The provincial government released a report today on electricity rates it says concludes that Muskrat Falls will result in lower and more stable rates for consumers compared to the Holyrood Isolated Island option.
The paper is entitlted “Electricity Rates Forecasting: Muskrat Falls will Stabilize Rates for Consumers.”
“In the Energy Plan, we stated that our priority is to meet current and future electricity needs with environmentally friendly, stable and competitively-priced power,” Natural Resources Minister Jerome Kennedy said in a news release.
“The hydroelectric power generated from Muskrat Falls will ensure that ratepayers receive a secure, renewable source of power at the least cost possible and stop the trend of increasing rates based on oil prices.”
The news release states:
Electricity rates between 2001 and 2011 for the average ratepayer on the Island have increased 32 per cent or approximately $45 per month, which is an annual average increase of approximately 2.8 per cent. This increase was based largely on increased oil prices.
The report illustrates that between 2011 and 2016 for the average ratepayer on the Island, rates are projected to increase by an additional 16 per cent or approximately $30 per month, an annual average increase of 3 per cent. These increases have nothing to do with the development of Muskrat Falls and are again based on a forecast increase in oil prices, and increasing electricity demand.
Muskrat Falls will result in lower and more stable rates for consumers compared to the Holyrood Isolated Island option. From 2016 to 2030 without Muskrat Falls, electricity rates for the average ratepayer are projected to increase by 38 per cent, approximately $82 per month. In the same period, with Muskrat Falls rates for the average ratepayer will increase by only 18 per cent, or approximately $38 per month.
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"We understand how important electricity costs are to consumers," said Ed Martin, Nalcor president and CEO. "Our focus has been to determine the path forward that provides the lowest rates for consumers and Muskrat Falls with a link to the Island will curb the volatility and growth we see in electricity rates today and ensure our rates are stable well into the future."
The release continues:
The cost of electricity production on the Island is directly linked to electricity demand and oil prices. Muskrat Falls will reduce the province’s dependence on oil and ensure that ratepayers are not vulnerable to price volatility and uncertainty with respect to supply and demand of global oil markets.
Crude oil prices are predicted by experts to stay above $100 per barrel, as referenced in PIRA’s Forecast Methodology and Assessment of Future Oil Price Trends also released today by the provincial government. The electricity rates report illustrates that without the development of Muskrat Falls, Holyrood will have to be used more and the cost of operating it will increase with rising world oil prices. Holyrood currently generates between 15 to 25 per cent on average of the Island’s electricity annually. At peak demand, the plant burns 18,000 barrels of oil a day. In 2017, for example, the annual cost of oil to generate electricity at the Holyrood plant is projected to be $324 million without Muskrat Falls.
To view the full discussion papers, visit: www.powerinourhands.ca.