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It's a single nagging question - and one that should bother even Muskrat Falls' strongest supporters. If the project really does represent the cheapest source of power for the island, why does Nalcor have to have legislation expressly preventing large industrial users or electricity retailers in the province from starting their own power generation projects?

Surely if it's the cheapest source of power, no one's going to build a plant to make more expensive power.

If it's the cheapest, there's no competition.

Strangely, though, the provincial government is clearly afraid that someone can compete with its project.

That's why, in Bill 61, currently being debated in the House of Assembly, the province is seeking to make it illegal for large industrial companies to build new power generation systems - even for their own use. Retailers like Newfoundland Light and Power would also be forbidden to build new generation facilities to supply their customers.

You can understand why the government might be concerned: if a large industrial customer, for example, decides that post-Muskrat power is too expensive, they might build a natural gas turbine generator - and in the process, punch a huge hole in the provincial demand for electricity, seriously damaging the economic case for Muskrat Falls.

Vale Inco, for example, might decide there are cheaper ways to make power onsite than by paying for expensive power from Labrador - and they've got deep enough pockets to do the math and see whether they would benefit in the long run from operating their own power supply.

Or the Come By Chance refinery - refineries are big electrical users and there are many that save money by operating cogeneration facilities that make power using low-cost or low-demand refining byproducts.

The thing is, though, if Muskrat Falls is the cheapest source, then none of those industrial customers would be able to find a cheaper way to make their power - leaving the question of why the project needs legislative protection.

There is also a bigger question about the province's proposed law: electricity is a legal product. There are necessary laws about its safe use, generation and transmission, but telling companies they cannot generate and use their own power seems like a longer reach than most voters would expect their governments to have. It's also a barrier that's in direct opposition to the spirit, if not the letter, of many trade guidelines that Canada has agreed to - something its drafters don't seem to have considered. After all, we want our power to reach American markets without penalties or tariffs - yet we want to put legislative trade barriers in place to keep cheaper power from coming the other way. It sounds a lot like wanting to have your cake and eat it, too.

Something to keep in mind: the last time a drive-by piece of legislation sped through the House of Assembly, it brought this province $100 million or more in future environmental bills, a heavily contaminated paper mill site and a $130-million settlement by the Canadian taxpayer to settle a North American Free Trade Agreement challenge.

What are we heading for this time?

Geographic location: Labrador, Canada

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Recent comments

  • Wayne R Bennett
    December 28, 2012 - 11:40

    What are we heading for this time? The cliff!

  • Maurice E. Adams
    December 23, 2012 - 11:02

    My comment re Bill 61 seems to have been in error, as when (b) is read in concert with the rest of the amended section it does indeed appear that energy generation by industrial customers, even for its own use, is prohibited.

  • Maurice E. Adams
    December 23, 2012 - 08:56

    Bill 61 states "(b) a retailer or an industrial customer shall purchase electrical power or energy exclusively from Newfoundland and Labrador Hydro in respect of the business or operations of that retailer or industrial customer on the island portion of the province."......Depending on how that is read, and while it is correct to say that retail or industrial customers must "purchase" electrical power or energy "exclusively" from (that is, from no one else other than) NL Hydro ----- "purchasing" is not the same as as creating and using electrical energy and using it (not 'purchasing') it for your own needs........ So it seems that there may be nothing to stop an oil refinery, a paper mill, or a nickel refinery from creating its own electrical power or energy (from wind or natural gas) and using the power or energy created (but not 'purchased') for its own use. -------What would that do to the viability of this Muskrat Madness?

  • W McLean
    December 22, 2012 - 13:04

    The answer is quite simple: Shut up and stop asking so many questions.