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Wisconsin is a long way from Muskrat Falls. But, given the interconnectedness of the North American electrical grid — a grid we expect to join with the building of Muskrat Falls and the Maritime Link — Kewaunee, Wis., might just be a little closer. Tuesday, the Kewanee nuclear power plant — a plant that had been selling into the U.S. spot electricity market — closed its doors, putting more than 600 people out of work. The plant was built in 1974, but the plug was pulled and the expensive decommissioning process started because of steadily-falling power prices.

Here’s how its owners described the closure of its plant: “This decision was based purely on economics,” said Dominion Nuclear president David Heacock. “This closing does not herald the end of our company’s commitment to nuclear power. It is a safe, reliable and carbon-free technology, but as with all forms of generation, it must compete on economics, including the necessity of being price competitive on a regional level.”

Those economics are daunting right now. Before Muskrat Falls was sanctioned, there had been discussions about Nalcor expecting power sales of five cents a kilowatt hour — far less than ratepayers in this province, who will shoulder the full cost of building Muskrat Falls, will pay, but at least some return. New numbers from Hydro-Québec are disturbing. Its annual report points out, “After reaching a historic peak in 2008, natural gas and electricity prices in northeastern North America dropped sharply in 2009, then rose slightly in 2010 only to fall again, such that prices in 2012 were at their lowest in 10 years.”

The accompanying graphic shows power sales from natural gas as low as two cents per kWh. It will cost 7.6 cents a kWh to produce power at Muskrat Falls, let alone the cost of transmission systems and the costs of wheeling it south to market. (Interestingly enough, a chart of electrical prices in that same annual report as of April 1 — well before Muskrat Falls and its inevitable hikes — listed St. John’s as having the third-highest power bills in the cities sampled, trailing Montreal, Winnipeg, Seattle, Vancouver, Miami, Houston, Portland and Nashville.)

But back to Wisconsin. The 556-megawatt Kewaunee plant shut down after its electrical utility customers switched to cheaper power generated by natural gas.

And it’s not alone, as the New York Times pointed out Wednesday: “Earlier this year … the owners of the Crystal River 3 plant in Florida decided to retire it rather than repair its containment structure, because of unfavorable economics. Industry experts say that several reactors are operating at a loss while their owners wait for the glut of natural gas to disappear. How long that will be, and how many will last, is not clear.”

It’s going to cost something like $900 million to decommission the Kewaunee plant. It’s cheaper to spend that money than to keep operating. The decommissioning will take time, and that delay may affect the total costs, according to the New York Times: “(A) commission expert said the actual budget was open to question. But ‘when you try to do any of these calculations beyond seven years, I’ll be frank with you,’ said Michael Dusaniwskyj, an economist with the commission. ‘It’s a shot in the dark.’”

The Dunderdale government must understand about shots in the dark. Last year, its single-year forecast for the price of oil was hopelessly optimistic (leading to a much-larger-than-expected deficit) and the forecast for this year is already trailing real oil prices.

Plenty can change over the 50-year roadmap for Muskrat Falls, and not all of it for good.

Organizations: North American, Dominion Nuclear, New York Times Hydro-Québec

Geographic location: Muskrat Falls, Wisconsin, Kewaunee, Wis. Kewanee U.S. Kewaunee North America Montreal Winnipeg Seattle Vancouver Miami Houston Portland Nashville Crystal River Florida

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Recent comments

  • Colin Burke
    May 10, 2013 - 09:20

    I forget her name, most unfortunately, but a perceptive and well-read person familiar with a book by E. Nesbit pointed out on this website some time ago that the reason we don't rise in the streets is that we got votes, b'ys, and voting -- which is wishing for what we want instead of doing what produces it -- is the zenith of privileged activity. Wishing thus for what one wants works well indeed for those with loads of money to pay for it, which is why those who get us to vote assume that wishing is the ordinary method of production or acquisition: it is so much their ordinary method that perhaps innocently they can conceive of no other. Or, as the reader of E. Nesbit suggested, perhaps they are not so much innocent as deviously cunning.

  • Lucien Beauregard
    May 09, 2013 - 15:27

    All I keep hearing is "Muskrat, Muskrat, Muskrat". I would like to hear about the Churchill Falls Contract litigation in Quebec Superior Court !

    • Just Sayin
      May 10, 2013 - 10:20

      Lucien, I agree, there is so little attempt to have the good people of Quebec, and their Superior Court , act to help Nfld in our circumstances, as to the Upper Churchill contract. And while a contract may be a contract, do you not agree the aboriginal rights as to the Upper Churchill were ignored, but have never been addressed.

  • Who is going to be monitoring the Muskrat Falls Project for cost-overruns that will impact the Newfoundland and Labrador Hydro consumers.
    May 09, 2013 - 13:19

    If I could be assured that there is some entity or over-seer in our Government, for instance an "Anti-Corruption" Commission monitoring against "cost over-runs" that impact Government Projects like Muskrat Falls, I would feel more secure that the Project would come in close to the cost that is projected. If I read the news correctly I believe the orchestrator of the Muskrat Falls Project, just faced a large cost-overrun on a private estate he has under construction and has sued the developer for retribution. He, apparently, is quite capable of looking after his own affairs, but who is going to keep check on a Government Project that the hydro-rate payers of Newfoundland and Labrador are going to be on the hook for in the risks of cost-overruns and the mortgage payment for the next 50 plus years?

  • Jan B
    May 09, 2013 - 12:06

    All I keep hearing is "Muskrat, Muskrat, Muskrat".

    • Tony Rockel
      May 09, 2013 - 13:54

      And so you should be hearing about it! If this travesty of social and economic justice goes ahead you'll thinking about every time you look at your hydro bill and your tax bill for the rest of your life!

    • Eli
      May 09, 2013 - 14:34

      Too bad you didn't listen Jan B! You got screwed too whether or not it's registered yet.

  • Wondering
    May 09, 2013 - 11:46

    Cryril, when did we ever have a fighting spirit? The sealers strike, was it 1905? The march on government house in 1932 when they wanted to hang Squires? Things get pretty desperate here before there is any fighting spirit, because, I suppose , Nflders are generally too green to burn. And that 60 percent could still support MF, it shows there are still a lot of green there. Now the whole thing is complex, but a terrible scheme supported by all 3 political parties. So, apart from the few critics, how is the average person to know the truth? The marching in the streets will come in a few years, when we see more people needing to take the axe to chop the meter off the house. In this age of mass communication, so few seek out the truth about this MF scheme. Too many still believe the Premier that we will be in the dark if MF don't proceed. And even ordinary workers will go for a few quick bucks on construction jobs even if it means 50 percent higher energy bills. The attitude :if it's good for me in the short run , that ok. I'll rant and roar later. Isn't that the Nfld fighting spirit?

  • Cyril Rogers
    May 09, 2013 - 11:07

    Many excellent comments, by informed readers, on this article. As one who has also spent a considerable amount of time trying to understand and analyze this project, I am dismayed that we are continuing to go blindly forward with this development. It is abundantly clear that it can never make any money, that it will hamstring us financially for generations, and, it is being built to satisfy greedy oligarchs whose sole motive is profit at the expense of people. Where is the fighting spirit of the people of our province? Why are we not out demonstrating in the streets? People in dictatorial countries are literally dying for basic freedoms and yet we are allowing our democratic rights and fiscal freedom to be eroded by a government with no clue about the nature of its development of this project.....or, if they do feel they must go ahead, they are so insecure as to stymie all opposition and dictate the assessment process. That, in and of itself, tells me they know this is uneconomic, so the logical question then is: Why are they so blindly forging ahead? What is driving their headlong rush to political oblivion? Most importantly, why are we not rising up in province-wide protest?

  • Maggy Carter
    May 09, 2013 - 10:39

    It seems that - when you discount partisans, government hacks, economists-for-hire, and industry lobbyists - it is very difficult to find intelligent, informed, objective individuals who do not see an enormous dark cloud looming over this province in the wake of the Muskrat sanctioning. As others have pointed out, the ultimate cost of Muskrat power to this province's ratepayers and taxpayers will dwarf even the cost of NALCOR's inflated island option, let alone the many other options our PUB was not permitted to evaluate or even allow to be discussed at hearings. Yet, it wasn't even this lack of latitude in its mandate that prompted the PUB's refusal to rubber stamp the project - it was the deliberate withholding by NALCOR and government of data essential to the discharge of its mandate. This is why the URB hearings on the Maritime Link which are due to get underway in Nova Scotia later this month should be of interest to Newfoundlanders. The terms of reference assigned to the URB are not as restrictive, and the Nova Scotia Consumer Advocate has taken his responsibilities far more seriously than did our own in this province. A report commissioned by advocate John Merrick from Levithan out of Boston recently concluded that Muskrat Falls power will be more costly for Nova Scotia than other options. Bear in mind that Nova Scotians will pay far less for our power than will Newfoundlanders and Labradorians as owners of the resource. Based on the number of interventions filed by the deadline, the hearings which begin May 28th will constitute the longest review ever undertaken by the utilities review board in that province. It is possible that we will discover more about the economics of Muskrat - and the legal ramifications of the deal with EMERA - than the Dunderdale government was ever prepared to make public in this province. One caveat. Just as Premier Dunderdale ran roughshod over the PUB in this province, Nova Scotia's Darrell Dexter has recently gone on record as saying that - despite what the URB may conclude - his government is going ahead with Muskrat power even if it requires the passage of new legislation in the Nova Scotia legislature. An election is expected in the province in June, during which Muskrat Falls is likely to be a bigger issue for voters than it was in this province.

  • Foghorn Leghorn
    May 09, 2013 - 09:20

    This terrible deal was designed only to benefit industrial markets in the province mainly Labrador. It was marketed to the general public as some kind of doomsday deal. If we don't do it you won't have lights in your house so to speak. How short sighted is it lock yourself into a long term deal with a monopoly on power generation. We all look back at the Upper Churchill deal with a similar feeling, What were the powers to be thinking at the time? I guess history has a strange way of repeating itself.

    • Eli
      May 09, 2013 - 18:13

      What were the POWERS thinking this time? Surely Foghorn you refer to THE WINGNUTS!

  • Wondering
    May 09, 2013 - 09:13

    And it is easier and cheaper for Nova Scotia to access this cheap gas fired electricity than to pay for the maritime link. So NS may very well opt out. But Nalcor pushes ahead. If NS opts out , so does the feds and their guarantee. But this low gas cost is what Cabot Martin said would happen. Isn't the events unfolding as the MF critics warned? Time for another poll on how many Nflders support MF? Mark Twain said ""a lie gets half way around the world before the truth gets out of the starting gate". The truth about MF is starting to catch up. But the lie still leads. And those that promote the lie, their nose grow daily.

  • Tony Rockel
    May 09, 2013 - 08:40

    Thanks to this government's blind pigheaded stupidity, the people of this province are about to screwed for the next 50 years, this time not by Quebec but by our own PC government. Actually we'll be doubly screwed because at the same time we'll still be subsidizing Quebec thanks to the Smallwood fiasco.

  • Jon Smith
    May 09, 2013 - 08:33

    The Newfoundland taxpayer has not only been shafted by the by the VOODOO economics of Nalcor and the provincial government with the legislative lock in of excessively high electricity rates but as well by the federal government. Harper had promised to support the project based on a review of its economic viability which the environmental reviews had recommended. Instead the feds about faced and acted in concert with the province to stymy the environmental review process and dictate the terms of the loan guarantee in a "road show" after summoning the premier to Goose Bay. No economic review was made public. Thereby the Harper government let the Newfoundland people down. It is depressing to think of it as payback for the ABC campaign but that aspect is hard to ignore.

    • Just Dawned on Me
      May 09, 2013 - 10:01

      Haven't you figured it out yet; Harper was delighted to give NL the shaft as a payback to the ABC. The effects of Danny's slight to Ottawa will have negative effects on NL for generations to come.

  • concerned
    May 09, 2013 - 07:25

    It is unfortunate that NALCOR failed to meet their legislative mandate (EPCA-1994) to review all power sources to provide the least cost power to islanders. In their assessments they did not examine quantitatively the import of electricity from North America. This could be through either the Labrador Link (Upper Churchill Power) or the Maritime Link. Although we will be physically linked for the first time in our history, Bill 61 will ensure that we will remain economically isolated from the rest of North America. Cheap Power is at our fingertips, brought to us by shale gas. Instead we will continue to have the most expensive power in North America, known as Muskrat Falls. 3 Generations of Newfoundlanders will be shackled to this project. This hyperbole could be wrong... but we will never know because Nalcor did not do their job. It is that simple. Also as a quick reference 800 GWHr of the 2000 GWHr initially needed for the island from Muskrat Falls will be used to supply Vale. They will effectively get this at industrial rates of 4 cents a kwhr. So in reality the other 1200 GWhr going to residential users will be paying about 27-30 cents on an incremental basis. This is about 5 times the North American benchmark. In their rate calculator I do not believe Nalcor considered the 800 GWhr of power to Vale will be sold at industrial rates, and not residential rates. This deserves to be looked into.

    • Just Sayin
      May 09, 2013 - 08:58

      At a time when all large commercial buildings are using efficient heating systems, thereby saving 60 percent on heating costs ( and their cost is about 10 cents per kwh), Vale is not using efficient heating systems. And why should they, when getting power at 4 cents, subsidized by the ratepayer average Joe. This modern plant is using heat technology that is 100 years old. They use about 74 Mw of power. How much reduction was possible with efficient heat?

  • Maurice E. Adams
    May 09, 2013 - 07:13

    Muskrat Falls power production costs alone are 22 cents per kilowatthour (plus 14+ cents for transmission, if my memory serves, for a total of 37 cents / KWh). Nalcor comes up with the misleading 7.6 cents figure by shifting real costs to future generations (their escalating supply price, 'take or pay' pricing scheme)........ the difference in the figures show how much our children and grand children will be burdened by high cost Muskrat power. Not only will they have to eventually pay the real 37 cent cost, but it is they who will pay the early year shortfall (the difference between the 37 and 7.6 cents figures).