By Ryan King
Community News Reporter
ST. JOHN’S – Last Monday, Feb. 14, Premier Andrew Furey announced that the province, NL Hydro, and the federal government had signed term sheets for the $1 billion federal loan guarantee and the capital restructuring of Muskrat Falls and the Labrador Transmission Assets. Also included in the deal is a $1 billion investment by Ottawa towards the province’s portion of the Labrador Island Link. The deal between the three parties will ensure that electricity rates will not double.
“This is an historic deal for the people of Newfoundland and Labrador, and for all Canadians,” said Furey. “We can all breathe a sigh of relief knowing our province will now have affordable power rates once Muskrat Falls comes online.”
MP Gudie Hutchings (Long Range Mountains), Minister of Rural Economic Development, said that the deal will improve the economic well being of the province.
“Supporting this project, and others like it, will not only contribute to Canada’s plan to address climate change and affordability, but it will also have a positive impact and a lasting effect for Newfoundlanders and Labradorians for generations to come.”
MP Seamus O’Regan Jr. (St. John’s South – Mount Pearl), Minister of Labour, also touted the benefits of the deal.
“Our hydroelectric resources can help power Atlantic Canada, electrify our regional economy, and lead the fight against climate change. This deal positions us to do just that.”
Though this announcement concerned the signing of term sheets, the province will sign the final agreements in the coming months. The financial restructuring included in the deal will alter the province’s obligations to reduce equity and debt-related cash flows. It will also leverage the Federal Government’s AAA credit rating to keep financing costs low, and they will also be able to provide rate relief to customers on the island. The province will maintain 100 per cent ownership of the Muskrat Falls project, the Labrador Transmission Assets, and retain control of the Labrador Island Link.
On July 28, 2021, Premier Furey and Prime Minister Justin Trudeau had announced an agreement in principle for the financial restructuring of the Lower Churchill Projects, reducing the province’s cost of financing and to improve its long term sustainability.
“That agreement is more than just a principle today,” Furey said. “It is a reality for the people of Newfoundland and Labrador. We’ll make it official and sign. More importantly what it represents, and that is the next step for all of us, all of you at home, to emerge from out under the dark long shadow of Muskrat Falls. While campaigning throughout the province, and since I’ve been elected, and I’m sure everyone will tell you the same, Muskrat Falls and the looming worry of doubling power bills has been a top concern of almost every single citizen in our province.”
The Muskrat Falls Project itself involved the construction of an 824-megawatt hydroelectric generating facility, which will produce 5 Terawatt-hours annually over the 1,600 km of transmission lines across the province. Payments for this third federal loan guarantee will start in 2037. Furey asserted this was not just putting financial burdens on residents in the future.
“First of all, I wouldn’t have got the first loan guarantee, but we are where we are. We don’t have a time machine. We have to deal with the realities of the contracts as they exist. What this will allow us to do is leverage the AAA rating of Canada to pay off loans that are due, frankly, in this decade, and allow us to pay them off at cheaper rates. We all recognize that there’s some of the lowest interest rates ever in our history right now, so we’re capitalizing on that while paying for it,” said Furey. “Like a mortgage down the road. But this is something that will have to happen in order to prevent rates from shooting up to over 23 cents a kilowatt-hour. Frankly, the impact of that far, far exceeds the impact of what we’ve done today by a long shot.”
Matters with the Innu Nation had not been fully resolved at the time of the announcement. Furey addressed concerns that the deal could be complicated by being brought to court.
“We’ve had reasonable conversations with the Innu Nation over the last few weeks recognizing that this was coming to a final decision point and a final event. So they knew this was coming, and I’ve talked to the Grand Chief myself. We’ve extended our process agreement that was signed, and we’re in facilitation, but we’ve agreed not to talk any further about the discussion points between the government of Newfoundland and Labrador and the Innu Nation.”
PC Leader, MHA David Brazil (Conception Bay East – Bell Island), held a media availability later that same day. He said that the announcement was a step in the right direction.
“You know this is a good day. It’s a good next step in rate mitigation. It’s been a number of years coming and there’s still some work to be done here, but we do acknowledge the federal and provincial governments for getting us to the next stage. People in Newfoundland and Labrador need to be reassured that the rate mitigation will happen and will happen at the level that people expected when the discussions around Muskrat Falls and the need for hydroelectric power and reliable power was put in place, at 14.7 cents. People realized there still will be an increase in their electricity bills, but stability and accessibility to reliable electricity and doing our part for the environment is important. But people need to be reassured that this will happen, the 14.7 will be the rate that will be paid.”
When rates do rise, Brazil said the government should be there to support its citizens.
“Just as important, they need to know that subsequently every year there won’t be dramatic increases here that will null and void the fact that we’re at a point now where people can find this to be affordable. For those who are going to have to change, obviously their income levels, when it comes to being able to have disposable income to cover off the increase that’s going to come. There needs to be some support from government. We would endorse government coming up with programs that would particularly address needs of seniors on fixed income or lower income individuals to offset the individual costs here.”
Brazil also had criticism regarding the loan itself.
“We were hopeful, and we would have liked some other arrangements here, where more cash flow would have been from the federal government here versus a loan process. That way we would have kept our debt down, we would have to borrow less, and it would have gave the PUB (Public Utilities Board) more flexibility to ensure that future increases would be minimal in comparison.”
MHA Tony Wakeham (Stephenville – Port au Port) had a similar response.
“I think the deal itself is a step in the right direction. We didn’t learn anything new, really, from the most recent announcement that we didn’t hear over the summer. But having the document signed, actually signed, is a step towards accomplishing the rate mediation for the province. This deal is an endorsement for the project from the federal government, which is positive for the economy of Newfoundland and Labrador in the long term.”
He added that there are still details to work out on this current deal.
“The rate mitigation presented to the province this week still needs the approval from the House of Commons. And there are still questions about how the Hibernia dividend agreement will play into the deal, especially if the future of our oil and gas industry is up in the air due to the divisions in the Trudeau cabinet, but we remain hopeful that these issues can be addressed. But it’s incumbent on the government to be transparent with the people of the province that the next steps are taken for this deal.”
The matter of rate mitigation is essential to Wakeham, who has been quite vocal about the soaring prices of goods and services throughout the province as of late.
“I certainly heard lots of about the cost of living in the province and the significant increases,” said Wakeham. “That have happened as a result of the increase in the price of oil currently, we’ve seen at the pumps. Really noticeable at the pumps. And certainly, if you’ve gone into any grocery store you’ve also seen it.”
Wakeham believes that the government needs to step in with programs to help those most affected, like seniors on fixed incomes.
“You know we’ve had home rebate programs in the past that have actually helped people, and the formula there. You don’t need to reinvent anything. You’ve just got to reintroduce it. And that is one example of something that could be used to help people – seniors, or people on fixed incomes or others. The government needs to do something. Don’t wait for a budget to make announcements. The heating season is right now. This is when people need their help.”
The announcement going ahead with matters still unresolved with the Innu Nation is also a concern for Wakeham.
“When the Furey Liberals have not made the appropriate efforts to consult and include our Indigenous population into the decision-making – I mean, the Premier left the Innu Nation out of their initial announcement and kept them in the dark. And we’ve just heard again from the Innu Nation with the announcement that there are still unaddressed concerns that they have about the deal. So we don’t want this to end up going back into the courts again. So I think the Premier really needs to listen to the Indigenous voices and ensure that they are at the table and every step of the way.”
Wakeham said that the province is currently benefiting from the high rates on the price of a barrel of oil, and should direct that money to help people who are feeling the pinch because of higher costs.
“I would want the government to share some of that additional revenue back, to some kind of program to help people that really need it, with the cost of heating their homes and the cost of living in this province. And again, we all know we have a large deficit, but that wasn’t created in one year. It won’t be gone in one year. It’s going to take a number of years for that to happen. And I think it’s imperative upon government to make a choice, and some of that is to help people who can certainly use their help right now.”