Well, there’s an interesting twist. Last week, an independent review of the Muskrat Falls project, done for the Nova Scotia government, found that power from the project would be cheaper for Nova Scotians than power from any other available source. The review was done by a company picked for the job without a tender call, and was started last September.
The Nova Scotia government has suggested it may enter the study as evidence before that province’s public utilities board, which plans to hold hearings on the Muskrat Falls deal.
Now, however, there’s an even more interesting twist to the twist: Hydro-Québec is saying it might seek to intervene in the utilities’ board hearings, because it feels it has not been properly represented in the new study.
Of particular interest, says Hydro-Québec spokeswoman Ariane Connor, is that the consultant doesn’t outline what the power from Muskrat Falls will actually cost.
“Normally we don’t comment on such third-party reports,” Connor said in an interview with The Chronicle Herald in Halifax. “But having had a chance to look it over quickly over the last 24 hours, we’re very surprised by the analysis and the conclusions of the report.”
Among the other surprises, there’s the fact that the consultant had not even spoken to Hydro-Québec about the price of its electricity before dismissing it as being more expensive than power from Muskrat Falls.
In fact, the report, by U.S.-based Power Advisory LLC, suggested that power from Hydro-Québec would be $402 million more than Muskrat Falls power over the 35-year period of the contract.
Fip that on its head and ask yourself an interesting question: since Quebec has several sites that generate power for far less than Muskrat Falls will, and since Hydro-Québec has signed contracts to supply power for substantially less than the cost of production and transmission from Muskrat Falls, just what kind of discounted power is Nova Scotia actually expecting to receive over the life of the 35-year Maritime Link contract?
Clearly, power that costs $402 million less than a competitor with lower supply costs can provide.
Since ratepayers in this province are being expected to pay for pretty much the whole transmission and generation shooting match — including any overruns on the massive project — perhaps we deserve to know the missing piece. It’s a piece that’s so important that the Nova Scotia government’s consultant can’t even find a way to include it in his report.
How much, per kilowatt hour, will it cost for Nova Scotian energy firm Emera to get power from Muskrat Falls? After all, that number shouldn’t be too hard to calculate: take Emera’s price tag for the Maritime Link, look at the interest rate they’re expecting and the total financing costs, and divide by the kilowatt hours over the 35-year term of the contract.
Then, you have a number. It’s a number that Emera has refused to reveal when its executives were asked directly about it in a Nova Scotian legislative committee, and it’s an important number that Power Advisory must have known in order to make its comparison, and yet must have deliberately left out of the final document.
So, why is it that no one wants to talk about what the effective rate will be? Now that the deal’s done, there’s really no reason not to tell us what we’ve signed onto.
It does seem that, in the absence of that number, the U.S. study is somehow too good to be true.
You have two farmers growing apples, both of them as far away from a Halifax market as Labrador. Farmer A can grow them for less than Farmer B, but customers in Halifax will get their apples from Farmer B for $402 million less than Farmer A would supply them.
What does it look like? Like Farmer B’s offering a pretty big subsidy by offering his apples below cost. That’s OK: Farmer B’s closest customers, the ones that don’t have an option, will pay all the more to cover the cost.
It’s putting me right off apples.
Russell Wangersky is The Telegram’s
editorial page editor. He can be reached by email at rwanger@thetelegram.com.
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For those who choose to read the text of the consultant's report, they clearly state the basis for their assumed rates from HQ: "we have assumed that Hydro-Quebec receives the New England market price" (p.6 of 39). This means they don't have to consult HQ for their prices (which won't be forthcoming anyway), but instead assume HQ would be indifferent to either selling to NS or to the US. Given NS's limited set of options for supply, it's more likely HQ would actually want a higher price.