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The Government of Canada is committed to developing Canada’s natural resources wealth in a way that protects the environment. In the June 2011 Speech from the Throne, the Government committed to supporting the Lower Churchill Hydroelectricity Projects.
On November 30, 2012, Prime Minister Stephen Harper announced that the federal government had reached an agreement with the Governments of Newfoundland and Labrador and Nova Scotia, as well as with two companies, Nalcor Energy and Emera Inc., on the terms and conditions for the federal loan guarantee for the Lower Churchill Hydroelectricity Projects. All of the term sheet conditions necessary for the loan guarantee for Nalcor’s Lower Churchill projects have been satisfied. As per the term sheet, the federal loan guarantee for the Maritime Link will be finalized within 90 days of the guaranteed funds being available to Nalcor. Nalcor is expected to have guaranteed funds available to them by mid-December.
OVERVIEW OF THE PROJECTS
Muskrat Falls Hydroelectric Generation Facility
Nalcor Energy is developing the 824-megawatt Muskrat Falls Hydroelectric Generating Station (located on the Churchill River in Labrador, downstream from the existing Churchill Falls facility). The Muskrat Falls facility is expected to generate 4.9 million megawatt-hours (MWh) annually.
- Labrador Transmission Assets: The Labrador Transmission Assets will be a 315-kilovolt, high-voltage alternating current transmission interconnection between the proposed Muskrat Falls Hydroelectric Generating Station and the existing Churchill Falls Hydroelectric Generating Station.
- Labrador–Island Transmission Link: The Labrador–Island Transmission Link will be an estimated 1,135-km, high-voltage direct current transmission line between Muskrat Falls Generation Facility in Labrador and the Island of Newfoundland with a transfer capability of 900 megawatts.
- Maritime Transmission Link: The Maritime Transmission Link will be a 520-km transmission line consisting of high-voltage direct current line and high-voltage alternating current line to bring power from the Island of Newfoundland to Cape Breton, Nova Scotia, with a transfer capability of 500 megawatts.
In November 2010, Nalcor Energy, Newfoundland and Labrador’s Crown-owned energy corporation, and Emera Inc. of Nova Scotia announced plans to develop the Lower Churchill River Hydroelectric Projects, comprising the Muskrat Falls Hydroelectric Generating Station and the three transmission lines.
Nalcor Energy and Emera Inc. estimate the total projected cost of the Lower Churchill River projects to be approximately $7.7 billion. Nalcor Energy will construct and own 100 percent of the Muskrat Falls Hydroelectric Generating Station and will also build the Labrador–Island Transmission Link through a joint venture with Emera Inc. (with Emera Inc. having an option to take a stake in this transmission line). Emera Inc. will also build, operate and own the Maritime Transmission Link for 35 years, after which the ownership of the Maritime Transmission Link will revert to Nalcor Energy.
THE FEDERAL LOAN GUARANTEE
The Government of Canada has committed, through the signing of a term sheet agreement, to guarantee project-related debt of up to $6.3 billion for the Lower Churchill River Projects for a period of 35 to 40 years from the time the project debt is raised, which will apply to the construction and operating phases of the projects. By backing the projects with Canada’s Triple-A credit rating, the loan guarantee will significantly reduce borrowing costs.
It is estimated that the loan guarantee will save over $1 billion dollars for the projects and, correspondingly, for ratepayers in Newfoundland and Labrador and Nova Scotia. The loan guarantee will be managed by Natural Resources Canada.
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