Ottawa, Nova Scotia at odds over $4.5B for Atlantic Loop

Canada has put $4.5 billion on the table to develop the Atlantic Loop, but it may not be exactly as advertised, says a spokesperson for Nova Scotia Premier Tim Houston.

"The proposal from the federal government requires Nova Scotia ratepayers to pay back the $4.5 billion," press secretary Megan Byrd said in a statement to CBC News.

"The payment would be in the form of a long-term loan that is repayable by Nova Scotians. It would also see Nova Scotians paying for infrastructure in Quebec. We obviously cannot support a proposal where Nova Scotians pay more."

A federal information package promoting the Atlantic Loop provided to CBC stated the transmission upgrades needed to deliver hydroelectricity from Quebec to the Maritimes are "the least costly solution" to replace coal for Nova Scotia.

The province still relies mainly on burning coal to generate electricity, but — by law — 80 per cent must be generated from renewable sources by 2030.

"The Government of Canada has proposed significant financial support to assist utilities and provinces in Nova Scotia and New Brunswick with advancing the Atlantic Loop. This proposal is based on two years of robust analysis between utilities, independent experts, and government officials," states the May 2023 background document.

A federal source told CBC on Thursday that Ottawa has proposed to invest $4.5 billion to advance the Atlantic Loop. That figure represents two-thirds of the overall capital cost.

CBC News is not naming the source because they are not authorized to speak publicly.

$6.8B overall capital cost

The money would reduce project costs, provide value to customers in New Brunswick and Nova Scotia and absorb risk, according to the information package.

The 32-page document says the capital cost of two bi-directional direct current lines between Quebec and New Brunswick is estimated at $6.1 billion in 2023 dollars.

Two routes are under consideration, including a subsea component under the St. Lawrence River at Manicouagan.

The cost of the alternating current intertie between Nova Scotia and New Brunswick is pegged at $700 million.

Federal support includes Canada Infrastructure Bank financing and a proposal for additional investments to assist with the Atlantic Loop "given its significant regional value," the document stated.

"It is the only real plan to get Atlantic Canada off coal by 2030, as mandated in federal and provincial legislation, while keeping electricity rates affordable over the long term," said Jean-Sébastien Comeau, press secretary for Dominic LeBlanc, minister of Intergovernmental Affairs, Infrastructure and Communities.

"We have a window of opportunity to get this project underway — and we urge the provinces to get on board."

Houston blames Trudeau government

As a condition of federal support, Ottawa wants a non-binding agreement in principle from the provinces, warning "there is a very tight critical path to bring Project online by 2030 — without added certainty utilities will down tools and stop crucial pre-development work."

Houston's office responded on Friday after the initial story was published.

After a cabinet meeting earlier Thursday, Houston suggested the Atlantic Loop is too expensive, and repeated comments made in April that he wouldn't give the proposal much time without a significant contribution from the federal government.

"If it was a different time and a different proposal and a different partnership from the federal government, then the Atlantic Loop might look like a more attractive piece to the solution. But it's not," he said.

"We can't place all of our hopes on the Atlantic Loop. I'm certainly not."

Houston and Natural Resources Minister Tory Rushton said the province is increasingly focused on other options, including offshore wind, tidal power from the Bay of Fundy and even nuclear power to meet renewable energy targets.

"There have been no further (loop funding) numbers shared with us from the federal level about what their investment is," Rushton said. "We're certainly looking at other options."

Off-ramps for utilities and provinces

The federal information package states the agreement in principle is not a final investment decision, but a critical step that needs to be resolved by 2025-26.

"Utilities will have time to develop more refined cost estimates, consider alternatives, complete further analysis, identify options to mitigate risk, submit proposals to electricity systems regulators and complete environmental assessments before making potential final investment decisions around 2025/26," reads the document.