out against this, should be equally concerning.