In her brief, insightful letter to the editor, April 4, Helen Webster of St. John’s posed several bang-on questions: “Why is Nalcor getting this ($776 million) funding while the provincial government is short cash? Why is Nalcor important enough to become a financial sinkhole for the province?”
Why indeed! Regrettably, an answer is obvious.
The recent Williams administration staked the economic future of the province on energy (mainly hydropower) exports — remember, the “energy warehouse” catchphrase? And the present Dunderdale administration now barrels ahead mindlessly.
That simplistic policy’s basic flaw is to misconceive electricity as a commodity, readily and cheaply transportable to distant markets (say, like oil). In fact, hydropower’s true nature is more that of a catalyst (say, like steam) of much value only at near-site usage — e.g. for heating, light, manufacturing, etc.
The only means whereby electricity can be long-distance transmitted
is so enormously capital-expensive
that any supply to distant markets must be subsidized, in this case partly by government and partly by ratepayers.
Thus, Muskrat Falls’ particularly high unit generation costs (cents/per kilowatt hour) cannot be recovered from foreign sales (or even local mining operations) let alone render a profit. Nor has Nalcor as yet even secured such contracts, non-profitable though they would be — the alternative simply being power wastage.
Nalcor’s current actions in pursuance of an “energy warehouse” fantasy obviously stem largely from satisfying internal aspirations, regardless of financial harm to the general populace of the province.
Before descending further in this Nalcor “sinkhole,” Ms. Webster and the rest of us should insist on a detailed review of this harebrained policy. No ifs, ands or buts!
My personal pitch to Nalcor would be: either demonstrate full gainful utilization of Muskrat Falls power locally or else desist and permit the government to attempt something sensible (for example, a province-wide rapid-transit transportation policy).