16 July 2012

Cost Over-Runs and Muskrat Falls #nlpoli

When announced in November 2010, the Muskrat Falls dam, the line to the island the connection to Nova Scotia were supposed to cost $6.2 billion.

The dam and the line to the island were priced at $5.0 billion.  The Nova Scotia line was supposed to cost $1.2 billion.

As it turned out, those numbers were wrong. 

Here’s what we have learned since then.

In its review for the public utilities board, Manitoba Hydro International looked at the projected costs for the dam and the line to the island.  They also looked at the associated costs to replace the Holyrood plant and meet future energy needs over the period Nalcor used to calculate the consumer rates for Muskrat Falls.

That dam, line and new thermal general added up to $6.6 billion.

So right off the bat, Nalcor’s original projection for replacing Holyrood was off by 32%.

Nalcor also left off $1.1 billion in interest on borrowing for the whole project.

That put the total cost for the whole project at $8.9 billion.

Or 43.5% above the original estimate.

Regular readers have seen these figures before.