The government of Newfoundland and Labrador has raised its capital cost estimates for the proposed Muskrat Falls hydroelectric project to $7.4-billion.
That’s up more than $1-billion from when the government announced plans two years ago to build the megaproject in Labrador for $6.2-billion.
The province says the new price tag includes higher capital costs for improvements such as the design of the dam and powerhouse, and stronger transmission towers.
Provincial Crown corporation Nalcor Energy says it’s recommending the province sanction its plan with Nova Scotia private utility Emera Inc. to harness power from the lower Churchill River in Labrador.
But Emera’s cost to fund a subsea transmission link to bring power to Nova Scotia has not been updated and is expected to exceed $1.2-billion.
The new cost estimates were provided by Nalcor Energy even though a federal loan guarantee that could save hundreds of millions of dollars in borrowing costs has not been finalized.
A new report by Manitoba Hydro International says Muskrat Falls would cost $2.4-billion less over 50 years than if Newfoundland relies on its oil-burning plant in Holyrood and other power sources.
The province’s Progressive Conservative government is expected to decide later this year whether to approve the project.
Newfoundland Premier Kathy Dunderdale says Muskrat Falls is the most scrutinized project in the province’s history. But critics say it puts ratepayers at risk for higher energy costs and that the province should meet its power needs with smaller developments.
Opponents also say the government has shrugged off the findings of a joint federal-provincial environmental review panel that found the province failed to show that the project is viable or needed. But the government and Nalcor Energy say that, after exploring other options, they believe Muskrat Falls is best suited to meet the province’s future energy demands.
Opposition parties will have a chance to review the latest cost estimates before a week-long debate is held on Muskrat Falls in the legislature. After that, the government is to decide whether or not to go ahead with the development.