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To see the news releases, you’d think everyone won. The Nova Scotia Utility and Review Board (UARB) wanted a commitment from this province’s Nalcor and Nova Scotia’s Emera that a Maritime Link would have more energy available at reasonable cost for Nova Scotia consumers.
Emera and Nalcor needed that UARB approval to give the Maritime Link the go-ahead, and Nalcor needed customers for the excess energy it has forecast that this province will have, once Muskrat Falls is in place.

To see the news releases, you’d think everyone won. The Nova Scotia Utility and Review Board (UARB) wanted a commitment from this province’s Nalcor and Nova Scotia’s Emera that a Maritime Link would have more energy available at reasonable cost for Nova Scotia consumers.

Emera and Nalcor needed that UARB approval to give the Maritime Link the go-ahead, and Nalcor needed customers for the excess energy it has forecast that this province will have, once Muskrat Falls is in place.

So Nalcor has committed to supply additional power to Emera — an average of 1.2 terawatts of additional power every year for the next 25 years — and to supply that power at what’s known as the Massachusetts Hub price, which is the price of electrical energy in the northeastern U.S. marketplace.

Nalcor boss Ed Martin described it like this in a news release that was emailed Monday morning; the deal was signed on Sunday. “This makes good business sense for Newfoundland and Labrador — we are offering power surplus to our needs at a competitive price to the Nova Scotia market. It’s a win for customers in both provinces and makes a great project better.”

There are some fine points that should be considered. First, there’s the commitment to supply the power. The output of Muskrat Falls is still a question, especially as Hydro-Québec seeks legal review of whether a water management agreement on the Churchill Falls watershed can actually be imposed upon their rights under the Churchill Falls agreement.

As well, this is precisely the kind of long-term contract Nalcor had earlier said it wanted to avoid, saying this province needed the ability to use an ever-increasing amount of power locally, including power for Labrador mining operations.

Then, there’s price. If we charge Nova Scotia consumers the same price we would get for shipping power to the Massachusetts Hub markets, we would save the wheeling fees (the cost of shipping the energy to market) and still reap the same return. That’s a win.

 At the same time, under this agreement, if everything were in place right now, the Nova Scotian utility would have Muskrat power at a price of roughly four cents a kilowatt hour (given the current Mass Hub prices), while the power, with delivery costs added in, would cost consumers on the Avalon something over 20 cents a kilowatt hour.

How could that be classed a win? Well, because the whole deal has to be looked at through a rather precise prism: the 20 cents is just what it will cost to pay for the project, and the structure has already been structured so that Newfoundland ratepayers carry the cost. The rest of the energy is, if you look at the right way, free (because the asset is being paid for by us) and Nalcor would be getting something like four cents a kilowatt hour for something it gets free.

That’s not going to help you when your electrical bill comes through the door, but it does make a kind of sense.

What can be said for certain about the new deal?

Nova Scotia’s utilities regulator was able to wrest modifications from the deal’s proponents that will help protect Nova Scotia consumers. They haven’t accepted this new deal yet, and may squeeze out even more before the deal is done.

Not only was our provincial utilities regulator unable to do the same for consumers here, they were specifically forbidden to do so by the government.

Nova Scotia customers will get a little more security because of their regulator.

More power to them — literally.

Organizations: UARB, Nova Scotia Utility and Review Board, Hydro-Québec

Geographic location: Nova Scotia, Newfoundland and Labrador, U.S. Massachusetts

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Recent comments

  • Corporate Psycho
    October 22, 2013 - 20:34

    History repeating itself.

  • Cyril Rogers
    October 22, 2013 - 10:57

    So, forgive me if I am a little bit "stunned" but, if we get 4 cents and it costs in excess of 20 cents to produce it, someone has to pay, or will pay. That someone is, and can only ever be, the ratepayers of Newfoundland and Labrador. As the song from Buddywassisname goes, NAlCOR, Ed Martin, and the government must be "as stunned as me arse".....or is it the complacency of the people to let this happen? Great deal for Nova Scotia, great deal for Emera, great deal for NALCOR revenue.....but it really sucks to be a ratepayer in NL.

  • Foghorn Leghorn
    October 22, 2013 - 09:09

    Only in Newfoundland and Labrador would the taxpayers pay twice for their electricity, once to finance Muskrat Falls and the second to buy electricity at premium prices. While we sell it to Nova Scotia and local mining interests for below cost. In the immortal words of Danny Williams - This is Sum Good Deal Bye - now pass me my Nalcor kool-aid.

  • Jon Smith
    October 22, 2013 - 07:47

    For the Newfoundland consumer it is not win win, it is spin spin. Nova scotia gain is the NL ratepayers loss. Moral of the story, "you do not have to speak French to suck in those Newfies".

  • Maurice E. Adams
    October 22, 2013 - 07:06

    While the massive cost of Muskrat Falls' unneeded power is a great risk to NL ratepayers/taxpayers and a great drain on our treasury, it may pale compared to the cost to us of this deal with Nova Scotia --- if the Water Management Agreement is found by the Quebec court to be in contravention of the 1969 Upper Churchill contract with Quebec. We would then find ourselves locked into a very long term power contract to deliver power that we do not have. NL ratepayers would then be forced to pay for the development of more power, buy power from Quebec to deliver to NS, and/or pay damages for any periods of non-delivery. UNBELIEVABLE (all so that Nalcor can justify Muskrat Falls and get a few pennies per KWh for power that we pay excessively for and that Nalcor thereby gets from us for free).