Muskrat Falls: the good, the bad and the who knows

Joey Smallwood has been roundly criticized for having saddled Newfoundland and Labrador with a bad deal over Churchill Falls. His mistake wasn’t in doing the deal, but in not consulting with enough folks such that he could have avoided its worst elements. Is Nova Scotia about to do the same thing with the Muskrat project?

Newfoundland is in a much better position to run the risks of this undertaking than Nova Scotia. First, it is an asset of that province, the transmission lines ultimately revert to it, and it has financial f lexibility that Nova Scotia does not enjoy. Oil and mineral royalties in Newfoundland could be used, if necessary, to subsidise power rates or cost overruns. In Nova Scotia, it is the ratepayers who will have to bear such risks and they are already paying the highest electricity rates in the country.

What’s the rush? Electrical consumption is not increasing at a rate such that Nova Scotia needs to confirm new energy sources today. Any decision whose impact will drive electricity rates for the next 35 years needs to be carefully considered. And that decision should be understood by all Nova Scotians.

We should first consider the alternatives, starting with the premise that we need more renewables and cleaner sources of energy so as to reduce our carbon footprint. At the same time, we know that even if we could solve the base power issue with wind, we would not want all our energy coming from wind–it’s just too damned expensive. That cost is not apparent to Nova Scotians at the moment because it constitutes such a small percentage of total energy production. We need to be cognizant of the implications of imposing higher rates on our economy. Proponents of Muskrat have espoused the benefit of a stable rate future and I appreciate that that’s an asset, but not if that stability imposes rates which are uncompetitive and we lose any ability to attract energy intensive companies, or keep those we have.

In fact, we have imposed our own element of urgency on the decision-making by way of an arbitrary obligation to produce 40 per cent of our energy from renewable sources by 2020. That’s an admirable goal, but it cannot be made absent consideration for the costs of meeting such a target. It is not as if Atlantic Canada is a material contributor to greenhouse gas emissions or is even symbolic for what the world is doing wrong in this regard. Admittedly we need to do our part, but without trouncing on both industry and the consumer.

Apparently, we have eliminated the prospect of asking Hydro Quebec to offer a solution. I wonder why it is alright for Nova Scotia to enter into a deal with a company owned by the Newfoundland government, but not one owned by Quebec? And why is renewable energy produced by a dam in Quebec different than that produced by a dam in Labrador? I don’t get it.

We have also, apparently, eliminated the nuclear option. I am well aware of the disrepute into which the nuclear industry has fallen post-Fukushima. But anybody who knows what happened at the Daiichi plant understands this was a classic human screw-up. The generators which should have, and could have, prevented the meltdown were left helpless because they were in a spot overwhelmed by the tidal wave. Management had been told multiple times to locate the generators in an elevated area. A huge portion of the world’s population draws their energy needs from nuclear without incident. China has over 50 nuclear plants now under construction. Do they know something we don’t? They very well might. The technology is changing quickly, but we haven’t given it a moment’s notice.

Many other jurisdictions are building natural gas fired generating capacity. Gas is often cited as being a much cleaner fuel than oil and coal, and more cost effective too. Admittedly, it is not as clean as hydroelectricity, but how do they cost compare and what are the different environmental consequences?

I do not believe we have given such questions and options due consideration. Muskrat Falls may indeed be the best option, but I would like to arrive at that decision after having had a really thorough understanding of the options and attendant costs. Given the current course we are on, we will only know if this was the right option when it will be too late to do anything about it. Isn’t that the mistake Joey made?

John Risley
About John Risley

John Risley, president of Clearwater Fine Foods Inc., regularly engages in policy debate as a member of the World Presidents' Organization, the Chief Executives Organization and as a director on the Board of the Canadian Council of Chief Executives.

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