N.S. premier concerned about potential Muskrat Falls cost increase

Nova Scotia Premier Darrell Dexter says the potential increase in costs for the Muskrat Falls hydroelectric project in Labrador is concerning, but it's still the most effective way of delivering power to his province.

Dexter's comments came ahead of a meeting Thursday with Newfoundland and Labrador Premier Kathy Dunderdale about the proposed development.

The cost of the project has previously been pegged at $6.2 billion, but Dunderdale has said that will likely increase.

When asked whether he was concerned about the possibility of costs for Muskrat Falls escalating, Dexter replied, "Of course."

"We've already looked at that and we've done studies that look at the delivery of power to Nova Scotians," Dexter said in Halifax.

"And the most effective way of doing that is through a project like the Lower Churchill."

As part of the proposal to build the project, a 180-kilometre subsea cable link would be built between Cape Ray, N.L., and Lingan, N.S. The cost of that has been estimated to be $1.2 billion.

Under the conditions of a term sheet announced in 2010 to develop the project, Newfoundland and Labrador's Crown energy company would spend $2.9 billion to build a power generating facility at Muskrat Falls capable of producing 824 megawatts of electricity.

The project would provide Nova Scotia with 170 megawatts of energy annually -- about eight to 10 per cent of the province's total power needs -- for 35 years.