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Ottawa Announces $5.2-Billion Bailout for Muskrat Falls Hydro Megaproject

July 29, 2021
Reading time: 3 minutes

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erik.altitude/flickr

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The Trudeau government has agreed to a tentative, C$5.2-billion bailout for Newfoundland and Labrador’s troubled Muskrat Falls hydropower megaproject, aimed at stopping local electricity rates from almost doubling while taking some of the immediate heat off a province facing serious financial woes.

“Muskrat Falls, which started with great optimism in 2013 on Labrador’s lower Churchill River, has ballooned into a financial albatross that’s now more than $6 billion over budget and years behind schedule,” the Globe and Mail reports. The federal-provincial deal, details of which have yet to be finalized, “would reduce the province’s cost of financing the project and keep Newfoundland’s electricity rates from spiking this fall when the hydro dam is fully online.”

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That’s when the full cost of the project would begin to show up in ratepayers’ power bills.

Ottawa’s offer, announced Wednesday, includes $3.2 billion in annual cash transfers spread over 26 years, equal to the royalties Newfoundland and Labrador collects from the Hibernia offshore oil project, the Globe says. The other $2 billion includes a loan guarantee for the hydro project and a cash contribution to the Labrador-Island Link, the power line that carries the dam’s output from central Labrador to other parts of the province.

“Easing some of the financial burden from Muskrat Falls is seen as a first step in Newfoundland’s efforts to dig out of a crippling fiscal situation with total provincial debt now more than $47.3-billion,” the Globe writes. Prime Minister Justin Trudeau and Liberal Premier Andrew Furey both picked up on that theme in their remarks.

“The pressures and challenges faced by Newfoundlanders and Labradorians for mistakes made in the past is something that Canadians all needed to step up on, and that’s exactly what we did,” Trudeau said, during a swing through Atlantic Canada that was widely interpreted as a pre-election tour.

“What a huge day for Newfoundland and Labrador,” Furey added. “Today, the weight begins to lift and we can all breathe a measured sigh of relief.”

Innu Nation Grand Chief Etienne Rich said the nation wasn’t consulted on the deal, and pointed to “an unresolved land claim with Ottawa that would give his people the right to approve any future hydroelectric projects on their traditional land in Labrador,” the Globe says. The story includes a photo of project opponents demonstrating against “poison and drowning” and in favour of “Labrador land protectors” on Parliament Hill in 2018.

Two years earlier, Nunatsiavut communities downstream of the project staged an occupation and hunger strike to flag serious concerns about methylmercury pollution they said would occur after the Muskrat Falls dam was flooded.

The Globe also picks up on the political pushback to the announcement, with Bloc Québécois natural resources critic Mario Simard saying an equivalent ratepayer buyout in his home province would have cost Ottawa $210 billion.



in Canada, Climate & Society, Climate Impacts & Adaptation, Community Climate Finance, Demand & Distribution, Energy Access & Equity, Energy Subsidies, First Peoples, Health & Safety, Heat & Power, Hydropower, Jurisdictions, Renewable Energy, Sub-National Governments

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Her Excellency the Right Honourable Mary Simon, C.C., C.M.M., C.O.M., O.Q., C.D., was installed as the 30th Governor General and Commander-in-Chief of Canada. The Installation ceremony was held in the Senate Chamber in Ottawa on Monday, July 26, 2021.
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