05 June 2012

The Kruger Nexus #nlpoli

As an astute reader pointed out in a n e-mail Tuesday morning, the Hebron-Muskrat Falls connection is not really as important these days as the the connection between the future of the Kruger mill at Corner Brook and the plan to develop the Lower Churchill.

Manitoba Hydro International noted that connection in their review of part of the Muskrat Falls project for the public utilities board. In instance, a relatively modest change in the project cost coupled with the closure of the Corner Brook mill, erased the Muskrat Falls advantage:

Also, should the existing pulp and paper mill cease operations, and its generation capacity be available for use on the system (approximately 880 GWh), and should the capital costs of both the Muskrat Falls Generating Station and Labrador-Island Link HVdc projects increase by 10%, the CPW for the two Options would be approximately equal.

Nalcor has no export markets for most of the electricity from Muskrat Falls.

What’s worse, they have been having no luck interesting any of the miners looking at new developments in Labrador to buy onto Muskrat Falls. Natural resources minister Jerome Kennedy said that in the House of Assembly on May 31:

As the member opposite is aware, we are in discussions with numerous companies as to whether or not they want the power. At this point, Mr. Speaker, there is only one company that has signed on the dotted line saying: We need power. …

One of the problems appears to be price:

We do not have the industrial rates developed at this point, Mr. Speaker, but we know that as a Province we have to be competitive with Quebec and Manitoba who produce the lowest rates in the country. …

Kennedy noted later in Question period that “Muskrat Falls will not be built … simply for the mining companies because they cannot afford or will not afford [it].”

Of course, that wasn’t all.  On May 31, Kennedy also confirmed what SRBP readers knew, namely that Muskrat falls can’t meet the forecast need for electricity by these Labrador developments:

Essentially, Mr. Speaker, Muskrat Falls by itself will not be enough to provide potentially all the power that is needed. …

Then there’s the unknown problems Nalcor seems to be having closing a deal with Emera to build a line from Newfoundland to Cape Breton so the Nova Scotians can get free electricity courtesy of the taxpayers of Newfoundland and Labrador.

pollyannaandkathyPut it altogether and you can understand why the crowd running the place these days don’t look very happy, right, [screen cap from cbc.ca/nl].

Listen to the scrum, by the way and you can see that the Premier’s tone of voice matches the look on her face but not the words she starts out with.  Even Vaughn ‘Sunshine Sally” Granter is looking down in the mouth.

Blame it on the Kruger Nexus.

-srbp-

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