Time is Running Out for Canada to Sell Hydro to U.S., Connecticut Governor Says

HALIFAX - - New England governors are calling for a swift resolution to transmission and financial issues associated with the potential development of Labrador's Lower Churchill hydroelectric project, with one warning that Canada is "running out of time" to sell power south of the border.

The governors met Monday with Atlantic Canadian premiers in Halifax, where they discussed the proposed $6.2-billion development at Muskrat Falls in central Labrador.

Connecticut Gov. Dannel Malloy said pressure is building in the United States to satisfy renewable energy needs locally rather than wait for Canadian sources of hydroelectricity.

"We have built a substantial desire amongst investors in our state to develop alternative energy — non-Canadian — because of the lack of direct discussion and belief that the product is going to be delivered in a timely fashion," said Malloy.

He said the lack of direct discussion about hydroelectricity with Canadian officials in general is "troubling."

Malloy said he believed importing Canadian hydroelectricity makes sense, but it has to be timely.

"You've got to begin recognizing that time is running out and that you haven't invited all of the players to the table," he said.

Quebec objects strongly to the development of the Muskrat Falls project — specifically a request from Nova Scotia and Newfoundland and Labrador for a loan guarantee — from Ottawa. It argues that such support, if provided by the federal government, would amount to an unfair subsidy and encroach upon provincial jurisdiction.

During the federal election, Prime Minister Stephen Harper promised a loan guarantee or financial equivalent to help develop Muskrat Falls.

Kathy Dunderdale, premier of Newfoundland and Labrador, has said she hopes the government would follow through on its promise by summer's end.

Vermont Gov. Peter Shumlin said he wanted to stay out of the squabble, emphasizing that New England needs as much cheap electricity as it can get from both Labrador and Quebec.

"As a region we need to partner, hold hands and get the job done," Shumlin said in an interview.

He said the most pressing question that needs to be resolved is how to get Canadian power to northern U.S. markets without boosting transmission capacity.

"There is no universal plan to get it there," Shumlin said.

"So you're building hydro, spending billions of dollars to do it and we haven't adequately addressed how we get it to the market."

Nova Scotia Premier Darrell Dexter said the Atlantic premiers were aware of the need to improve transmission systems.

"This is something that we are dealing with here in Atlantic Canada both with the Maritime link and with the enhancements of the transmission between Nova Scotia and New Brunswick," he said.

"We have already made a commitment among the Atlantic provinces to find ways to overcome those problems."

Quebec Premier Jean Charest was invited to the meeting but did not attend, citing a scheduling conflict.

His representative, Environment Minister Pierre Arcand, said he spoke briefly with Dunderdale about Lower Churchill.

Arcand said they agreed a "win-win situation" was needed, but he didn't elaborate.

Dunderdale said she didn't detect any significant change in Quebec's position.

"I can't say that there's been anything substantive happen positively or negatively in the last six months," she said.

Under the conditions of a term sheet announced last year to develop the project, Nalcor Energy, 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.

A transmission link from Labrador to Newfoundland would cost $2.1 billion, $600 million of which would be provided by Emera, Nova Scotia's private utility. That link would span 1,100 kilometres, including a 30-km subsea connection across the Strait of Bell Isle.

A 180-km subsea link between Cape Ray, N.L., to Lingan, N.S., would cost $1.2 billion, all funded by Emera.

Under the agreement, Nova Scotia would receive 170 megawatts of energy annually — about eight to 10 per cent of the province's total power needs — for 35 years.