The Government of Canada is committed to developing Canada’s immense resource wealth in a way that ensures world-class protection for our environment. In the June 2011 Speech from the Throne, the Government committed to supporting the Lower Churchill 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 projects.
On December 10, 2013, the Government of Canada announced the finalization of the federal loan guarantee for Nalcor’s Lower Churchill projects (Muskrat Falls Hydroelectric Generating Station, the Labrador Transmission Assets and the Labrador–Island Transmission Link). That federal loan guarantee applies to $5 billion borrowed for the Nalcor projects. The Government of Canada has also finalized the loan guarantee for Emera Inc.’s portion of the project, the Maritime Link. The loan guarantee will apply to up to $1.3 billion of project debt.
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.
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 projects, comprising the Muskrat Falls Hydroelectric Generating Station and the three transmission lines.
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 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 projects for a period of 35 to 40 years from the time the project debt is raised. This 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 for the projects and, correspondingly, for ratepayers in Newfoundland and Labrador and Nova Scotia. The loan guarantee will be managed by Natural Resources Canada.