We carry the freight for N.S.’s cheap power

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In his Nov. 30 letter to the editor (“There are better options for power”), Danny Dumaresque stated that the Newfoundland and Labrador Public Utilities Board (PUB) is “now being asked to set new rates starting Jan. 1, 2014, and for residential customers, this amount of power (170 megawatts) would cost $120 million per year.”

However, with respect to an equivalent 170 MW of export power to Nova Scotia, Nalcor’s Ed Martin is reported to have said that, “We’re going to be making a good return on that excess (Muskrat Falls) power.”

According to Canada’s National Energy Board, for year 2012, an average equivalent amount of electrical energy (1.2 terrawatt hours) required to go to Nova Scotia every year would bring Nalcor $39 million in export revenue (a return that is more than three times less than the return that is now being requested from NL residential ratepayers), http://www.neb-one.gc.ca/clf-nsi/

rnrgynfmtn/nrgyrprt/nrgyftr/2013/nrgftr2013-eng.html#s3_1.

If $39 million is a good return for sales to Nova Scotia, what would Mr. Martin call a return of $120 million from this province’s ratepayers — gouging?

Now in 2017, when Muskrat Falls comes on stream and the additional 50 to 100 per cent rate shock takes affect, Newfoundland and Labrador residential ratepayers will be paying, not three times more, but five or six times more than the so-called “good return” that Nalcor can expect from Nova Scotia. However, once Muskrat Falls comes on stream, this province’s ratepayers will not be paying for only 170 MW of Muskrat Falls power.

Newfoundland and Labrador ratepayers will pay for the entire 824 MW of rated output from Muskrat Falls — five times 170 MW, at $120 million per 170 MW — or $600 million per year. 

Now compare Nalcor's so-called “good return” of about $39 million in export revenues (zero cost to Nalcor) to the Muskrat Falls debt servicing and operating costs alone (an average of $300 million a year for 50 years that will be borne by this province’s ratepayers).

Now add to that the further $400 million a year that government has said will be revenues from Muskrat Falls over and above debt servicing and operating costs, and then ask, “Is $39 million a year in export revenues really a ‘good return’?”

Depends on your viewpoint

While I understand that from where both the Newfoundland and Labrador government and Nalcor stand, a return of $39 million a year on export sales (in a rapidly diminishing export value market) may be seen as a “good return on excess power,” when the cost to Newfoundland and Labrador residential ratepayers could be as high as 10 to 15 times the value of export sales, the Muskrat Falls project (and the 24-year legal commitment to sell up to nearly 60 per cent of Muskrat Falls power to Nova Scotia for mere crumbs) gives considerable credence to the phrase that, “where you stand on an issue depends on where you sit.”

In Nova Scotia, their new government is promising new legislation that will offer Nova Scotians “greater choice among power providers (that) will allow local providers of renewable electricity to compete with Nova Scotia Power and sell directly to customers (and) compell regulated power companies to compete for your business ... a solution that puts Nova Scotians first.”

In Newfoundland and Labrador, our government and Nalcor (through Nalcor’s monopoly and this province’s ratepayer-paid-for high cost Muskrat Falls project and the locked-in, long-term deal with Nova Scotia) have given Nova Scotia the basis not only for low-cost rates for Nova Scotians but also a tremendous economic business advantage.

Through this new deal with Nova Scotia, Nalcor and the Newfoundland and Labrador government have laid the foundation for a

leading-edge Nova Scotian renewable energy industry, while this province is tied for decades to a high-cost, non-competitive, monopolistic, 19th century-looking energy regime and placed this province’s ratepayers and businesses in an uneconomic, 50 year monopolistic yoke.

 If where you stand on an issue depends on where you sit, then from this ratepayer’s perspective, where many Newfoundland and Labrador ratepayers will soon be sitting is in the dark.

Maurice E. Adams writes from Paradise.

Organizations: National Energy Board, Nova Scotia Power

Geographic location: Nova Scotia, Newfoundland and Labrador, Muskrat Falls Canada Nova Scotians

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  • Just sayin
    December 19, 2013 - 18:03

    Maurice, you say many Nflders will be sitting in the dark once these rate shocks take hold. Now Dunderdale and crew said we would be in the dark, with blackouts, if MF did not go ahead. Of course that was false. Now lights is only about 4 percent of the average electricity bill. Heat is nearly 70 percent. In the depression days, in Upper Island Cove, some men actually cut down the wooden pole lines for fire wood. Many poles served no purpose as houses had the lines cut, unable to pay the one dollar per month for power for the lights. With shock rate power increases coming, it will be the heat, more so than the lights that people cannot afford. More will sit in the cold, perhaps not in the dark... as more people may be forced to cut down the poles for firewood. Of the essentials, heat is a necessity. And affordable heat should be a Right in this province, so blessed with energy, at affordable cost. This will soon change with MF. Strange so few complain that we help Nova Scotia more than ourselves. Their is generosity .....and then there is stupidity.

  • Cashin Delaney
    December 15, 2013 - 19:57

    As we are much more regulated on how we solve our personal energy needs now than in the 19th century, despite having so much more technology available, one could say we are closer to a controllist radical monopoly than our Liquor Corporation could every imagine. It is harder to find stills than windmills, and you can get through a winter without booze. I'll also make the point that these number crunching dissent letters are very popular these days. So popular we seem to forget to include all the shady carbon credit, SNC-Lavalin, strong-arm the Métis, corrupt the Innu, trick the Inuit, aspects. Mercury, Agent White, the whole stupidity of the transmission plan. No decommissioning fund for the generating plant. CBS electroded residents treated like ignorant children by Gilbert Bennett. These issues are more real, yet the Telegram is ever so happy to liberally bury these real dangers with geeky calculations of what may be. Pay attention to the framing. Don’t forget that the liberals want to manage the fallout, and want to frame this fallout as financial only.

    • Maurice E. Adams
      December 16, 2013 - 07:53

      A little unfair I think to suggest that many other problems have not been raised. Many others (quite a few) have been written about and all but ignored.

  • What were our politicians thinking about?
    December 14, 2013 - 08:26

    It can only be described as criminal? The brains of the Muskrat Falls Project were already aware of the giveaways of the past and appeared to be disgusted about it when they were not in power. Some of them even promised us there would be no more giveaway of our natural resources under their watch, not even a spoonful. But the insatiable greed within them to develop something to boost their own bottom line economically was too great and too strong a calling and Bingo the Muskrat Falls Project was born. Please believe me it is going to put untold economic stress on the ordinary Newfoundland and Labrador hydro-rate payer and again we are passing over industry that could be developed because of cheap energy in the province of Newfoundland and Labrador to Nova Scotia. So there goes the industry and resulting jobs for the province of Newfoundland and Labrador. The status quo remains, the last hydro energy project of 5400 mega watts of power, all of whih was passed over to Quebec.

    • Dolf
      December 15, 2013 - 19:32

      What were our polititians thinking about? The bloody cowards weren't allowed to think. Dunderdale's stranglehold on MHA's is no different than Harper's stranglehold on HIS Tory MP's. A pox on the lot of 'em. Both have given "Tory times are hard times" new life.

  • What were our politicians thinking about?
    December 14, 2013 - 08:25

    It can only be described as criminal? The brains of the Muskrat Falls Project were already aware of the giveaways of the past and appeared to be disgusted about it when they were not in power. Some of them even promised us there would be no more giveaway of our natural resources under their watch, not even a spoonful. But the insatiable greed within them to develop something to boost their own bottom line economically was too great and too strong a calling and Bingo the Muskrat Falls Project was born. Please believe me it is going to put untold economic stress on the ordinary Newfoundland and Labrador hydro-rate payer and again we are passing over industry that could be developed because of cheap energy in the province of Newfoundland and Labrador to Nova Scotia. So there goes the industry and resulting jobs for the province of Newfoundland and Labrador. The status quo remains, the last hydro energy project of 5400 mega watts of power, all of whih was passed over to Quebec.