Friday, April 22, 2016

Muskrat Falls Uncertainty Means Tough Questions for Nova Scotia

The Maritime Link is on schedule and on budget according to Emera. But that might not matter if musings by the new chief of Nalcor Stan Marshall that the Muskrat Falls project may not be completed come to fruition. That could mean bad news for Nova Scotia ratepayers.

I am looking into the issue more and will post more as I have more details, but here’s the thing, Nova Scotia has an equivalency agreement with the Federal government which allows the province’s coal plants to continue to operate until the end of their service life, as long as greenhouse gas and other emission targets are reached. Clean energy across the Maritime Link is a big part of achieving this. The Maritime Link will still be on time and budget (according to current estimates) however, energy coming across that link may very well not be green energy. It may instead come from heavy oil fired plants like Holyrood (it burns 6,000 barrels a day of oil). This could put Nova Scotia in violation of the equivalency agreement.

The other critical issue in this is Nova Scotians are paying for the Maritime Link project and then receive a block of energy for free (it isn’t really free but this is the simplest way to describe it, we pay for the infrastructure, and get the energy at no additional cost).

This could mean Nova Scotians would end up paying twice for energy. First for the Maritime Link, and second to get enough green energy to make up for Muskrat Falls not going online. This is also an issue if there is a significant delay in the project.

And it's not as simple as just finding replacement emission-free energy. When I was Energy Minister I met with the Québec government about the possibility of imports from there. They were keen, but only if someone fixed the transmission bottleneck near Moncton. Otherwise there is no way to get significant amounts of energy through. Nova Scotians can’t pay for infrastructure in other provinces, New Brunswick doesn’t have a pressing need to upgrade that part of the system, and Québec has clients in the United States and Ontario and so doesn’t need to spent money on upgrades.

While the Maritime Link agreement was improved to ensure that Nova Scotia is protected, as in any contract, that protection is only to an extent. Newfoundland and Labrador could invoke the Force Majeure provision if the project is not built at all which would wipe out any obligations to Nova Scotia.

Many questions remain: If the project is not completed where does Nova Scotia get its 8-20% of green energy? If the project is significantly delayed how does Nova Scotia meet its federal commitments? Will Nova Scotians end up paying twice for energy? Where would Nova Scotia get replacement energy?

There is more to come on this, but as of today, it seems Earth Day 2016 in Nova Scotia is marked by questions about where our green energy will come from.