In keeping with the Government of Newfoundland and Labrador�s commitment to transparency and accountability, the Honourable Kathy Dunderdale, Minister of Natural Resources, and Ed Martin, President and CEO of Newfoundland and Labrador Hydro and the province�s energy corporation, today released the Lower Churchill Project expenditures.

"This government is committed to ensuring that our energy resources are developed to benefit the people of this province. As outlined in our Energy Plan, the Lower Churchill Project will play a key role in our renewable energy future if the development is sanctioned and proceeds as planned," Minister Dunderdale said. "In order to protect our interests, we must invest in the preliminary stages of this development to allow us to make a sound decision on a path forward and ensure maximum benefit to the province."

In May 2006, the Province of Newfoundland and Labrador announced that the province�s energy corporation would lead the development of the Lower Churchill hydroelectric resource after going through an Expressions of Interest Process.

Since that time, the project has moved along on several fronts, examining market access options and making transmission access applications, as well as the environmental assessment processes, preliminary engineering and negotiations of an Impacts and Benefits Agreement with Innu Nation. To support the significant amount of activity, $62 million, excluding interest charges, has been invested in the Lower Churchill Project since 2003. These recent investments are in addition to the $115 million spent by prior administrations and $70 million in interest incurred; for a total expenditure of $247 million since the 1970s.

Efforts in engineering and environmental investigations have already paid substantial dividends in project planning. "By completing this site work we have reduced the project�s risk exposure to uncertain geotechnical conditions. If such things aren�t identified prior to construction commencement, an issue like this could result in a substantial redesign, thereby causing a possible one-year delay and additional charges in the magnitude of $1 billion."

The effort to assess the feasibility of the development is continuing and will involve further study on the project�s technical and environmental elements, its configuration, and market access options. These studies will form the basis necessary for the province to make a decision as to whether the project should proceed.

The energy corporation has implemented a comprehensive planning and decision process to develop the resource using industry recognized mega-project best practices. The overarching execution process being used is called the Gateway Process. This process identifies work which has to be complete prior to committing additional funds for the next phase of development. The project is currently in Phase 2, which is essentially selection of the optimal development scenario. In order to pass through to the next phase, a comprehensive list of deliverables need to be achieved. These deliverables are part of a due diligence process which provide the certainty required to move into Phase 3 of the development. A key deliverable is the Impacts and Benefits Agreement with Innu Nation. Without this agreement, the project will not go forward and no further money will be invested.

While the province�s energy corporation will take the required time to complete due diligence on the feasibility of this project, a planning time-frame has been developed that could see major construction begin in 2010 and potentially first power in 2015.

Depending on the development option chosen, the project is valued between $6-9 billion.

The Churchill River is an attractive, renewable, clean energy source. The Lower Churchill Project can displace an estimated 16 megatonnes of carbon dioxide emissions annually from comparable production from coal thermal generation. Combined with the existing Churchill Falls Generating Station, the three developments could produce the electrical equivalent of 225,000 barrels of oil a day � forever.

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The following provides details of cumulative expenditures on evaluating the development of the Lower Churchill.

Project Execution - The Gateway Process

Any project the size of the Lower Churchill Project (LCP) requires thorough planning and timely execution for success. As part of the LCP management process, the team is using a delivery method that is based on lessons learned and best practices that will be followed through to project completion.

The overarching execution process used by the LCP team is called the Gateway Process. This process identifies the transition between project phases and within project phases. A gateway is at the end of each project phase and readiness checkpoints occur throughout. As such, the Gateway Process provides a logical roadmap that ensures organized project planning and execution.

There are five gates within the LCP life cycle that mark an important juncture of the project. The LCP is currently in Phase 2, approaching Gate 2. In support of the Gateway Process, a Readiness Process is also implemented. The Readiness Process is a tool to help achieve the timely and effective achievement of key project milestones and helps the transition from one phase of a project to another. A Gate is only opened if all predetermined deliverables have been met.