results of phase one of Expression of Interests process
Premier Danny Williams was joined today by Dean MacDonald, chair of the board of Newfoundland and Labrador Hydro (NLH) and Edmund (Ed) Martin, the new president and chief executive officer of NLH, to announce that phase one of the call for Expression of Interests and Proposals (EOI) for the development of the Lower Churchill hydro resource is complete.
�I am pleased to announce that after careful assessment and evaluation, the Government of Newfoundland and Labrador and Newfoundland and Labrador Hydro have selected three full development proponents from the EOI process to move onto phase two,� said Premier Williams. �I would also like to make it very clear that from our government�s perspective, the option of the province and Newfoundland and Labrador Hydro developing the project on our own will be given primary consideration. This evaluation will include fully evaluating both sub-sea and land transmission options.�
Therefore, including the potential of government and hydro developing the resource independently, there are a total of four development options on the table.
�As well, from the original 25 submissions we have also chosen an additional three proposals as potential financing options,� added the premier. �These three financing options will also move into the next phase of assessment as we continue to explore the best option for developing this resource. This process has been extremely effective in determining which of the proponents have the greatest potential to facilitate government�s objective of developing the Lower Churchill in the best interest of Newfoundlanders and Labradorians. The caliber of proponents moving forward is very strong, and I am pleased to say that all six proponents have accepted our invitation to move into phase two.�
The main development proponents that will move onto phase two are:
Of the three financing options, two are potential equity investors. Once the development concept is further defined, the province will be considering equity participation including:
Finally, an innovative financing option in the form of a royalty trust has been proposed by Altius. This concept will be explored later in the process.
Dean MacDonald indicated the EOI process to date has yielded great success. �Of the 25 formal submissions received, there were eight full development concepts, two transmissions concepts, two financing source options and multiple offers of services and supplies,� said Mr. MacDonald. �We would like to thank all who made submissions in this process, and now anxiously move onto phase two to further assess the potential of the successful proponents from phase one.�
�As we move forward, we are keeping our options open in terms of the development configuration and destination of the power. In addition to Labrador and the island, we have several market options including Ontario, Quebec, the Maritime provinces and US Northeast. As we proceed with these proposals, we are also keeping our options open regarding the ownership structure for the development ranging from a 100 per cent NLH owned and led development, to a lease/franchise option, and a variety of equity partnership options,� added Mr. MacDonald.
Ed Martin stated that he is excited to lead Newfoundland and Labrador Hydro at such a critical time in the province. �I am very pleased to have the opportunity to contribute to an organization that will work with the province in developing this tremendous hydro resource,� said Mr. Martin. �Today, we are narrowing down the field of proponents coming out of phase one of the EOI who we will be engaging as we consider our market and development arrangement options. In addition to the full development concept and financing submissions, the proposals involving services and products will remain on file for future consideration.�
The key considerations in assessing the submissions were the proponents� financial and technical qualifications to undertake a development of this magnitude and relevant previous experience. The proposed concepts were also considered in terms of what the proponents could offer to facilitate achievement of government�s objectives. Demonstrated awareness of aboriginal and environmental issues and willingness to plan to address these issues were also key factors taken into consideration.
The Premier noted that he has contacted Ben Michel, Innu Nation President. �I indicated to Mr. Michel the province recognizes the importance of resolving outstanding issues surrounding the Labrador Innu land claim and a possible impacts and benefits agreement for the project. We have agreed that we will make it a priority to resolve these issues as soon as possible.�
Government has directed NLH to immediately initiate a process whereby the short-listed proponents will be invited to enter into feasibility agreements. Phase two of the process will involve a feasibility review of the concepts and related alternatives, and discussion of commercial principles. Negotiations with the proponents of the most viable development concepts would follow in phase three. Phase four will involve detailed negotiations with the successful proponent. The final objective is the successful negotiation of a development arrangement for the Gull Island and/or Muskrat Falls hydro projects.
The Premier noted government�s new approach to attracting development options for the Lower Churchill has been very successful to date, and he is confident that as the process moves forward a development plan can be achieved which yields maximum benefits for the people of Newfoundland and Labrador. �In the context of the significant need for new, clean electricity sources in Northeastern North America, the timing has never been better for the development of the Lower Churchill. However, we are steadfast in our position that we will not proceed if the development does not provide maximum benefits to our province,� said Premier Williams.
This EOI process was open to all interested parties and invited any range of proposal concepts, including the use of power in Labrador, on the island, for export or some combination of these options. The submissions were assessed by two committees with representatives from government, NLH and two consultants. Phase two will commence upon reaching agreement with the short-listed proponents on the terms for undertaking phase two feasibility review and discussions.
Elizabeth Matthews, Office of the Premier, (709) 729-3960, 690-5500, email@example.com
Dawn Dalley, Newfoundland and Labrador Hydro, (709) 737- 1315, 727-7715
Backgrounder on Lower Churchill Hydro Development
Hydro Quebec/Ontario Energy Financing Company (OEFC) /SNC-Lavalin (SNC-L)
Financing Company (OEFC)