Not to rain on anyone's parade, but Nalcor's partner in the proposed Muskrat Falls development is losing the confidence of the world's per-eminent credit rating agency.
Emera and its subsidiary, Nova Scotia Power Inc, are at risk of losing their long-term credit rating from the current “BBB+” ranking. Standard & Poor’s Ratings Services has revised it's outlook for both companies from “stable” to “negative.”
Nova Scotia is trying to eliminate it's dependence on coal fired electricity. The goal is to reduce that reliance to 40% by 2020. The answer, renewable energy. While the company has been retrofitting some generating stations with natural gas, a big part of Emera's electrical future is electricity generated and transmitted from Labrador via the proposed Maritime Route.
Emera and Nalcor have not been able to reach a final agreement on the $7 Billion Muskrat Falls, Labrador-Island Transmission Link and Maritime Transmission Link to Nova Scotia. In November 2010, Nalcor and Emera signed a term sheet for Phase One of the lower Churchill development. They failed to come to an agreement within the year proposed by the original agreement. An extension to January 31st, 2012 failed produce a deal. That deadline has come and gone as well.
It is going to be harder and more expensive for Emera to borrow the funds it needs to participate in this huge capital project. Perhaps, that explains why Emera spokeswoman, Sasha Irving made this statement to the Chronicle-Herald: " (she) called the Standard and Poor’s change in outlook for both companies “a call or request for clarity and possibly co-operation on the path forward for provincial and federal energy policies.”
The PUB report has already slowed down this freight train. The Government has been forced, rightfully, to concede to a debate and to carry out studies on alternative power. Through the PUB, grass roots democracy has succeeded where parliamentary democracy has failed.
Nalcor and the province should proceed with a transmission line from the Upper Churchill because it makes sense to access the recall power. If the demand for power on the island and Labrador grows, we will have the time to meet our long term needs in a more responsible fashion.
The Lower Churchill offers us great potential for the future, but I remain to be convinced that we can afford to do it at this time, as proposed by Nalcor. We still need a CPW economic analysis of the project which includes the Maritime link, following the same methods as used within the PUB submission. This would include any loss of revenue associated with Recall power not being wheeled through Quebec, any additional island generation required to meet the NS commitment (I still think,as proposed, Nova Scotian's will potentially benefit from Bay d'Espoir hydro generation, as well as Muskrat Falls), and finally the potential upside from a realistic export sales of excess power.
Once again, I fall back to my original position , the development of the Lower Churchill should be in the form of an East-West pan-Canadian hydro grid which will assist Canada in meeting its international greenhouse gas treaty obligations, synchronize federal provincial energy policies and drive industry.
All that is lacking is the political will.