N.L. hydro project help questioned

Muskrat Falls loan guarantee seeks Ottawa backing for a $6.2 billion hydroelectric project linking Labrador to Newfoundland and Nova Scotia via underwater cables, led by Nalcor Energy and Emera, delivering 824 MW of green power.

Members of a Senate committee are questioning a request from Atlantic Canada for a federal loan guarantee for the central Labrador Muskrat Falls hydroelectric project.

Newfoundland and Labrador and Nova Scotia have asked the federal government for a loan guarantee to help with the $6.2 billion project at Muskrat Falls.

At a federal Senate energy committee hearing in Halifax, B.C. Conservative MP Richard Neufeld said it would be "great" if the federal government would underwrite loans for electrical generation in all provinces.

Supporters also point to opportunities to sell hydro to the U.S. as regional demand grows.

"Why Nova Scotia doesn't underwrite the $6.2 billion project itself?" he asked.

Nova Scotia Premier Darrell Dexter, who has urged Ottawa to back the hydro project, responded that the borrowing rate for Ottawa is much lower than it would be for his province.

In November, N.L.'s Crown-owned Nalcor Energy and Nova Scotia's Emera Inc. agreed on a $6.2 billion plan for the Lower Churchill project to generate 824 megawatts of power at Muskrat Falls on Labrador's Churchill River.

According to the deal, electricity will be moved first to Newfoundland with much of it later relayed through Nova Scotia by underwater cables, though some activists say it should stay in the Maritimes instead of being exported.

In February, Newfoundland and Labrador Premier Kathy Dunderdale said she expects an answer from Ottawa in March regarding the request for a loan guarantee, while Nalcor remained resolute about the Lower Churchill power plan.

The project to harness power from Muskrat Falls in Labrador was billed by former Newfoundland and Labrador premier Danny Williams as one of the last large green energy projects in North America.

Prime Minister Stephen Harper did not make any promises when he visited St. John's in February.

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