Feds tap brakes on Atlantic Loop expectations

The Trudeau government is still many months away from a decision on how it will support the Atlantic Loop.

Intergovernmental Affairs Minister Dominic LeBlanc says more information on the business case is needed before Ottawa can "justify a federal investment" in the proposed regional energy project.

The Atlantic Loop project would see hydroelectric energy from Quebec and Labrador flow to Nova Scotia and New Brunswick through upgraded transmission grid.

"We think that the next six months will be critical to bring that clarity in terms of the cost, in terms of the business model for that infrastructure," LeBlanc told CBC News on Tuesday after sitting in on a virtual meeting of Atlantic premiers during discussions on the project.

"With that clarity will come a greater understanding of how the government of Canada can be a financial partner with the utilities in Nova Scotia and New Brunswick, for example, in terms of making that power, that greener energy available to people in Atlantic Canada."

Nova Scotia Premier Tim Houston has seized on the Atlantic Loop as an affordable solution to weaning the province from its reliance on burning coal to generate electricity — currently the source of about 50 per cent of electricity.

'We want to get off coal,' N.S. premier says

Nova Scotia Power coal plants must be phased out by 2030 when 80 per cent of electricity must come from renewables.

"We want to get off coal and we have to do that in a way that protects the ratepayers of this province," Houston said Tuesday.

He said building the Atlantic Loop would cost $5 billion and is publicly lobbying Ottawa to share the costs. Last fall, New Brunswick Premier Blaine Higgs wrote to Prime Minister Justin Trudeau seeking $5 billion for the project.

"We replied that the government of Canada is not on the verge of sending a $5-billion cheque to the utilities in Nova Scotia or New Brunswick," said LeBlanc. "That's not how this conversation should work."

LeBlanc said the Liberal government is on board with the Atlantic Loop — it's part of his mandate letter from Trudeau — but more technical work is needed on the required infrastructure upgrades and the part played by New Brunswick Power and Emera, owner of Nova Scotia Power.

"So we can understand the full nature of these costs and we can understand the business model that would justify a federal investment. The cost of electricity and electricity generation is not a federal responsibility. It's a provincial responsibility," said LeBlanc.

"But we recognize as a national government that the obligation, for example, to get off coal-generated electricity by 2030 is one that the government of Canada should share with the provinces of Atlantic Canada."

Not like N.L.

LeBlanc rejected comparisons between the Atlantic Loop request and the $5 billion in assistance Ottawa handed to Newfoundland and Labrador to subsidize power rates. Rates had been poised to soar to pay for massive cost overruns in the provincially owned Muskrat Falls hydro project in Labrador.

Muskrat Falls is now so expensive it threatened to push Newfoundland and Labrador power rates up to an unaffordable 23 cents per kilowatt. The federal assistance kept them at 14.7 cents.

Trudeau travelled to St. John's in July 2021 to announce the deal.

The lion's share is annual transfers from Ottawa equivalent to its annual royalty gains from its share in the Hibernia offshore oilfield, estimated at $3.2 billion. There are also loans and loan guarantees.

LeBlanc said the assistance is not the same.

"It's much different than a discussion around subsidizing directly interprovincial electricity infrastructure," he said.

Urgency recognized

Houston emerged from the meeting of Atlantic Premiers saying he heard what he needed from LeBlanc — a recognition of the urgency of the situation and the role the Atlantic Loop would play in getting the province off coal.

"My sense is that they believe in the project," Houston told CBC News.

"They believe in the environmental goals of the project and they certainly understand the need to be conscious of the impact on ratepayers and affordability."

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