Now that rate mitigation financing is signed and done, it’ll be up to Hydro to get the best bang for Ottawa’s buck.
The federal government is backstopping a third loan guarantee of $1 billion as part of the financial restructuring of the Muskrat Falls Project.
Armed with Canada’s triple A credit rating, Hydro will now seek out the best deal to pay down debts due by the end of this decade.
Premier Andrew Furey says he’d rather not have to seek such help to finish the project. But he also notes that Newfoundland and Labrador is ahead of the game in the region.
While this province may be the first in Atlantic Canada going through the electricity transition, Furey says it won’t be the last. He notes Nova Scotia and New Brunswick still have significant issues ahead of them as they reduce their reliance on coal.
The total cost of the Muskrat Falls re-financing is pegged at $5.2 billion—including another $1-billion federal investment in the troubled Labrador-Island Link.
Then there’s the feds’ transfer of its Hibernia profits—estimated at about $3.2 billion—to the end of that project’s life.
The rate mitigation deal is designed to prevent so-called rate shock, keeping it in the range of 14.7 cents per kilowatt hour for the first year after final commissioning.
The Opposition Tories, meanwhile, are calling yesterday “a good day” for the province.
The trick, says interim PC Leader David Brazil, will be in what lies ahead as rates continue to rise and become too much for many.
He says they need some peace of mind that electricity rates won’t go beyond their means, or at least that the government has a plan to help seniors on fixed incomes and others on low incomes.
The new final commissioning date for the entire Lower Churchill Project is May 31.
The new rate, estimated to be 14.7 cents a kilowatt hour, is expected to be set and approved by the Public Utilities Board sometime this summer.
(Innu Nation Grand Chief Etienne Rich.)
The Premier says favourable market conditions prompted government officials to act quickly on signing term sheets for rate mitigation and capital restructuring even as discussions with the Innu Nation continue.
The Innu Nation expressed frustration with the fact that a satisfactory process agreement has yet to be reached.
They launched a court injunction against the rate mitigation process announced last summer when they were not invited to the table. They dropped the court case when it was announced that further discussions would take place, but the Innu say no agreement on their concerns has yet been reached.
Premier Andrew Furey acknowledged those concerns but market conditions forced quick action.
He says, in the meantime, discussions continue with the Innu Nation, and yesterday’s announcement does not harm the process agreement, which government and the Innu have agreed to extend.
