Ottawa hands N.L. $5.2 billion for troubled Muskrat Falls hydro project , Innu Nation left in the dark

By Sarah Smellie


JOHN’S, N.L.- Prime Minister Justin Trudeau announced Wednesday a $5.2-billion deal to help Newfoundland and Labrador cover the costs of its troubled Muskrat Falls hydroelectric project.

Trudeau’s visit to St. John’s, N.L., comes amid growing speculation that a federal election is on the horizon, and he is set to announce later in the day the province will become the fourth to strike a deal with Ottawa for a $10-a-day child-care program.

Premier Andrew Furey, who joined Trudeau for the hydro announcement, said the federal funding will help Newfoundland and Labrador avoid a spike in electricity rates that had been feared when Muskrat Falls begins generating power this November.

“Muskrat Falls has been the No. 1 issue facing Newfoundlanders and Labradorians now for well over a decade,” Furey said, adding that he is regularly asked by people whether their electricity rates are going to double.

“We landed on a deal today that I think , I know, is a big deal for Newfoundland and Labrador and will finally get the muskrat off our back,” he said.

The money will help cover costs set to come due when the Labrador project comes online, preventing rate increases that would have been necessary to pay the bills. Ottawa is giving the province $3.2 billion from its share in the Hibernia oilfield off the coast of St.

John’s, while the remaining $2 billion comes from loan guarantees and a $1-billion investment in the province’s portion of the Labrador-Island Link.

Trudeau, whose Liberals hold six of the province’s seven electoral ridings, called the agreement “a big step in the right direction” and said the funding “will ensure financial sustainability of the project while protecting people from major electricity increases.”

Electricity rates in the province will rise when the project comes online, to 14.7 cents per kilowatt hour from the current 12.5 cents, but that’s well below the projected 23 cents that officials had said would be needed to cover the project’s costs. Muskrat Falls was commissioned in 2012 at a cost of $7.4 billion, but its price tag has since ballooned to $13.1 billion.

Ottawa previously backed Muskrat Falls with billions of dollars in loan guarantees, and in December, Trudeau announced he had appointed Serge Dupont, former deputy clerk of the Privy Council, to oversee negotiations with the province about financially restructuring the project.

Furey has likened Muskrat Falls to an “anchor around the collective souls” of the province. Its looming impact on provincial finances is set against an already grim financial situation: the province projected an $826-million deficit in its latest budget, coupled with $17.2 billion in net debt.

The Innu Nation said in a statement Tuesday it has been left in the dark about any rate mitigation announcement, despite being assured it would be kept in the loop and despite the impact on its people of past energy agreements, such as the 1969 Churchill Falls deal with Quebec.

“This time, unlike 1969, our voices will be heard and our rights will be respected,” the statement said. “Our land is not a commodity to be sold to solve (Newfoundland and Labrador’s) economic crisis.”

This report by The Canadian Press was first published July 28, 2021.

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