* Loan guarantee for C$6.3 bln, total project cost C$7.4 bln
* Project may lower power rates in Newfoundland, Nova Scotia
* Quebec protests the deal
OTTAWA, Nov 30 (Reuters) – Canada’s federal government will
provide a loan guarantee of up to C$6.3 billion ($6.3 billion)
for Lower Churchill River hydro-electric projects in Labrador in
a move that could cut the cost of power to residents of two
Atlantic provinces.
The loan guarantee, announced by Prime Minister Stephen
Harper on Friday, is intended to give new impetus to the
long-stalled Muskrat Falls hydro-electric generation station
near the Quebec border in Labrador and to three transmission
projects.
The loan allows the project proponents to seek financing at
lower costs, eventually making electricity cheaper for residents
of the provinces of Newfoundland and Labrador, and Nova Scotia.
“The federal loan guarantee will lower the costs of
borrowing for the proponents, with projected savings of over a
billion dollars for ratepayers in Newfoundland and Labrador and
Nova Scotia,” Harper’s office said in a statement.
The guarantee, which Harper promised in the 2011 federal
election campaign, will remain valid for 35 to 40 years. The
term sheet for the deal was signed by Ottawa, the premiers of
Newfoundland and Labrador and Nova Scotia and by the two energy
companies involved.
Newfoundland and Labrador has been looking since the 1970s
at harnessing the Lower Churchill River, which can produce more
power than the province needs, but it did not start active
development until the last decade.
In November 2010, Newfoundland government-owned Nalcor
Energy and Nova Scotia-based Emera Inc announced plans
to develop the 824-megawatt Muskrat Falls plant and related
transmission lines.
The estimated cost of the projects is C$7.4 billion. Muskrat
Falls is expected to start operations in mid-2017, generating
4.9 million megawatt-hours (MWh) annually.
Nalcor will build and own 100 percent of Muskrat Falls and
will also build one of the transmission lines through a joint
venture with Emera.
It will build the Lower Churchill project in two phases,
the first at Muskrat Falls and the second 2,250-MW phase at Gull
Island.
The cheap and clean power produced at Muskrat Falls could
also attract buyers in New England.
The project plays into a longstanding dispute between
Newfoundland and Quebec over energy development on the Churchill
River. The dispute spurred Newfoundland and Nova Scotia to
become partners to find a way to deliver power to other markets
while bypassing Quebec.
Quebec’s new separatist government immediately criticized
the loan guarantee, saying Ottawa was giving preferential
treatment to one region.
The federal government said the Muskrat Falls facility would
reduce up to 4.5 million tonnes of greenhouse gas emissions
annually.
