Backgrounder - Nalcor Energy and Emera Inc. Term Sheet

Project Details

Thirty-five year deal which includes construction of Muskrat Falls Generating Station, Labrador Transmission, Labrador-Island Transmission Link, and the Maritime Link.
Emera Inc. (Emera) will contribute 20 per cent of construction costs and provide transmission to Nalcor Energy (Nalcor) across the Maritime Link and through Nova Scotia. Emera will also pay the costs of operating and maintaining the Maritime Link to a maximum of 20 per cent of the operating and maintenance costs of the entire project.
Emera will invest in the Labrador-Island Link at an amount such that its total investment in the overall transmission assets does not exceed 49 per cent. Nalcor will be provided similar investment opportunities in future Emera infrastructure.
Nalcor will manage and execute the design, engineering, construction and commissioning of Muskrat Falls and the Labrador-Island Link.
Nalcor and Emera will jointly manage and execute the design engineering, construction and commissioning of the Maritime Link.
Emera to own greenhouse gas credits associated with its block of power which they cannot sell and Nalcor Energy owns the remaining credits.
Governing law for the term sheet is Newfoundland and Labrador.
The Term Sheet expires upon the conclusion of the formal agreements or November 30, 2011.
Both Emera and Nalcor will formalize the agreements and conclude matters such as environmental assessments and engineering work.

Nalcor to provide Emera with approximately one terawatt hour per year (Nova Scotia Block) for a term of 35 years.
Power to be provided to Emera for 16 hours per day (on peak) and Emera’s transmission rights on the Maritime Link are limited to delivery of the Nova Scotia Block.
Emera may seek to extend the agreement beyond 35 years and Nalcor must negotiate in good faith to reach an agreement on an extension. If an agreement cannot be reached, Nalcor may sell to third parties.
Both parties can seek to expand the Maritime Link together or separately if the other decides not to participate.
Both parties will work together on an environmental assessment submission for the Maritime Link.

Nalcor will own all transmission rights on the Labrador-Island Link.
Emera will be granted transmission rights on the Maritime Link sufficient to deliver the Nova Scotia Block. All remaining Maritime Link transmission rights will be held by Nalcor.
Emera will provide Nalcor with transmission rights from Cape Breton to the Nova Scotia/New Brunswick border up to Nalcor’s capacity on the Maritime Link. Nalcor will pay the Nova Scotia transmission tariff.
Nalcor will be provided use of Emera’s transmission rights to transmit power through New Brunswick with Nalcor paying the associated transmission tariff when used by Nalcor. If these rights cannot be acquired or extended, Emera will purchase the power Nalcor would have sold through New Brunswick. Alternatively, at Nalcor’s option, Emera will provide Nalcor with the opportunity to acquire or use 300 MW of firm transmission if proposed Nova Scotia-New Brunswick transmission line is constructed.
At the termination of the delivery of the Nova Scotia Block, ownership of the Maritime Link will revert back to Nalcor Energy for $1.
Emera will hold its investment in the Labrador-Island Transmission Link in a Newfoundland and Labrador public utility.