HAPPY VALLEY-GOOSE BAY, N.L. - Prime Minister Stephen Harper has signed off on a long-awaited federal loan guarantee for the $7.4-billion Muskrat Falls hydroelectric project in Labrador.
The federal backing is expected to save the governments of Newfoundland and Labrador and Nova Scotia more than $1 billion in borrowing costs.
The agreement signed today guarantees up to $6.3 billion in debt for the financing of the project for a period of 35 to 40 years.
Premier Kathy Dunderdale's government has waited for the federal support before sanctioning Muskrat Falls, which is expected to happen before the end of the year.
If it goes ahead, Muskrat Falls would be the largest single public expenditure in Newfoundland and Labrador's history, costing almost as much as its annual budget.
It is expected to begin generating power in 2017, and some of that electricity would flow to Nova Scotia through subsea cables.
Opponents have said the Newfoundland and Labrador government has not proven its case for Muskrat Falls, accusing it of expediting a project without debate that could burden future generations with a heavy debt.
But the government has countered the criticism by releasing a series of reports in recent weeks that conclude the project is a viable, clean source of renewable energy that's needed to wean the province off fossil fuels.
If it proceeds, Muskrat Falls would be capable of generating up to 824 megawatts of electricity, 170 megawatts of which would go to Nova Scotia annually for 35 years. That would serve about 10 per cent of that's province's power needs.
The development is a joint venture between Nalcor Energy, Newfoundland and Labrador's Crown utility company, and Nova Scotia private utility Emera (TSX:EMA).
Nalcor Energy would be responsible for the construction of the dam and power station in Labrador as well as transmission lines on the island of Newfoundland. That is expected to cost about $6.2 billion.
Emera would build subsea a 180-kilometre subsea link that would transmit the power from Cape Ray in southwestern Newfoundland to Lingan, N.S., in Cape Breton. That is expected to cost at least $1.2 billion.
Preliminary work on a road to the site near Happy Valley-Goose Bay has already started.
The project has been on the drawing board in one form or another for decades. In 1980, it passed an environmental assessment but was set aside due to market access and financing issues.