For the average person paying a monthly electricity bill in this province, your bill will be less in a world with Muskrat Falls than in a world without it, according to both the provincial government and Nalcor Energy.
In an attempt to provide an answer to perhaps the most pervasive question associated with the hydro megaproject — the question of what bills will look like with Muskrat Falls — the Department of Natural Resources released a discussion paper Tuesday, projecting dollar amounts expected on monthly bills between now and 2030.
Averages were offered for those who rely on electric heat (about 140,000 customers) and those who do not rely on electric heat (about 90,000).
Looking at all ratepayers together, the average bill with average power usage is expected to go up, between 2016 and 2030, by $38 with Muskrat Falls, compared with $82 on the isolated island option.
The discussion paper, available online, is being offered in conjunction with the online rate calculator, as a comfort for people concerned about talk of power bills doubling, said Natural Resources Minister Jerome Kennedy.
“As you probably remember, this started over a year ago, with the mantra that power rates will double. That went on for quite some period of time (and) had the effect of instilling fear and providing inaccurate information to the public,” Kennedy said, during an afternoon news conference at the House of Assembly.
Price of oil will make a big difference
“Why did we put it in writing? Because we’ve said it and people don’t believe us,” Kennedy said. “So here, it’s in writing. Go test us. Show us where we’re wrong and basically, to the people of the province — not the critics. To the people of the province — we have the confidence to put these numbers in writing to try to help you understand Muskrat Falls.”
Nalcor Energy CEO Ed Martin was sat beside Kennedy. “Understanding and projecting rates is regular business for Newfoundland and Labrador Hydro,” Martin said, explaining his confidence in the numbers. Hydro is a Nalcor subsidiary.
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One big difference between the estimates on power bills with and without Muskrat Falls is the cost of oil.
“It’s projected, in 2017, it will cost $324 million for oil at Holyrood,” Kennedy said.
With Muskrat Falls, that money can go elsewhere.
Some of the criticism of the online rate calculator has been focused on what price of oil was used in determining the power bill figures.
Kennedy said the province is relying on projections from PIRA Energy Group, based in New York.
“Oil will stay, according to them, above $100 a barrel and that’s consistent with other expert opinions,” he said.
The government has released an analysis and up to date prediction for the price of oil from PIRA.
The report was prepared on the request of government and briefly explains the methodology used for developing oil price forecasts. Economic growth, technological changes, global supply, government policies and sudden, political upheaval are all considerations, it states.
Prices are forecast as ranges, with low and high cases considered and those cases weighted.
PIRA has predicted the price of Brent crude oil to average $100-105 (in 2011 dollars and adjusted for inflation) from 2012-2025.
The bottom line from government: they are as certain as they can be on oil.
Power bills are expected to rise across the board between 2011 and 2016, but that increase has nothing to do with Muskrat Falls, the government has stated. Instead, the increase is attributed to the price of oil for Holyrood combined with electricity consumption.
The Maritime Link and potential sale of excess power — whether to Labrador mining companies, or outside of the province — has not been factored into the power bill estimates.
According to Martin, any money made from power sales would come into Nalcor and then be paid up to the province. Government can then decide if it wants to use the profit to help bring down the cost of power to individuals and businesses, or put the money towards other projects.
For anyone now worried about being able to cover their power bill, Martin said energy conservation is a way for individuals to keep costs down. He encouraged individuals to consider rebates for certain home upgrades, as covered under the Take Charge NL energy program, offered by Newfoundland and Labrador Hydro and Newfoundland Power.
Energy demand and conservation will be tackled today, as the Department of Natural Resources releases another Muskrat Falls discussion paper. “I don’t expect there’s going to be any great surprises there,” Kennedy said.
Opposition members said they wanted to see the information on demand.
“We’re glad that the (pricing) information is out there now, but from what I can see the rates may still increase depending on other factors,” said Liberal MHA Andrew Parsons.
Specifically, if demand for power comes in below projections, Parsons said he believes power rates may go higher.
“The real message here is that Newfoundlanders themselves are going to have to use this 40 per cent (of power from Muskrat Falls for the island) in order to keep rates stable, according to what Mr. Martin and Mr. Kennedy are talking about,” said NDP MHA George Murphy.
“If we don’t see that full 40 per cent taken up, the possibility here is that rates could increase over and above what they’re initially projecting.”