In 2013, the Government of Newfoundland announced the start of one of the largest projects in the history of Newfoundland and Labrador, the Muskrat Falls Dam. With a capacity of 824 MW, the project was to be a pride of the Newfoundland people. Accumulated delays and project costs, which rose from $ 6.7 billion to $ 12.7 billion, have led to growing public anger.
While the dam accumulates delays and cost overruns, the company Emera (TSE: EMA), which is responsible for the construction of the “Maritime Link” transmission line, is expected to finalize the project by the end of 2017. This line is to transmit 500MW of power from the new dam in Nova Scotia. Since Muskrat Falls will not be completed until 2020, Emera (TSE: EMA) is in a situation where the “Maritime Link” will not generate any profit before 2020 and therefore will have to draw from their profits to repay the project.
To avoid a major impact on its profits, Emera (TSE: EMA) asked the Nova Scotia Utility and Review Board if it could increase their electricity rates to offset building costs. This plan, which was supposed to generate 326M $CAN in additional revenues by 2019, was only partially accepted by the Nova Scotia government. Emera (TSE: EMA) is expected to repay the additional 105M $CAN it raised in 2017, but will be able to raise 109.5M $CAN in 2018 and 111.5M $CAN in 2019.
Global News. (Septembre 11 2017). Delays in construction at Muskrat Falls impacting power bills in Nova Scotia. From GLOBAL NEWS: https://globalnews.ca/news/3734455/delays-in-construction-at-muskrat-falls-impacting-power-bills-in-nova-scotia/
Global News. (Septembre 29 2017). N.L. premier announces inquiry into delayed, over-budget Muskrat Falls project. From GLOBAL NEWS: https://globalnews.ca/news/3776018/n-l-premier-announces-inquiry-into-delayed-over-budget-muskrat-falls-project/
The Globe and Mail. (Juin 23 2017). Muskrat Falls price tag rises by another billion: CEO. From THE GLOBE AND MAIL: https://beta.theglobeandmail.com/report-on-business/muskrat-falls-price-tag-rises-by-another-billion-ceo/article35444637/?ref=http://www.theglobeandmail.com&
Wikipedia. (n.d.). Churchill falls generating station. From WIKIPEDIA: https://en.wikipedia.org/wiki/Churchill_Falls_Generating_Station