ST. JOHN'S, N.L. - Opposition politicians in Newfoundland and Labrador are raising questions about what a missed deadline means for the planned $6.2-billion Muskrat Falls hydroelectric project.
The province's Crown energy company and Nova Scotia private utility Emera (TSX:EMA) were to have finalized a deal for Muskrat Falls by the end of Wednesday. But on Tuesday, officials for the companies pushed back that date to Jan. 31.
Nalcor Energy CEO Ed Martin said in a statement that both sides are committed to the complex venture but need more time to finish the work required.
Martin was unavailable for comment Tuesday. But in an interview earlier this month, he said that although he was still working toward the Nov. 30 deadline, it was more important to get the project right than to stringently follow the schedule set a year ago by the utilities themselves.
"We have to have things properly documented, properly in place, before we make our decision to proceed," he said.
"Our job is to not get fussed by pressure coming from various areas in terms of time frames and deadlines. Work towards them, but you'll see me consistently say, unless we have the right information in place, we'll wait until we get it."
Martin said he still hopes to break ground in Labrador sometime next spring, pending final approval by the province's Progressive Conservative government. The project has been a major focus for the Tories, who were re-elected to a third straight majority on Oct. 11.
Liberal and NDP critics say the deadline extension raises more questions about a dam and power station they fear are prone to cost overruns and delays.
"It tells me there's some instability already when it comes to this project," said NDP environment critic George Murphy. "We've got them picking dates out of the air.
"If they can't meet a Nov. 30 deadline on this, can they meet any date that they're going to be putting out there for us to believe?"
There was no hint Tuesday that the federal government would announce by Wednesday a promised loan guarantee or equivalent that could shave tens of millions of dollars off the project's borrowing costs.
Natural Resources Minister Joe Oliver said in August that Ottawa would hire financial advisers to help finalize the loan guarantee by Nov. 30.
After repeated requests by The Canadian Press for an interview with Oliver or an update, the federal government released a joint statement Monday with Nova Scotia and Newfoundland and Labrador.
"We will work together going forward on a guarantee that will be completed in a timely manner while ensuring that all due diligence is performed," it said.
A federal financial adviser is in place but the statement did not say when the loan guarantee would be finalized.
Under conditions of a term sheet announced a year ago, Nalcor would spend $2.9 billion to build a power generating facility at Muskrat Falls on Labrador's lower Churchill River capable of producing 824 megawatts of electricity.
A further $2.1 billion would be spent to build a transmission link from Labrador to Newfoundland, $600 million of which would be provided by Emera. The Nova Scotia power company would also fund a 180-kilometre subsea link between Cape Ray, N.L., to Lingan, N.S., at a cost of $1.2 billion.
Under the agreement, Nova Scotia would get 170 megawatts of energy a year -- about 10 per cent of the province's total energy needs -- for 35 years.
The project has been touted as a greener option that would allow Newfoundland to mothball an oil-burning power plant and put the province on a power grid that would be 98 per cent carbon-free.
Excess electricity would be available for sale in other parts of eastern Canada or the northeastern U.S.
Innu protesters and environmental activists in Labrador have said flooding from the development will wipe out traditional trap lines and animal habitats.
Provincial Liberal Opposition Leader Yvonne Jones said she wants to see Muskrat Falls developed, but not this way.
"They've become completely wrapped up in trying to do a deal that takes power to the marketplace without going through Quebec," she said in an interview.
"At the end of the day, it will be the people of Newfoundland and Labrador who ... will pay the most for electricity."
Martin has stressed that Nalcor's so far fruitless efforts to negotiate a transmission deal through Quebec will continue.
Meanwhile, the Quebec government has slammed Ottawa for promising a loan guarantee for Muskrat Falls, calling it an unfair subsidy of a hydro dam.
Nalcor has defended its claim that Muskrat Falls, with a link to the island to meet the province's future energy needs, is the least-cost power option over time. A report by global energy analyst Navigant Consulting backed that finding, but critics said its assessment could not be called independent because it was based on data provided by Nalcor.
The Crown corporation, which is exempt from provincial access to information and privacy laws, says the megaproject is needed because the fast-developing province will face an energy crunch as early as 2015 -- an assertion that a joint federal-provincial environmental review panel said was unproven.
Tom Adams, an independent energy consultant, said Nalcor's assumption that oil prices will steadily rise is a risky premise on which to build a business case.
"There are people who think we'll have $40-a-barrel oil," he said in an interview.
"It seems to me it would be high time to seek some objective comparison shopping on what the alternative costs of incremental supply for the island really are."
