Muskrat Falls should proceed now: prof

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Gary Kean
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Gabriela Sabau, associate professor of economics and environmental studies at Grenfell Campus, Memorial University, supports moving ahead with the Muskrat Falls hydroelectricity project.

CORNER BROOK — Gabriela Sabau thinks the Muskrat Falls project makes sense both economically and ecologically and now is the time to proceed with it.

The associate professor of economics and environmental studies at Grenfell Campus, Memorial University said there is nothing politically motivated about the provincial government forging ahead with the hydroelectric mega-project right now.

“I commend the provincial government for keeping steady on this project,” she said. “It’s a good one and I don’t think we should be postponing it any longer.”

Sabau gave three reasons why Muskrat Falls should be developed.

First of all, she said it makes sense to invest in a new source of renewable, clean energy, as opposed to spending money on upgrading the fossil fuel-dependent power station at Holyrood that currently provides much of the province’s electricity.

In economic circles, she noted, this is known as the energy transition and Newfoundland and Labrador could be the leader of this change towards clean energy.

The second reason is that the project should be done now, while interest rates are at low levels. The project is going to cost Newfoundland and Labrador and partnering Nova Scotia more than $7 billion and the federal government has committed to a loan guarantee for $6.3 billion of that amount.

“If this loan is going to be guaranteed by the federal government, that’s going to diminish the amount our province and Nova Scotia is going to be burdened with to repay,” she said.

The third reason cited by Sabau is that Muskrat Falls is crucial for the development of the provincial economy. In addition to thousands of good-paying jobs during construction, she said there will eventually be affordable power that will help attract business and investment.

Sabau foresees that economic development going beyond the obvious power-hungry sectors like mining.

While it may be dependent on government exercising regulatory control, Sabau said residents and business alike will eventually reap the benefits of affordable, clean energy.

“The initial cost of the infrastructure is really high and those initial costs need to be paid up front,” she said.

It is the long-term nature of the project’s benefits that Sabau approves of the most.

“Why shouldn’t we leave to our children something that is clean and efficient and is going to stay?” she asks. “The infrastructure with his project will be a source of economic stability for this province.”

Geographic location: Muskrat Falls, CORNER BROOK, Newfoundland and Labrador Nova Scotia

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  • Tom Adams
    December 07, 2012 - 06:28

    One of the reasons that inflation-adjusted power rates are rising in Canada while they fall in the U.S. is because so many Canadian academics addressing energy policy present analysis as carefully researched as the opinions Dr. Sabau presents here. Muskrat Falls and the associated transmission will cost twice what Romaine development will cost Hydro Quebec and Romaine is uneconomic. Muskrat Falls is going to be a disaster for Newfoundland far more serious than the Upper Churchill contracting disaster. Upper Churchill was only a lost opportunity. Muskrat Falls won't hurt ratepayers terribly at the beginning, but the impact will be unbearable after 30 or 40 years.

  • Tom Adams
    December 06, 2012 - 13:39

    One of the reasons that inflation-adjusted power rates are rising in Canada while they fall in the U.S. is because so many Canadian academics addressing energy policy present analysis as carefully researched as the opinions Dr. Sabau graces us with here.

  • Des Sullivan
    December 05, 2012 - 17:42

    The Professor speaks nothing of construction risk and cost overruns, the actual cost per KWh of Muskrat power to Soldier's Pond (not the blended rate), or the "shale" gas revolution in the U.S., which is forecast to drive down oil prices. NL risks having increasing power costs while they are declining in other areas of Canada and N.A. Remember, high oil prices are the only reason Nalcor could use to justify MF as opposed to the "isolated island" option. Neither does the Prof. note that Newfoundlanders will pay (based upon DG-3 numbers) more than 16 cents per KWh for this power (not including cost overruns or NL Power Distribution and mark-up). Surplus power will be exported or sold to mining companies for around 5 cents per KWh. How does NL make money if the power costs 16 cents and the Province sells it for 5 cents. I have been in business for 27 years; I have never mastered that equation! I suggest you might read Uncle Gnarley Blog (just Google it) for more views on MF. That said, if economics is a science, I see that the Professor uses not one number to bolster her position. With respect, Professor, these comments do not contribute anything to this most crtical debate.

    • david
      December 06, 2012 - 11:32

      You must be a cynic....or just someone else with the power of independent thought, logical reasoning and financial comprehension. Either way, well done..

  • rob
    December 05, 2012 - 16:19

    Sabau is right on. I don't understand all the negativity towards the project. As the article states, there are many good reasons to proceed. As for the opinion of university professors... feel free to state your own credentials when you comment. I can dumb it down for you: If Quebec is fighting it, it's good for Newfoundland.

  • rob
    December 05, 2012 - 16:18

    Sabau is right on. I don't understand all the negativity towards the project. As the article states, there are many good reasons to proceed. As for the opinion of university professors... feel free to state your own credentials when you comment. I can dumb it down for you: If Quebec is fighting it, it's good for Newfoundland.

  • david
    December 05, 2012 - 12:59

    When you have no concept of the value of money, or the way the real world works, or how to prioritize needs, you get university professors.

    • George
      December 05, 2012 - 21:08

      David, and when you have little value to add, you get a cynic.

    • david
      December 06, 2012 - 11:26

      Cynics don't get sold a bill of goods over and over and over....and when it comes to politics and public policy, cynicism will almost always explain what actaully happens. Enjoying your new City Hall? How about your new hospital? How's the roof looking on that courthouse these days? Muskrat Falls, here we come!