AIMS Senior Fellow Gordon Weil is the principal author of Muskrat Falls: Opportunities to Reduce Risk and Enhance Benefits, a commentary about the most significant hydro development in Atlantic Canada in recent years. In addition, we invited Ed Martin, President and Chief Executive Officer of Nalcor Energy, to address the subjects covered in the paper.
The two views on how to maximize the value produced by Muskrat Falls contribute to consideration of the project’s future.
Dr. Weil writes that the Muskrat Falls hydro station in Labrador is the most significant single addition to the Atlantic Canadian electrical grid in recent years. However, he argues the project brings significant risks of higher costs and prices.
He identifies three key risk factors for customers:
1) Rate increases may result from recently announced higher project costs
2) No assurance has been forthcoming that revenues from off-system sales will be used to offset customer charges
3) The events of the past winter in Newfoundland and Labrador reveal problems with system reliability, placing customers at risk of outages or higher costs of replacement power
Dr. Weil proposes that a regional reliability system and pooled use of energy resources, made possible by Muskrat Falls, could mitigate the project’s risks while enhancing its potential benefits. In his response, Mr. Martin suggests an alternate reliability solution. He also maintains Nalcor’s commitment to export market sales from Muskrat Falls as opposed to Dr. Weil’s Atlantic Canada pooled resource proposal.
“Muskrat Falls faced strong resistance at the outset, but there is now little doubt about its ultimate creation,” said Dr. Weil. “I hope that the publication of this discussion will prompt further public discussion about the significant risks and opportunities stemming from the project.” In response, Mr. Martin says, “The Muskrat Falls project is being developed first and foremost for the benefit of Newfoundland and Labrador. Decades of studies and analyses of potential alternative energy sources have continually shown that this project is the lowest-cost way to meet our electricity needs.
AIMS is pleased to be able to provide this important exchange of views. Click here to read the discussion paper and Ed Martin’s response.