Cost increases means price go up - probably

James McLeod
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Marshall floats Liberal idea of subsidizing power rates

The projected cost to build Muskrat Falls has jumped by around $800 million, but it’s not clear exactly what that will mean on your electricity bill.
When Premier Tom Marshall spoke to reporters Thursday afternoon, he had a sheet of paper in hand which showed the forecast increases for ratepayers.

Natural Resources Minister Derrick Dalley (left) and Premier Tom Marshall speak about Muskrat Falls hydroelectricity project cost overruns Thursday. — Photo by James McLeod/The Telegram

But at the same time, Marshall said if it was up to him, the government would use excess power revenue to offset rate increases from Muskrat Falls.

Previously, Muskrat Falls was forecast to increase electricity bills by $38 on average between 2016 and 2030. With costs going up, the new forecast is a $46 per month increase in power bills between 2016 and 2030.

The way the deal to develop Muskrat Falls is structured, Newfoundland and Labrador ratepayers foot the bill for the full cost of building the hydroelectric dam in Labrador and the power lines to the island.

But domestic ratepayers only use around 40 per cent of the electricity, and 20 per cent of the power goes to Nova Scotia in exchange for building the Maritime Link between Cape Breton and Newfoundland.

That leaves 40 per cent of the Muskrat Falls electricity which the government can sell on the North American energy markets or use for industrial development. And since ratepayers are footing the full bill for the cost of building the dam, whatever money the government gets from those power sales is essentially all profit.

For years, the Liberals have been saying that money from the excess power sales should be used to subsidize the electricity bills of ratepayers in Newfoundland and Labrador.

Up until now, the Progressive Conservative government has insisted that they won’t commit to doing that. Then-premier Kathy Dunderdale always said that it would be up to the government in 2017 to decide, once power starts flowing.

“I can tell the people of the province, however, if first power were flowing today, that this government would use the money from the project’s revenue stream to offset this increase in electricity rates,” Marshall told reporters Thursday. “It’ll be the decision of the government of the day, and if we’re the government of the day, we commit to that.”

Marshall’s words come with the caveat that he’s got one foot out the door; in a matter of months, the PC party will select a new permanent premier and then Marshall will hand over the keys to the premier’s office to somebody else.

Liberal House Leader Andrew Parsons said the cost increases mean that the announcement on cost increases is very bad news, but he said he’s happy to hear that the government is looking at using excess power sales to keep costs lower for ratepayers

“So what they’ve done here today on a bad news announcement they’ve tossed this in. They’ve used a Liberal policy,” Parsons said. “They still haven’t committed to it. They that’s what they’d do if they’re there, but that’s something that a Liberal government would do, as Dwight Ball has said repeatedly.”

Twitter: TelegramJames

Organizations: North American

Geographic location: Muskrat Falls, Newfoundland and Labrador, Nova Scotia Cape Breton

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Recent comments

  • Maurice E. Adams
    June 27, 2014 - 14:06

    Nalcor's 2011 media presentation shows that revenue (from NL ratepayers) flowing into Nalcor (the portion over and above operating and debt servicing costs) is 15 times its 8.4 % return on equity entitlement. So (even forgetting about the piddly amount we will get from Nova Scotia), Nalcor is fleecing an unnecessary $18 billion (the portion over and above MF operating and debt costs) out of NL ratepayers. Remove that, and perhaps our rates need not go up at all.

  • Dumb-Minister in the Age of Active Materials!
    June 27, 2014 - 04:35

    Will this Cool Cat of finance leave the Office with Derrick's tongue, or gracefully give it back on his way home? The symbolism of the Christmas-paper motif neck-ties and the 5 Pratt-flag golden arrows pointing to ground confined by two Stanley-flags speaks volumes. I have absolutely no idea how to read Dalley's seemily sour facial expression however and it will likely remain a mystery forever. Is he 9 minutes into a stare-down with Telegram James? Burner left on the stove at home? Severe Toothache? Missed Garbage Day? Got Jury Duty? Or, just the normal Lingual Extensile Dysfunction he has suffered since taking over Energy & Resources portfolio? Marshall seems to be signalling to us with his thumb in the style of Arthur Herbert Fonzarelli; signalling that Happy Days are indeed coming to him as they have to Williams, Kennedy, Dunderdale and any other impotent politicos who have donated their time to Ottawa and/or Industry while in Office, as dumb-ministers. Slightly more useful invention than the dumb-waiter. The drawback is the pensions.