Buying electricity from Muskrat Falls would be cheaper than Quebec: N.S. study
Muskrat Falls, on the Churchill River in Labrador, is shown in a Feb., 2011 file photo. (THE CANADIAN PRESS/Paul Daly)
Published Thursday, January 17, 2013 6:49AM EST
Last Updated Thursday, January 17, 2013 12:31PM EST
HALIFAX -- A study conducted for the Nova Scotia government says buying electricity from the proposed Muskrat Falls project in Labrador would be $402 million cheaper than importing it from Quebec.
The study, released Thursday by consultant John Dalton of Power Advisory, also concludes that building a subsea transmission link to Newfoundland would cost $1.5 billion less than using a mix of wind and natural gas over the 35-year life of the commercial contract for the hydroelectric development.
The projected costs are based on 2017 dollars, which is when the project is expected to be online.
The study uses a computer model to compare the differences in the costs between the three options considered.
Dalton said the Muskrat Falls option would help Nova Scotia avoid transmission tariffs from Quebec, which he described as "relatively high."
He said that despite the relatively small difference in cost between the Hydro-Quebec option and Muskrat Falls, it was "highly unlikely" Nova Scotia would get a better deal in any negotiations Quebec's Crown-owned utility.
Dalton said that assumption took into account Hydro-Quebec's recent contracts signed with jurisdictions such as Vermont. He said while he didn't talk to the utility, he also used data provided by the Nova Scotia Energy Department and Emera Inc., parent of Nova Scotia Power Inc.
"They (Quebec-Hydro) are going to do what's in their best commercial interests," said Dalton. "And that's why we think that our assumptions are conservative and why we've understated the value that Hydro-Quebec would want for a contract."
The study said the greatest uncertainty in generating more power through wind and gas would be the cost of upgrading gas pipelines, estimated to be in the hundreds of millions of dollars.
The study was commissioned last September but Nova Scotia Premier Darrell Dexter only announced it was ongoing last month, prompting the opposition parties to question the independence of the report.
Dalton said the true test of that would occur before the Nova Scotia Utility and Review Board, where he will be cross-examined during upcoming hearings.
"If it was demonstrated that we just convey the opinions of our client then I wouldn't have a career in terms of testifying before different regulatory agencies, and I've done so 20 different times," he said.
Dalton's report follows several others commissioned on behalf of the government of Newfoundland and Labrador, which approved the $7.7-billion project last month.
Critics in that province have questioned the legitimacy of reports that weren't vetted by a public regulator. They also accused the government of ignoring other reports by the province's Public Utilities Board and a joint federal-provincial environmental review panel.
Those reports concluded that Muskrat Falls had not been proven to be the cheapest or even necessary option to meet Newfoundland and Labrador's needs.
As part of the development, Emera would build a 180-kilometre subsea cable known as the Maritime Link, which would ship power from Cape Ray in southwestern Newfoundland to Lingan, N.S., in Cape Breton. That is estimated to cost about $1.5 billion.