NL & NS: Analysts closely watching Muskrat Falls

James McLeod, The Telegram
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BMO Capital Markets’ analysis of Emera’s energy prospects in Canada and the U.S. says there’s a '50 per cent probability of sanctioning' when it comes to the Maritime Link component of the Lower Churchill project.

Telegram file photo

[ST. JOHN'S, NL] - Financial analysts are keeping an eye on the Muskrat Falls hydroelectric project, but a trio of recent reports are lukewarm about the development’s prospects.

BMO Capital Markets’ analysis of Nova Scotia utility Emera’s energy prospects in Canada and the U.S. says there’s a “50 per cent probability of sanctioning” when it comes to the Maritime Link component of the Lower Churchill project.

Both BMO and CIBC say Emera’s plans to buy a trio of natural gas power plants in New England means it is going to do a lot of financing in the near future.

The power plant purchase represents about $541 million for Emera, and the Maritime Link comes with a $1.5-billion price tag.

The CIBC report also talks about “weak pricing” in the New England electricity market — where the Newfoundland and Labrador government has said excess Muskrat Falls power may be sold.

“The outlook calls for only modest improvements,” the CIBC report says. “Furthermore, capacity pricing has been at floor levels, and could actually go lower.”

The Telegram requested a response from Nalcor Energy, which is currently building the Muskrat Falls project on the Churchill River in Labrador, but did not receive a statement by press time.

It’s not just banks keeping an eye on Muskrat Falls, either; a white paper published by the New England States Committee on Electricity looking at hydro power gives a three-page writeup on Labrador hydroelectric power.

In particular, the report looks at the Hydro-Quebec lawsuit dealing with the Churchill Falls power contract, which could affect Muskrat Falls.

“As noted above, Hydro-Quebec filed a lawsuit against Churchill Falls that puts the Muskrat Falls project in jeopardy,” the report says. “Muskrat Falls uses the same river system as Churchill Falls.”

Organizations: Hydro-Quebec, New England States Committee on Electricity

Geographic location: Labrador

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