No change to Muskrat Falls cost or schedule, says Nalcor CEO

The financial bleeding at Muskrat Falls appears to be over, with Nalcor CEO Stan Marshall reporting that for the second year in a row all-in forecast final costs for the controversial project remain static at $12.7 billion, with first power still on track for later this year.

• Nalcor boss reports 'great year', says Muskrat Falls mostly complete
• Labrador's Muskrat Falls price tag now $12.7B: Worse than 1969 Quebec deal, CEO says

The project update was one of the highlights as government-owned Nalcorheld its annual general meetingTuesday in St. John's.

The cost and schedule have remained the same since June 2017, but is still more than $5 billion higher than what was forecastwhen the project was sanctioned in late 2012, and when the date for first power was set for mid-2017.

But he did not rule out any future increases, saying, "I do not anticipate an update during the year."

Nalcor's ability to hold the line is surprising, given the shakeup at Muskrat in 2018.

Nalcor evicted one of the main contractors,Astaldi Canada, from the site last fall, and hired Pennecon to finish off the powerhouse contract.

Marshall said a potential change in contractors was "contemplated" when he gave his last cost and schedule update in mid-2017.

"The transition has gone smoothly," said Marshall.

96 per cent complete

The controversial hydroelectric project includes an 824-megawatt power generating station on Labrador's Lower Churchill, and transmission lines to Churchill Falls and Newfoundland's Avalon Peninsula. Construction reached 96 per cent completion by the end of 2018.

Marshall said testing and commissioning of the Labrador-Island transmission link is ongoing, with power already flowing to Newfoundland over the line from the existing Churchill Falls generating station. The project also includes a subsea link to Nova Scotia called the Maritime Link, which was financed by that province'sEmera Inc.

And by this fall, Marshall said he expects power to be generated from the first of four turbines and generators being installed at the Muskrat power station.

In preparation, Marshall said, Nalcor will begin to raise the water levels in the Muskrat reservoir this summer.

Meanwhile, one of the lingering questions about Muskrat Falls is:what will Nalcor do with all the power it will generate?

Only one-third of the power generated at Muskrat will be needed to supply the island's power needs, while another one-third is committed to Emera for the next 35 years as payment for the company building the Maritime Link.

To date, the remaining power is uncommitted.

Marshall said it will most likely be sold to customers in the Maritimes.

"Over the long term, you're talking the next decade, you've got 1,700 megawatts of coal-fired capacity that has to come out of service (in the Maritimes), and replaced by clean energy. There's not a lot of that around," he said.

Whatprice that power will fetch, and whetherit will be enough to help offset the billions in cost overruns at Muskrat, remains to be seen.

How much reliability is enough?

Marshall also addressed recent concerns about the reliability of Muskrat Falls power.

The original strategy called for the decommissioning of the 500-megawatt Holyrood thermal generating station in 2021. But depending on the level of backup power that ratepayersdemand, and are willing to pay for, Marshall said it's possible the facility could be kept onlinelonger.

Marshall said the Labrador-Island Link proved itself to be very reliable this past winter during what he called record winds, and the system held up in February during what he said were record power demands.

"We can have all the reliability you want if you're prepared to pay the cost. We already said we can't pay the cost of what we're building, so what do you want us to do, build more?" Marshall asked.

Mitigating rates a focus

The cost and schedule overruns at Muskrat have been a hot-button issue in the province for years, with government, Nalcor and the Public Utilities Board trying to devise a plan to avoid a doubling of electricity rates once the project reaches full power.

Marshall said Nalcor is focused on finding "all reasonable measures" to manage the cost of Muskrat, and minimize the impact on rates.

Meanwhile, Nalcor's books show a profit for 2018 of $180 million, up from the $51-million profit realized the year before.

Nalcorhas equity shares in three producing offshore oil projects, and the higher profits are attributed to higher oil prices and production.

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