Premier Dwight Ball confirmed today Emera owns a majority stake in the Labrador-Island Link following cost overruns with the project.
Three links make up the entire structure of power moving from Newfoundland and Labrador to the mainland. The Muskrat to Churchill link is owned exclusively by Nalcor, the Maritime Link is owned by Emera and the Labrador to Soldiers Pond link (LIL) is shared by the two companies.
Originally, Emera was entitled to 29 per cent ownership of the LIL, and a 49 per cent ownership of the three links combined while Nalcor would own 51 per cent, but given cost overruns with the project Emera is investing an additional $600-million to increase their ownership of the LIL to around 59 per cent.
Ball says it’s a condition set in the original 2010 contract.
He says there are price escalations with the LIL, therefore more investment from Emera means their ownership is going to increase. He says it’s concerning because there is going to be a 8.8 per cent return on equity for the company.
The infusion of equity from Emera means more money from Newfoundland and Labrador ratepayers is going to Emera’s profits.
On top of this, although Emera’s Maritime Link is on budget according to Ball, any cost overruns with the Maritime Link are also the responsibility of Nalcor to cover.
The biggest concern for the people of Newfoundland and Labrador is what effect this is going to have on electricity rates, Ball says there are many options government has to keep rates low for the people of the province including rate stabilization through taxpayer subsidies or the sale of surplus power.