(Reuters) - Canada has finalized a federal loan guarantee of up to C$1.3 billion for Nova Scotia power company Emera Inc’s (EMA.TO) Maritime Link power transmission project to connect the provinces of Newfoundland and Labrador and Nova Scotia.
“We are working to put the financing in place as soon as possible, which we expect to happen in the second quarter of 2014,” Chris Huskilson, president and chief executive of Emera, said in a statement Thursday.
Jeff Myrick, a spokesman for Emera, said Friday that Nova Scotia power customers should save about C$250 million over the life of the project due to the federal loan guarantee because it will allow the company to get better financing terms.
The Maritime Link is Emera’s part of the first phase of the Lower Churchill Falls project, which includes the 824-megawatt Muskrat Falls hydropower plant in Labrador, the Labrador-Island Transmission Link from Labrador to Newfoundland and the Maritime Link. One megawatt can power about 1,000 homes.
Emera and Newfoundland and Labrador province-owned energy company Nalcor Energy agreed in 2012 that Emera would invest 20 percent of the total cost of developing the first phase of the project and build the Maritime Link in return for 20 percent of the energy from Muskrat Falls for 35 years.
That 20 percent investment will cost about C$1.56 billion, according to Emera.
The first phase of the Churchill Falls project is expected to be completed in 2017 and will cost about C$7.8 billion, including both Nalcor and Emera’s investments.
Nalcor, which will control the remaining 80 percent of the project’s power, is building the Muskrat Falls plant, a transmission line connecting Muskrat Falls to its existing 5,428-MW Churchill Falls hydropower plant and the Labrador-Island Link.
Nalcor has said it expects to use about 40 percent of the project’s power to meet domestic needs, with the other 40 percent available for the province or for sale to utilities in eastern Canada or the U.S. Northeast.
The Maritime Link will have about 500 MW of capacity and will include a 180-kilometer (112 miles) undersea link from Newfoundland to Nova Scotia.
French cable company Nexans SA (NEXS.PA) will build the undersea cable.
Emera’s Myrick said the company started clearing the trees in the right-of-way for the Maritime Link three weeks ago.
Emera will also own about 29 percent of the 900-MW Labrador-Island Link in Newfoundland and Labrador. The Labrador-Island Link will run 1,100 km from Labrador to Newfoundland, including 30 km under the Strait of Belle Isle between Labrador and Newfoundland, according to Nalcor’s website.
Nalcor hopes to build the second phase of the Lower Churchill Falls project - a 2,250-MW hydropower plant at Gull Island - at some point in the future.
Reporting by Scott DiSavino; Editing by Bernadette Baum