Muskrat Falls 'disaster' may hurt Nova Scotia energy goals

Nova Scotians shouldn't expect greener and cheaper energy any time soon, despite promises linked to the Muskrat Falls project, experts say.

Nalcor Energy CEO Stan Marshall said Friday that the project now behind schedule and over budget by around $4 billion, interest included could lead to higher, not lower, power rates for Newfoundland and Labrador.

"It's a disaster of unprecedented dimensions," energy consultant Tom Adams said Saturday.

That trickles down to Nova Scotia, which sees some of the highest power bills in the country, he said.

"There's been some good intentions, but the announcements [Friday] changed the game," Adams said.

Coal reduction 'depends heavily'

Emera, Nova Scotia Power's parent company, has promised $1.57 billion in rate payerdollars to build Maritime Link and bring 20 per cent of Muskrat Falls-produced energy to the province.

That work is on time to finish in late 2017on budget, the company says, despite Newfoundland and Labrador's Muskrat Falls problems.

"Nova Scotia's coal reduction plan, Nova Scotia's electricity plan depends heavily on Muskrat Falls being a success," Adams said. "It depends on the early delivery of large volumes of reliable energy delivered when Nova Scotia needs it."

Renewable energy target 'awfully tight'

The goal is to be using 40 per cent renewable energy by 2020, which is expected to be that cheaper energy from the Newfoundland and Labrador production site. The company faces fines if that goal's missed,Dalhousie University energy professor Larry Hughes said.

As of Friday,Nalcor expects full production to be running by the second quarter of 2020.

"It's awfully tight," Hughes said.

• Analysis: the upside down assumptions of Muskrat Falls, Churchill Falls

More expensive energy

The Nova Scotia Department of Energy said in a statement Friday thatNalcor's announcement "doesn't impact our ability to meet our target" of 40 per cent renewable energy by 2020.

The delay would mean buying more expensive energy for longer, Hughes argued. Any further delay or missing that 2020 target would bea shame, he said, as in 2015, Emera surpassed its renewable energy target by 1.6 percentage points, according to that year's annual report.

"If [the project] doesn't come in on time, they will roll the cost into the rates," Hughes said.

Shareholders protected

The company has "significant contractual terms in place protecting Emera and [Emera Newfoundland] from any exposure to cost overruns to either of Nalcor's projects and with specific provisions for Nalcor sharing in cost overruns of the Maritime Link Project," its 2015 annual report said.

"Nova Scotia Power and its shareholders have been quite safe all along," Hughes said. "The risk has been to Nalcor, the risk has been to Nova Scotia Power's customers, and there has been minimal risk to Nova Scotia Power."

And at Nalcor, the CEO said the project's struggles mean he'll have to work hard and consult with Emera and Hydro Quebec to find a way to prevent customer costs from going up.

Emera willcontinue collaborating with Nalcor, spokesman Jeff Myrick said Saturday, and that its agreement details "are what they are for now."

'Nova Scotia has to adjust'

This all means the Nova Scotia government may need a backup plan to lower prices and reduce fossil fuel reliance, Adams said.

"Nova Scotia's got a hole in its energy plan, and that hole needs to be filled with somethingsome resource that is reliable and low cost," Adams said. "Otherwise, you're going to just blow out the government's good plans around rate control."

The province has no alternative of equal scale ready to go earlier, as tidalis experimentaland natural gas exploration is stalled, he said. Adams recommended, thoughunpopular, even upgrading coal plants to fill the gap.

"Now that Muskrat Falls has these new uncertainties and has a much less favourable outlook, I'm arguing that Nova Scotia has to adjust."

Nova Scotia Power spokesperson SashaIrving said Maritime Link puts Nova Scotia in an "energy loop" so the province hasaccess to energy generated in Quebec and New Brunswick until Muskrat Falls is running at full capacity.

"There will be power going across that transmission line to the benefit of Nova Scotia customers."

• 'It will not bankrupt this province': Newfoundland Premier on Muskrat Falls update