ST. JOHN’S, N.L. — The price tag of the Muskrat Falls hydroelectric project in Labrador has been increased by another $1 billion.
Nalcor Energy CEO Stan Marshall says the new price tag for the dam on the Churchill River is now $12.7 billion with financing. That’s up from the estimate last year of $11.7 billion and is about $5 billion higher than when the project was sanctioned five years ago.
The project has been frequently compared to the Site C project in B.C., as both dams are planned to be roughly the same size. After a number of cost over-runs, many critics have pointed out that the same issues could arise in the construction of Site C.
However, last June Energy and Mines Minister Bill Bennett said that Site C differs from Muskrat Falls in that the planning and budgeting for the dam was subject to a rigorous seven-year process. Bennett said that in addition to planning that included an independent panel of experienced contractors, and having the project’s budget audited by KPMG twice, that BC Hydro has built a strong inflation budget into the project.
Marshall took over as head of Nalcor last year and agreed its Muskrat Falls megaproject was a “boondoggle” he would try to fix. He blames the increases on contractor disputes, higher operating costs, a leaky cofferdam, and delays including a worksite occupation last fall by demonstrators concerned about methylmercury.
Marshall says 75 per cent of construction is now done, up from 48 per cent last May. First power from the dam is expected in 2019 at an estimated cost of 23.3 cents per kilowatt hour before tax. That’s up 8.2 cents from when Muskrat Falls was approved and is more than double recent rates paid by consumers.
Marshall and Premier Dwight Ball have said they’ll look at ways to lower those rates to ease average monthly bills that could otherwise go up more than $150 per month.