25 August 2010

Lower Churchill costing: recap

How does $15.5 billion grab you?

Feel any better about $12 billion?

Maybe $11 billion?

Since the subject is back in the public eye yet again, here are some figures  - yet again -  related to the estimated costs for the Lower Churchill project.

1.     Danny Williams’ estimate of costs to build two dams, line to St. John’s and line to Quebec (House of Assembly, May 2010):  $12 billion. Note:  Williams gave a range of $6.0 to $12 billion. 

Based on other information in the public domain, Williams’ estimate of $6.0 billion would be for the dams alone without any transmission infrastructure or for the highly unlikely scenario of one dam and limited transmission infrastructure.  The project description used for these comments is the one contained in NALCOR’s environmental assessment submissions.  It consists of two dams, a line to St. John’s and a tie to Churchill falls and out to Quebec.  There is no plan in public for any connection to Nova Scotia or any other part of the Maritimes.

2.     Cost for two dams, line to St. John’s and connection to Quebec (1998):  $10.5 billion.

3.     NALCOR estimated cost for two dams and line to Quebec (Telegram, August 2010):  $9.5 billion.  Consists of $6.5 billion for two dams and $3.0 billion of transmission facilities.

4.     2009 value of the 1998 project cost estimate, accounting for inflation:  $13.75 billion.

If you accept NALCOR’s current cost estimate for the project – in the Telegram story linked above - you would have to believe that they have been able to negate over a decade of inflation and at the same time further reduce construction costs in a province where government capital works projects routinely go over budget, some by as much as 70%.

Inflation alone would put the 1998 project (that is, essentially the same one NALCOR is proposing) at something around $14 billion.  A line to Nova Scotia would add a minimum of another $1.5 billion to that for a cost of more than $15.5 billion.

5.     Estimated cost of tie to Nova Scotia (Chronicle Herald, Jan 2010 not on line):  $800 million to $1.2 billion.

6.     Estimated cost of tie to Nova Scotia (CBC Here and Now, 24 Aug 2010, not on line):  $1.5 billion.

- srbp -