My February 27, 2013 at 09:03:05 comment to the above Letter to the Editor by Burford Ploughman:-----"That same Hatch Mott MacDonald fixed link report also concluded that a fixed link could include a power line/transmission link and that by using a fixed link (instead of Nalcor's undersea cable) the cost of a power line transmission link from Labrador to the island would be reduced by $400 million (to say nothing about how much more flexible and cost effective it would be to repair a transmission line that runs through a fixed link or to upgrade the line to accommodate Upper Churchill power). ..........See link to Hatch Mott MacDonald report at www.vision2041.com . ........... Of course, Nalcor do not want a fixed link, because then there would be no need to build the massively high cost, high risk, Muskrat Falls dam and generation facility.......... The dam/generation facility increases Nalcor's infrastructure, and since Nalcor's revenues are calculated and determined based on the the value of its infrastructure, the Muskrat Falls dam/generation facility increases (by billions over 50 years) the amount that Nalcor can extract out of the pockets of low and middle income ratepayers, while a fixed link would benefit both Labrador and island ratepayers/citizens/voters much, much more and save them billions (but would reduce by billions of dollars what Nalcor could otherwise scheme out of the pockets of citizens it is supposed to be serving). .... While it is not surprising that Nalcor is putting its own interest first, it is government's job to put the interest of its citizens first ----- and it is clearly not doing so. A fixed link could save ratepayers/voters $25 billion over 50 years. See www.vision2041.com ."
VISION 2041 Muskrat Falls
for OR for
$3.4 billion ? $8.5 billion ?
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"Inherent in the development of any rational planning process
is the ability, and willingness, to adjust a 'plan' so that
it becomes part of a coherent 'strategy' and
thereby reflects, and meets,
changing realities, and
real needs"
Muskrat Falls
will mean cheap power
for the mining giants of western Labrador ---
paid for AT A HUGE LOSS by
ordinary, captive, island ratepayers
who are forced into a
locked-in, high cost, high debt, steadily increasing
(year over year) higher electricity rate
50-year "take of pay"
contract.
In effect
Muskrat Falls will be built
so that
the potential power needs of the multi-billion dollar
mining giants of
western Labrador will be paid for by you,
by me, by our children and our grandchildren --- for at least
the next 50 years,
while access to, AND THE BENEFIT FROM, near-zero cost
Upper Churchill power is
STIFLED
Natural Resources Canada concluded that if actual island demand turns out to be lower than forecast (low), then Muskrat Falls is NOT the lowest cost option.
An alternative, TRULY GREEN, AFFORDABLE
B R I D G I N G O P T I O N
Below are several (1st and 3rd slide) of more than 30 info-graphic slides that formed part of a Nalcor presentation to the public and media in 2011.
Viewed individually (and quickly) one can easily be left with the impression that the Cash Flow/costs (and perhaps even moreso) the debt servicing costs associated with the Labrador-Island Link transmission line (1st slide below) are generally equal to (and for debt servicing costs) even higher than the total Muskrat Falls/Labrador Island Link combined (3rd slide below).
However, when you carefully compare the two slides, you will see that the viewer would easily form an erroneous opinion BECAUSE the "dollar scale" on the 1st slide (the Labrador-Island Link) is "substantially" DIFFERENT FROM the dollar scale used for the total, combined Muskrat Falls/Labrador-Island Link (3rd slide).
Furthermore, if you looked at the 1st slide information, presented instead, as in the 2nd slide, using the same dollar scale for both slides ( 2nd and 3rd lower slides), the viewer can readily see that the Labrador-Island Link cash flow/cost (2nd slide) is minuscule compared to the total (combined) Muskrat Falls/Labrador-Island Link cash flow/costs (3rd slide) --- about 5 times lower than the Muskrat Falls dams/generation facility alone.
CLICK IMAGES TO ENLARGE
Slide 1.
An alternative, TRULY GREEN, AFFORDABLE
B R I D G I N G O P T I O N
Below are several (1st and 3rd slide) of more than 30 info-graphic slides that formed part of a Nalcor presentation to the public and media in 2011.
Viewed individually (and quickly) one can easily be left with the impression that the Cash Flow/costs (and perhaps even moreso) the debt servicing costs associated with the Labrador-Island Link transmission line (1st slide below) are generally equal to (and for debt servicing costs) even higher than the total Muskrat Falls/Labrador Island Link combined (3rd slide below).
However, when you carefully compare the two slides, you will see that the viewer would easily form an erroneous opinion BECAUSE the "dollar scale" on the 1st slide (the Labrador-Island Link) is "substantially" DIFFERENT FROM the dollar scale used for the total, combined Muskrat Falls/Labrador-Island Link (3rd slide).
Furthermore, if you looked at the 1st slide information, presented instead, as in the 2nd slide, using the same dollar scale for both slides ( 2nd and 3rd lower slides), the viewer can readily see that the Labrador-Island Link cash flow/cost (2nd slide) is minuscule compared to the total (combined) Muskrat Falls/Labrador-Island Link cash flow/costs (3rd slide) --- about 5 times lower than the Muskrat Falls dams/generation facility alone.
CLICK IMAGES TO ENLARGE
Slide 1.
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Slide 2. (The dollar scale in slide 1 above has been adjusted in Slide 2 to match that used in Slide 3. That allows the cash flows/costs for ratepayers for the Labrador-Island Link to be properly compared to Slide #3 (Total MF + LIL). 
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At first glance, the 1st and 3rd slides look similar in magnitude, except the Labrador-Island Link would appear to incur higher debt servicing costs with less free cash flow/dividends
However, when the dollar scales are adjusted so as to be the same on both slides (slide 2 and slide 3), it can be seen that the cash flow/costs for ratepayers for the Labrador-Island Link makes up only about 1/5th of the total cash flow/costs to ratepayers for the total Muskrat Falls dams/generation facility
and the Labrador-Island Link combined
Slide 3.
So, from a ratepayers perspective, it is the MF dams and generation plant that will cost ratepayers most --- by far.
Accordingly (BELOW), instead of building the Muskrat Falls dams and generation facility, if a $3 billion power purchase from Hydro Quebec (the GREEN bar BELOW) were combined with a Labrador Island Link alone, island ratepayers could save 10's of billions of dollars over 50 years. Such an option appears, by far, to be considerably GREENER and LOWER COST and deserves further analysis, consideration and evaluation
Accordingly (BELOW), instead of building the Muskrat Falls dams and generation facility, if a $3 billion power purchase from Hydro Quebec (the GREEN bar BELOW) were combined with a Labrador Island Link alone, island ratepayers could save 10's of billions of dollars over 50 years. Such an option appears, by far, to be considerably GREENER and LOWER COST and deserves further analysis, consideration and evaluation
As shown, a 25-year power purchase from Hydro Quebec, combined with the Labrador-Island Transmission Line/Link would cost ratepayers, even in year one, about $150 million LESS THAN than Muskrat Falls. Furthermore, unlike Muskrat Falls (which escalates at 2% annually), a power purchase from Quebec would mean that rates would continue to decrease so that by year 2041 costs for ratepayers would be about $300 million a year (50%) LESS than with Muskrat Falls --- and with the return of Upper Churchill power in 2041, electricity rates would DECREASE even further --- BILLIONS OF DOLLARS IN SAVINGS over 50 years.
You can see that:
ADVANTAGES
In short --- all of the advantages of Muskrat Falls ---- WITHOUT the risks and weaknesses.
It is time therefore to speak reasonably and collaboratively with Quebec
You can see that:
- over the 50-year Muskrat Falls 'take or pay' contract period, the Muskrat Falls dams/generation facility will cost ratepayers about 5 times as much as a Labrador-Island Link
- the costs for the Labrador-Island Link decreases over time because it is paid for using the industry standard Cost of Service (COS) method, while the cost of the Muskrat Falls dams/generation facility increases because Nalcor is using an escalating supply price scheme escalating at 2% annually that shifts costs to future ratepayers (our children and grandchildren)
- supplying power to the island by way of a power purchase agreement with Quebec (instead of Muskrat Falls) has the potential to save island ratepayers about $500 million per year ($26 billion) over 50 years, and would facilitate access to near-zero cost Upper Churchill power in 2041
ADVANTAGES
- 10's of billions of dollars in savings
- All (and more) of the environmental advantages of Muskrat Falls
- Debt free
- No need to share transmission ownership with Emera
- Can buy energy as needed (no excess power that must be given away)
- Frees up money to build a stronger transmission line and thereby improve reliability
- Frees up money to build additional or higher capacity lines come 2041
- No longer an 'isolated island'
- Provides a 'cooperative' negotiating experience "PRE" 2041
- Facilitates access to Upper Churchill Power come 2041
- AVOIDS Muskrat Falls risks --- such as cost overruns, higher interest rates, etc.
- Provides power for Labrador mining companies (at lower cost to island ratepayers)
In short --- all of the advantages of Muskrat Falls ---- WITHOUT the risks and weaknesses.
It is time therefore to speak reasonably and collaboratively with Quebec
MUSKRAT FALLS ---- $8.5 (?) billion cost (high cost, high risk power, locked-in high rates for an unneeded dam/generation plant and transmission links/lines)
FIXED LINK ALTERNATIVE ? ----- $3.4 billion cost
- Labrador-island FIXED LINK (people, goods and power)
- upgradeable, very low cost Upper Churchill power and TRANSMISSION LINK/LINE to the island, and
- Savings --- $5.1 billion
"...all we...have to do is build a transmission line to meet our needs on the island. Instead, we are committing to a new multi-billion dollar project at Muskrat Falls, a project that will shackle us for generations" -- Alvin Hewlett
Quote from the August 25th, 2012 edition of The Shoreline:
"...If we can bridge the electrical gap between now and 2041, one has to wonder why the rate-payers of this Province need to incur and repay such a multi-billion dollar public debt. If we planned for and built the required transmission facilities, we could take delivery of a portion of the much cheaper Upper Churchill power for use on the post-2041 period" -- Alvin Hewlett
Quote from Des Sullivan's (Uncle Gnarley) blog: ****
“Prior to 2041, when the Upper Churchill contract expires, I suggest we cannot afford to build both a power plant and the Labrador/island link. Not at today’s cost! To be economic, either the power generation or the transmission link, at least one of them, has to be virtually free, Gnarley declared, with emphasis. Otherwise, we should not build Muskrat Falls.“ I have concluded, Nav, that we should kill the power generation plant at Muskrat completely.
“Let’s build only the transmission line now; then Gnarley paused. He was insistent that I understand that, even this proposal, contained a significant qualifier. The qualifier is this, stated Gnarley: Nalcor must purchase access to 250-350 MWs from Hydro Quebec. Together with the balance of ‘recall’ power from the Upper Churchill, of about 80MWs, the cost of which is small, might, and I emphasize might, justify such an expensive transmission link to the island.That idea would certainly reduce the risk of the project and provide power more cheaply than from Muskrat Falls generation, I allowed. “Exactly”, responded, Uncle Gnarley. “We have to decide whether the goal is to build an edifice or serve the public with lowest cost power”. -- Des Sullivan
ALTERNATIVE ? ----- $5.8 billion cost
- Labrador-island FIXED LINK (people, goods and power)
- upgradeable, very low cost Upper Churchill power and TRANSMISSION LINK/LINE to the island,
- RAILWAY to ship iron ore from the iron mines to Goose Bay, and
- Savings --- $2.7 billion
The NL government's 2005 Fixed-link Pre-feasibility Study concluded that a fixed link from Labrador to the island to carry people, goods and power could be built for $1.7 billion........ Nalcor's estimate for its Muskrat Falls' Labrador-island under water/land link is $2.1 billion alone......... Subtract $0.4 billion that the Fixed link pre-feasibility study says can be saved by using the tunnel to carry a power cable, and the TOTAL cost for a fixed link (people, goods and power) capable of carrying Upper Churchill power is $3.4 billion ($5 billion LESS THAN Muskrat Falls)......... That approach requires NO MUSKRAT FALLS DAM/ GENERATION PLANT, allows MUCH CHEAPER (and more) energy transmission from the Upper Churchill, provides REAL REVENUES from low cost existing renewable assets, reduces the provinces/Nalcor's debt payments and operating costs and frees up about $4 billion dollars for further Labrador/island investment...........Even today (16 August, 2012) Yvonne Jones is saying that Labrador NEEDS a railway to move iron ore from the mining companies to Goose Bay (cost $2.4 billion). ........ TOTAL (a fixed link to carry BOTH people and power from Upper Churchill) and a railway from the mines to Goose Bay would cost $5.8 billion (about $2.7 billion LESS THAN the proposed, unneeded, high cost, high risk Muskrat Falls project alone). ....... TOUGH CHOICE.
WHERE IS THE "INDEPENDENT" ECONOMIC ANALYSIS
THAT GOVERNMENT RELIES ON FOR
EXCLUDING
THESE OPTIONS ?
Excerpt from August 13, 2012 Globe and Mail, ("Lacking a clear vision, Ottawa's energy strategy is in crisis") by Barrie McKenna:
"Does it make sense for Newfoundland to develop the Lower Churchill hydroelectric project, then transmit power circuitously to Nova Scotia and U.S. markets?"
A TRAGEDY IN THE MAKING ------ NALCOR'S own documents show that over 50 years, $14.5 BILLION will be needed to cover off Muskrat's debt servicing and operating costs ALONE --- practically all of which will come from captive island ratepayers who will be LOCKED-IN (forced to pay) by way of a Nalcor-imposed 'take or pay' 50 year contract...... more than $6 BILLION of which will be taken out of the pockets of our children and grand children "AFTER 2041". ..... Muskrat Falls will effectively PREVENT island ratepayers (our children and grand children) and businesses from benefiting from the NEAR-ZERO COST Upper Churchill power because they will have been locked into high cost Muskrat power... We should, instead, be increasing our revenues by preparing for and making early and best use of near-zero cost Upper Churchill power ---- not by locking us into high cost, high risk Muskrat Falls power.
Muskrat Falls makes no economic sense whatsoever. It cannot make profit. It shifts money out of the pockets of island ratepayers and puts it into the coffers of Nalcor (and government) ---- with no net gain, only BILLIONS going to international bankers for debt payments, to Nalcor for operating costs, and way-below-cost power to the mining companies and to Nova Scotia--- power provided at a HUGE LOSS that must be HIGHLY SUBSIDIZED by island ratepayers --- A TRAGEDY IN THE MAKING.
NOTICE
In recent days government and the media have said how the Dominion Bond Rating Service (DBRS) considers Muskrat Falls to be a "balanced risk" ---------- NOT SO. ------ DBRS says, instead, that Muskrat Falls is a risk to the province's credit rating.
A lower credit rating for the province in future could cost the province hundreds of millions or billions in increased borrowing costs.
Here is the actual quote from their report (note the difference):
"Development of the lower Churchill River hydroelectric project in Labrador (the Lower Churchill Project) presents more of a balanced risk to the Province’s credit profile as it could increase debt levels, materially so in the case of cost overruns,... (emphasis added)".
What that actually says, is not that the Muskrat Falls project itself is a 'balanced risk", what that says instead, is that Muskrat Falls 'presents ... a ... risk (albeit a 'balanced' one) to the province's credit profile (rating) as it could increase debt, materially so in the case of cost overruns................... BIG DIFFERENCE
The report also goes on to say ---- CLEARLY, that "Depending on the financing structure used and the level of recourse to provincial taxpayers, the rating could be materially affected, especially in the case of significant cost overruns.... (emphasis added)”
Also, check out: http://bondpapers.blogspot.ca/2012/08/not-exactly-there-tom-by-nlpoli.html
and: http://unclegnarley.blogspot.ca/2012/08/the-province-gets-a-finance-minister.html
OIL PRICES
From the Globe and Mail, August 9th, 2012: "The coming oil boom,...":
"Until (2015)... the oil market will be “highly volatile” and “prone to extreme movements in opposite directions.”
After 2015
"...after 2015,... a “glut of oil,” which could lead to a fall, or even a “collapse,” in prices..........A final conclusion to draw from the next oil revolution is... another reminder that what both common sense and expert consensus assure us to be true very often isn’t. It was obvious that efficient markets worked and financial deregulation would stimulate economic growth, until the financial crisis and the subsequent international economic recession. It was equally apparent that we were running out of oil – until we weren’t."
http://www.theglobeandmail.com/report-on-business/industry-news/energy-and-resources/the-coming-oil-boom-and-resulting-environmental-battle/article4472056/
THEREFORE:
- What will a collapse in oil prices do to the province's oil revenue, revenue needed to pay off a Muskrat Falls debt?
- What will a collapse in oil prices do to island electricity users who will be tied (for 50 years) to Nalcor's high cost, 'take or pay', electricity rates?
- What will a collapse in oil prices do to Nalcor's revenue when island electricity users switch to low-cost oil?
- What will a collapse in oil prices do to government revenues when an increase in taxes is needed to stave off default on Nalcor's Muskrat Falls' debt?
- What will a collapse in oil prices do to the province's security of ownership of Muskrat Falls if the much-touted 'loan guarantor' has to step in to avoid default?
- What will a collapse in oil prices do to the province's credit rating?
"Our elected representatives
(our Members of the House of Assembly)
are not sheep."
Members of the House of Assembly,
(instead of being corralled into a 'sanction' or 'no sanction' decision)
must have the option of "deferring"
NALCOR'S Muskrat Falls' project
decision until after
2015
If OUR NL government can give Nova Scotians (by way of the Nalcor/Emera deal) two (2) years to decide on whether or not to 'opt in' to Nalcor's Muskrat Falls project, why is the NL government giving OUR elected Members of the House of Assembly (and through them, NL citizens) only one (1) week to debate, and to make a sanction decision, on Muskrat Falls?
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NEWS ALERT - 03 August 2012
Nalcor's
"best interest",
is not the same as
the people's, and the province's, "best interest"
The Nalcor/Emera deal requires Newfoundland and Labrador to "indemnify" Nova Scotia (cover any losses incurred) if power from Muskrat Falls is lost to Nova Scotia.
Also:
The Emera deal is, in effect, a non-deal -------- Emera has two (2) years to decide on purchasing any power from Muskrat Falls and furthermore, Emera also has an effective veto over sales into the U.S.
Also, Emera's 20% is really much more than that, because the deal allows Emera to save up portions of their 20% during the night-time and in summer when they don't need it and take it during high demand hours and in winter (when, with Holyrood shut down, we ourselves would need it here on the island).
So in winter, when we do need (at times) to have Holyrood operating at its full 466 megawatts (MW) NET capacity (although only on average for about 5.5 days a year) and when Muskrat Falls may only be able to produce A TOTAL of about 500 MW of power ---- Nova Scotia will (it seems) have a priority entitlement to its 20% (equivalent) of power --- which could be high demand hours and during that winter period, 30, 40 or even 50% of Muskrat Falls' capacity ---- leaving insufficient power for island ratepayers --- perhaps only half what Holyrood is now capable of.
How then can it be said that the island "needs the power", when Muskrat Falls could leave us with less power during high demand periods and in winter (when we need it most) than we already have?
It seems therefore that captive island ratepayers are in every way on the hook for this multi-billion dollar boondoggle..
See:
http://www.thetelegram.com/Opinion/Letters-to-the-editor/2012-08-30/article-3063964/Expensive-power%2C-and-nowhere-to-sell-it/1
PROFIT ?
Nalcor cannot sell Muskrat Falls power outside the province (or to the mining companies of Labrador) at a profit --- but only at a huge loss (losses that MUST BE paid for, due to Nalcor's mandatory 'take or pay' 50-year contract, solely by captive island ratepayers).
Of course, Minister Kennedy calls such sales "a profit".
What he calls a 'profit' --- is the much-less-than-cost revenue NALCOR RECEIVES from any outside sales and can only be 'termed' a profit from a NALCOR-only (not from a 'ratepayer') perspective.
Why? Because HUGE (most all) of the power generation and transmission COSTS are paid for, lock, stock and barrel --- by island ratepayers.
So when Minister Kennedy (on CBC's 'On Point') speaks of such sales as generating a 'profit', what that really equates to is a HUGE LOSS for captive island ratepayers (energy that costs island ratepayers 20-40 cents/KWh to generate and supply, can only be sold either outside the province or to mining companies for about 3-6 cents/KWh).
Some profit -------- some project.
Even from a narrow, self-interested Nalcor-only perspective, such sales can only be considered a "profit" if one is blind to the costs paid by captive island ratepayers.
In short, Muskrat Falls can be described only as a "Nalcor first" --- not a "ratepayer first" --- project.
Link to Nalcor/Emera Agreement ------ http://nalcorenergy.com/Formal-Agreements.asp
The following is an excerpt from CBC's website (Aug 2nd):
Energy consultant "(Tom) Adams says money can still be made exporting surplus power from existing facilities, which have been already paid down (the Upper Churchill for example). 'The market for export power into the U.S. has dropped through the floor.'—Tom Adams" But if you’re building new facilities to try and serve the New England market, you’re going to lose your shirt," he said.
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The only 2 independent Muskrat Falls studies (the Review Panel and the Public Utilities Board) concluded that Nalcor had not shown Muskrat Falls to be viable.
And when it comes to Muskrat Falls 'keeping on going and going'? --------- that can only be achieved with captive island ratepayers robbing their children's and grand children's piggy banks to keep feeding Nalcor (and Emera) the $14.5 BILLION IT NEEDS to cover the project's debt servicing and operating costs over the next 50 years alone, $21 BILLION in total cash flow from the pockets of captive island ratepayers (especially our children and grand children) AFTER 2041 alone.
More than $6 BILLION in debt servicing and operating costs AFTER 2041 alone. $35 BILLION in total cash flow (TOTALLY out of the pockets of captive island ratepayers) over the LOCKED-IN 50 year take or pay contract period --- and a project that effectively will weaken the province fiscally, so that pre-2041, we will once again be at the mercy of Quebec ---- when instead we (our children and grand children) should be reaping the benefits of the availability of NEAR-ZERO cost Upper Churchill power (instead, stifled by the FORCED, CONTRACTED, 50-year use of VERY HIGH COST Muskrat Falls power).
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Phased Energy 'STRATEGY' (not a 'Project') -- needed
A LOWER COST, STRATEGIC, ALTERNATIVE APPROACH
Defer construction of a new, unneeded, uneconomic Muskrat Falls dam/generation plant and thereby free up at least $2.9 BILLION (possibly 3, 4, 5 or 6 billion, once DG3 and cost overrun numbers are in)
In 2005 the province commissioned a pre-feasibility study into the construction of a tunnel across the Strait of Belle Isle that could carry both people and power ( http://www.gov.nl.ca/publicat/fixedlink/ )
The pre-feasibility study concluded that "The construction cost of a bored tunnel would be approximately $1.2 billion in 2004 dollars (and) ... incorporating the HVDC cables in the fixed link rather than constructing a submarine installation, reduces the capital cost to an HVDC proponent by approximately $390 M."
Accordingly, on Feb 28, 2005 Premier Danny Williams said that “the possibility remains that a fixed link could be constructed during the completion of projects such as the Lower Churchill hydro development or Highway 138 in Quebec."
On June 6, 2011, the Northern Pen ("Province agrees to study Strait of Belle Isle tunnel concept") reported that "Quebec premier John Charest announce(d)...Plan Nord, which supports the extension of Route 138 by building a link between Kegaska and Blanc-Sablon."
And then, the same 2011 article reported Minister Hedderson as saying --- "The provincial government is moving ahead with its investigations into the feasibility of a proposed tunnel under the Strait of Belle Isle "...........transportation and works minister Tom Hedderson has written to his Quebec counterpart Norman MacMillan confirming Newfoundland and Labrador’s plans to “conduct its own analysis of the socio-economic benefits of a possible fixed link over the next year. “The province may subsequently consider more direct collaboration with the province of Quebec ...,” a spokesman for Mr. Hedderson told the Pen last week (June, 2011)".
Where then, is the 2011, Labrador-Newfoundland fixed-link "Feasibility Study" ?
When a pre-feasibility study points to (and government is on record as recognizing and supporting) the need for a full fledged "Feasibility Study", WHY (and on what basis) has a 'fixed link' OPTION been EXCLUDED from Nalcor's energy project ---- and where is the objective analysis that supports Nalcor's rejection of this OPTION in favour of an UNTIMELY, new, unneeded, uneconomic Muskrat Falls dam/generation project?
Has the "province's" best interest
been replaced by
"Nalcor's" best interest?
It is therefore the Premier and Cabinet's responsibility to assess, determine and make decisions on what is in THE BEST INTEREST of Newfoundlanders and Labradorians --- NOT WHAT IS IN THE BEST INTEREST OF NALCOR.
Nalcor's hydro-electric, Muskrat Falls only, sanction or no sanction development approach, unduly limits and actually prevents our elected officials from determining what is in the "best interest" of the people and the province.
ACCORDINGLY, a more open, comprehensive, integrated, and phased decision-making approach is needed.
If Premier Dunderdale looks ONLY (or even predominantly) to NALCOR for an answer to her question "What is the alternative (to Muskrat Falls)?", she will likely find only what is in the best interest of Nalcor --- not what is in the best interest of the people of the province.
So, if the Muskrat Falls project, as it is currently configured, is not in the best interest of the people, Nalcor is not the place to find that out.
BEFORE any sanction/no sanction decision is made, the province should proceed with a full Feasibility Study of a Labrador-island fixed link and a benefit/cost comparative analysis with the proposed Muskrat Falls dam/generation facility.
2012.07.22
Nalcor's Labrador - island DG2 transmission link cost estimate -------------------------------------------- $2.1 billion
SUBTRACT: Transmission link cost savings from using fixed link ----------------------------------------- $0.4 billion
Net cost of transmission line (excluding cost of fixed link) --------------------------------------------------- $1.7 billion
ADD: Fixed-link cost estimate (including financing and interest during construction) ----------------- $1.7 billion
TOTAL FIXED LINK/TRANSMISSION LINE COST to carry BOTH people and Upper Churchill power ----------------------------- $3.4 BILLION
Skinner's estimated cost for Muskrat Falls dam/generation PLUS Labrador-island transmission link
(excluding Emera's Nova Scotia link) ------------------------------------------------------------------------------ $7.3 billion
SAVINGS ---------------------------------------------------------------------------------------------------------------- $3.9 billion
The only 2 independent Muskrat Falls studies (the Review Panel and the Public Utilities Board) concluded that Nalcor had not shown Muskrat Falls to be viable.
And when it comes to Muskrat Falls 'keeping on going and going'? --------- that can only be achieved with captive island ratepayers robbing their children's and grand children's piggy banks to keep feeding Nalcor (and Emera) the $14.5 BILLION IT NEEDS to cover the project's debt servicing and operating costs over the next 50 years alone, $21 BILLION in total cash flow from the pockets of captive island ratepayers (especially our children and grand children) AFTER 2041 alone.
More than $6 BILLION in debt servicing and operating costs AFTER 2041 alone. $35 BILLION in total cash flow (TOTALLY out of the pockets of captive island ratepayers) over the LOCKED-IN 50 year take or pay contract period --- and a project that effectively will weaken the province fiscally, so that pre-2041, we will once again be at the mercy of Quebec ---- when instead we (our children and grand children) should be reaping the benefits of the availability of NEAR-ZERO cost Upper Churchill power (instead, stifled by the FORCED, CONTRACTED, 50-year use of VERY HIGH COST Muskrat Falls power).
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Phased Energy 'STRATEGY' (not a 'Project') -- needed
A LOWER COST, STRATEGIC, ALTERNATIVE APPROACH
Defer construction of a new, unneeded, uneconomic Muskrat Falls dam/generation plant and thereby free up at least $2.9 BILLION (possibly 3, 4, 5 or 6 billion, once DG3 and cost overrun numbers are in)
In 2005 the province commissioned a pre-feasibility study into the construction of a tunnel across the Strait of Belle Isle that could carry both people and power ( http://www.gov.nl.ca/publicat/fixedlink/ )
The pre-feasibility study concluded that "The construction cost of a bored tunnel would be approximately $1.2 billion in 2004 dollars (and) ... incorporating the HVDC cables in the fixed link rather than constructing a submarine installation, reduces the capital cost to an HVDC proponent by approximately $390 M."
Accordingly, on Feb 28, 2005 Premier Danny Williams said that “the possibility remains that a fixed link could be constructed during the completion of projects such as the Lower Churchill hydro development or Highway 138 in Quebec."
On June 6, 2011, the Northern Pen ("Province agrees to study Strait of Belle Isle tunnel concept") reported that "Quebec premier John Charest announce(d)...Plan Nord, which supports the extension of Route 138 by building a link between Kegaska and Blanc-Sablon."
And then, the same 2011 article reported Minister Hedderson as saying --- "The provincial government is moving ahead with its investigations into the feasibility of a proposed tunnel under the Strait of Belle Isle "...........transportation and works minister Tom Hedderson has written to his Quebec counterpart Norman MacMillan confirming Newfoundland and Labrador’s plans to “conduct its own analysis of the socio-economic benefits of a possible fixed link over the next year. “The province may subsequently consider more direct collaboration with the province of Quebec ...,” a spokesman for Mr. Hedderson told the Pen last week (June, 2011)".
Where then, is the 2011, Labrador-Newfoundland fixed-link "Feasibility Study" ?
When a pre-feasibility study points to (and government is on record as recognizing and supporting) the need for a full fledged "Feasibility Study", WHY (and on what basis) has a 'fixed link' OPTION been EXCLUDED from Nalcor's energy project ---- and where is the objective analysis that supports Nalcor's rejection of this OPTION in favour of an UNTIMELY, new, unneeded, uneconomic Muskrat Falls dam/generation project?
Has the "province's" best interest
been replaced by
"Nalcor's" best interest?
- SAVE BILLIONS --- DEFERRING THE SPENDING OF $2.9 BILLION (OR $4, $5, $6 OR MORE BILLION) on an unneeded (and uneconomic) dam and generation plant would save more than enough to pay for the estimated cost of construction of a tunnel across the Strait of Belle Isle
- Diverting the billions destined for the Muskrat Falls dam/generation plant to the construction of a tunnel would SUBSTANTIALLY reduce overall debt, debt servicing and operating costs and meet both our transportation and power transmission requirements
- A tunnel would provide a real benefit not only to Nalcor (see below), but to Labrador, to the Northern Peninsula, to the people of the Province and to the country as a whole
- A tunnel provides an assured economic, social and political benefit to Labrador and to the island, especially to rural Labrador and Newfoundland, irrespective of whether or not the island has a need for more power
- Additional power could be provided from the already existing, already paid for, NEAR-ZERO COST Upper Churchill to parts of Labrador and the island in an as-needed, affordable, phased manner
- A tunnel would allow for, as required, the future transmission of Upper Churchill power (on an as-needed, more economic, phased basis) --- with power cable transmission upgrades when and as required
- Such a phased approach would, in real terms, allow for an 'alternate route' --- and equally important --- an 'alternate market' AND POTENTIALLY A REAL REVENUE GENERATOR for NEAR-ZERO COST Upper Churchill power
- In preparation for pre-2041 discussions with Quebec, such a phased approach (unlike Muskrat Falls) would significantly strengthen the province's bargaining position with Quebec
- Muskrat Falls, instead, displaces any domestic power need and eliminates the island as a potential alternative market for Upper Churchill power. Muskrat Falls thereby strengthens Quebec's hand and affirms the Quebec route (come 2041) as THE ONLY ALTERNATIVE to a renegotiated Upper Churchill contract (the province will again be forced to sell to Quebec for PENNIES)
- A phased (tunnel first) approach would not be a canceling of government's desire to shift non-renewable oil revenues to a renewable, Labrador sourced, hydroelectric plan
- A phased (tunnel approach) would instead be totally consistent with the province's desire to move from non-renewable to renewable energy and to provide some REAL, badly needed, renewable revenue)
- A phased planning approach would be a "rational planning refinement" to Danny Williams'/Nalcor's current Muskrat Falls configuration, and one which reflects current shale oil/gas, world economic, and other realities --- and would allow the Dunderdale government to "adjust" the original Muskrat Falls "concept" plan and move it, in a phased, more affordable, economically viable way towards a plan that can and will provide an immediate and permanent nation/province-building benefit --- first and foremost to the people of the province ---- and also to the country as a whole
- A phased approach would also provide the potential for meaningful and full participation by both the government of Quebec and the federal government
It is therefore the Premier and Cabinet's responsibility to assess, determine and make decisions on what is in THE BEST INTEREST of Newfoundlanders and Labradorians --- NOT WHAT IS IN THE BEST INTEREST OF NALCOR.
Nalcor's hydro-electric, Muskrat Falls only, sanction or no sanction development approach, unduly limits and actually prevents our elected officials from determining what is in the "best interest" of the people and the province.
ACCORDINGLY, a more open, comprehensive, integrated, and phased decision-making approach is needed.
If Premier Dunderdale looks ONLY (or even predominantly) to NALCOR for an answer to her question "What is the alternative (to Muskrat Falls)?", she will likely find only what is in the best interest of Nalcor --- not what is in the best interest of the people of the province.
So, if the Muskrat Falls project, as it is currently configured, is not in the best interest of the people, Nalcor is not the place to find that out.
BEFORE any sanction/no sanction decision is made, the province should proceed with a full Feasibility Study of a Labrador-island fixed link and a benefit/cost comparative analysis with the proposed Muskrat Falls dam/generation facility.
2012.07.22
Nalcor's Labrador - island DG2 transmission link cost estimate -------------------------------------------- $2.1 billion
SUBTRACT: Transmission link cost savings from using fixed link ----------------------------------------- $0.4 billion
Net cost of transmission line (excluding cost of fixed link) --------------------------------------------------- $1.7 billion
ADD: Fixed-link cost estimate (including financing and interest during construction) ----------------- $1.7 billion
TOTAL FIXED LINK/TRANSMISSION LINE COST to carry BOTH people and Upper Churchill power ----------------------------- $3.4 BILLION
Skinner's estimated cost for Muskrat Falls dam/generation PLUS Labrador-island transmission link
(excluding Emera's Nova Scotia link) ------------------------------------------------------------------------------ $7.3 billion
SAVINGS ---------------------------------------------------------------------------------------------------------------- $3.9 billion
