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Newfoundland, Emera to proceed with Muskrat Falls project

Muskrat Falls, on the Churchill River in Labrador, is to be the site of a hydroelectric project estimated to cost $7.5-billion

Paul Daly/THE CANADIAN PRESS

The government of Newfoundland and Labrador and Nova Scotia utility company Emera Inc. are proceeding with development of the $7.7-billion Muskrat Falls hydroelectric project despite lingering cost and environmental concerns.Premier Kathy Dunderdale made the announcement late Monday in the lobby of the Newfoundland and Labrador legislature in St. John's, saying the decision marks a significant moment in her province's history.

"Harnessing the vast hydroelectric power of the Lower Churchill is a promise that has been hovering on the horizon for 50 years but has remained just out of reach for successive governments of Newfoundland and Labrador," Ms. Dunderdale told a crowd of supporters.

"The most important benefit of this development is that it allows us as Newfoundlanders and Labradorians to stand tall and proud on the national stage, knowing that as our forebears persevered to etch an existence on the edge of the North Atlantic, so will we with unrelenting focus and steadfast determination overcome all obstacles and transform challenges into success."

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The development, which is expected to start generating power in 2017, is a joint venture between Nalcor Energy, Newfoundland and Labrador's Crown utility company, and Emera.

Nalcor Energy would be responsible for the construction of the dam and power station in Labrador as well as transmission lines on the island of Newfoundland. That is expected to cost about $6.2-billion.

Emera would build a 180-kilometre subsea link that would transmit the power from Cape Ray in southwestern Newfoundland to Lingan, N.S., in Cape Breton.

At a news conference late Monday in Halifax to announce Emera's decision, chief executive officer Chris Huskilson said the cost of the subsea link has been revised to $1.52-billion.

In Newfoundland and Labrador, opponents say Ms. Dunderdale has not proven the case for Muskrat Falls, accusing her of fast-tracking a project without legislative committee scrutiny or debate that could burden future generations if it soars over budget.

She has countered the criticism by releasing a series of government-commissioned reports in recent weeks. They conclude the project is a viable, clean source of renewable energy that would wean the province off fossil fuels.

Ms. Dunderdale has refused further review by the province's Public Utilities Board since it declined to endorse Muskrat Falls last spring, citing a lack of updated information.

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Muskrat Falls would be capable of generating up to 824 megawatts of electricity, 170 megawatts of which would go to Nova Scotia annually for 35 years. That would serve about 10 per cent of that province's power needs.

Muskrat Falls got a boost last month when Ottawa offered a federal loan guarantee for the project that would cut borrowing costs by about $1-billion.

Preliminary work on a road to the site near Happy Valley-Goose Bay has already started.

The project has been on the drawing board in one form or another for decades. In 1980, it passed an environmental assessment but was set aside due to market access and financing issues.

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