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Canada's 824-MW Muskrat Falls jumps in expected cost

Canada's 824-MW Muskrat Falls hydroelectric project will come with a larger price tag, Premier Kathy Dunderdale told a group in St. John's earlier this week.

Muskrat Falls, which was projected to cost around US$6.1 billion in a government study two years ago, will now cost about $7.4 billion, Dunderdale says.

The project has been fraught with controversy throughout its development, but proponents say that Muskrat Falls' long-term benefits outweigh its negatives.

"The cost estimate supports Muskrat Falls as the least-cost alternative to meet the future energy needs of Newfoundland and Labrador," Dunderdale says. "Energy independence will help us reach our maximum potential and ensure a prosperous future."

According to a report from Manitoba Hydro International (MHI), the project would cost $2.4 billion less over the next 50 years than if the province continues relying on other alternatives.

Items included in the cost are the Muskrat Falls generating station, the Labrador-Island transmission link, and a maritime link that will be constructed by Emera, Inc., which is Nalcor Energy's partner in developing the project.

Government officials say the price increase reflects cost escalation and a more "clearly defined scope of the Muskrat Falls project".

Capital costs identified in the report are based on the completion of approximately 50% of the engineering and detailed design work for the project, the results of early site work completed near Muskrat Falls, and include actual bid values for major components.

"We are very pleased to see this project take another major step toward a final sanction decision," says Ed Martin, President and Chief Executive Officer of Nalcor. "The results of this review by MHI validate years of analysis, planning and design by a dedicated team of experts at Nalcor.

"We remain confident that the development of Muskrat Falls will provide the most affordable energy solution for homes and businesses in Newfoundland and Labrador."

The province's government is expected to decide later this year if it will approve the project or not.

"It's taken us all a long time to get to this place," Dunderdale says. "But during the last 10 years we have made remarkable progress. This is not the time to rest on our laurels. Now is the time to build on our momentum."

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