Ratepayers will be paying it off for a long time

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First the friends of Muskrat Falls, then Danny Williams extolled the virtues of the project. When you look at who is going to pay for this $6-billion to $8-billion boondoggle, you can’t blame them for being ecstatic.   

Nalcor plans to have Newfoundland and Labrador Hydro sign an agreement to buy 100 per cent of the power from Muskrat Falls at cost plus 11 per cent. I couldn’t understand why they needed a signed agreement to purchase; could it be that they would have a hard time trying to get loans without a customer for the power?

Newfoundland and Labrador Hydro has only Newfoundland Power to sell the power to, and they have only the island ratepayers to pay for it. With the deal the way it is, the ratepayers can’t be bailed out by oil money or taxes. We’ll be on the hook for 50 years. Hydro is a Nalcor company. In other words, Nalcor is selling power to itself.

Gerry Goodman

St. John’s

Organizations: Newfoundland and Labrador Hydro, Newfoundland Power

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Recent comments

  • Maurice E. Adams
    October 25, 2012 - 14:02

    LATEST POLL RESULTS:------- Option 1 (9.5%) Option 2 (14%) Option 3 (47.5%) Option 4 (29%)

    • What poll
      October 25, 2012 - 15:03

      Don't forget the warning that this poll is totally inaccurate and unreliable.

  • Winston Adams
    October 25, 2012 - 13:23

    To CONCERNED AND VERY CONCERNED- your raise a very good point. You suggest that power bills when added up are less than what they were 5 years ago. That while rates have gone up , because of warmer weather, the bills have been lower and they are selling less power. Fact checkers - confirm this!. Now global warming is certainly helping on our heat cost, and hurting on power sales.But note this- efficient heating, will generally save 65 percent on heating cost. The units output increase with increased outdoor temperatures, at the rate of 1.4 percent more for every 1 F rise in outdoor temperature. With the outdoor unit seeing a few degrees warmer, it can gain say 5 percent more in efficiency on top of the 65 percent. I mounted my outdoor component in the attic, achieving 10 percent or more in efficiency, a benefit from the solar boost on the shingles. But the shareholders of the power companies got to hate these units. Any wonder they don't promote them? These units are the greatest benefit for homeowners, and the biggest problem for power companies, whose profits are tied to sales. Nevertheless, there is more down side to global warming than upside.But for heat cost, we win and nalcor/ Nfld Power lose. Check Take CHARGE and Turn Back the Tide- nothing promoting efficient heating. But this secret benefit can't be hidden forever. Can't be covered by the Secercy Act.

  • Maggy Carter
    October 25, 2012 - 12:55

    @Jack asks why 'NALCOR wants (NL Hydro) to sign recursive agreements'. To be sure, it is not to demonstrate to lenders that it has a 'take or pay' contract in hand. Lenders know that such non-arms-length contracts are worthless - hence the need for a federal loan guarantee. No, the purpose of the recursive agreement is to place the contract beyond the reach of the PUB. NL Hydro is a regulated utility but NALCOR is not - thanks to the shrewd foresight of the provincial government. Hence, whenever NL Hydro and NL Power go to the PUB for the next 60 years, the predetermined rate at which NALCOR sells power to NL HYDRO (which in turn sells to NL Power) is sacrosanct. The justification for it cannot be challenged by the PUB.

    • Gerry Goodman
      October 25, 2012 - 16:25

      Thanks Maggie, This is probably why the PUB wouldn't rubber stamp the project in the first place. Can you imagine the uproar if they would have said the project was crap, based on the info they did have?

    • Gerry Goodman
      October 25, 2012 - 18:30

      Maggie, Is this why the PUB okay'd the Rate increases 1Jan. 2011 and 1Jan. 2012 when Hydro NL said it was because of increased oil prices?

  • Very Concerned
    October 25, 2012 - 12:16

    Global warming is on the rise, thirteen month in a row. NL power must be feeling the effects of this, lower payments from the public, which means more money in our pockets. Government is not going to have that, there out to get every cent they can from us, going as far as, making working peasants out of us, disgusting. They know what their doing they have the numbers, their there to fill their own pockets at any expensive.

  • Concerned
    October 25, 2012 - 12:03

    John, go add-up your heat and light bill for the last 5 years, you will be very surprised just how much its gone down even with the increases. You're just a big mouth.

  • Jack
    October 25, 2012 - 12:02

    Since Newfoundland and Labrador Hydro is owned by Nalcor, I'm wondering why Nalcor wants to get its subsidiaries to sign recursive agreements? Recursive agreements mean imposing a contract on itself. In the case of Nalcor, getting NL Hydro to sign purchasing agreements. Recursive agreements should be illegal.

  • Winston Adams
    October 25, 2012 - 11:25

    Little John, you say 'right now today the combined rate we pay for power , that is the 10.5 cents a kwh combined with the yearly adjustment to pay for oil brings us to about 14 cents a kwh.' you then go on to say that 16.5 cents will be a reasonable incerease - as this is about 18 percent not 40 percent increase. Now this spring we were being charged 10.407 cents and this got bumped up to 11.171 cents in July. Now holyrood is more expensive cost to produce than our Hydro, and we are not charged at the holyrood cost as it is only 12 percent of our production. So the rates get blended to compensate for the expensive oil. Does not the 11.171 cents current rate cover the oil cost? Or are you saying we are getting a subsidized rate as the oil cost is not fully covered? What the household sees now is 11.171 cents , less tax. If this goes to 16.5 , that is 43 percent increase. No little increase , Little John. And if my memory is correct, some months ago, on VOCM of CBC , Ed Martin said when MF comes on stream our power bills will be up by about 40 percent. Where's our fact checkers? Now John, you may not like responding to me, but this is the most critical issue for 98 percent of Nflders- how much will the power bills go up? The other 2 percent don't care as they will reap the construction profits. And I somewhat enjoy seeing your comments and trying to get a response from you, because the facts more so lie with me than you. And I thank you for making this exception and hope you will do so again.I feel a little a sorry if i take advantage of my training in this debate, but I am but one voice and you ahve the experts of Nalcor, MHI and others, at the expense of the public purse,and you and I are just helping to inform the public with truth and honesty and best judgement , as we see it , right John? This should not upset you in any way? Can't understand why you don't like to respond to me. I agree with you on this- oil consumption at Holyrood is a problem- and I gave you a alternate solution. Maurice, on the other hand, don't seem so concerned on that. But I'm in your corner on that- but at the same time , Holyrood is small potatoes when compared to polution from transportation- and we need to be consistant- CO2 is CO2. Shouldn't you voice that too?

  • Cold Future
    October 25, 2012 - 11:19

    Muskrat, because of its high cost , will become a significant burden on the NL consumer who will subsidize the power sold on spot market at discount rates to mainland consumers. It will mean the power will go around Quebec and we will get them back for the bad contract at Upper Churchill. Guess what, Quebec stands to gain the most of any province from short term supply and labour to the project during construction. Then when the the energy flows from the project guess who stands to gain the most. You guessed it-HQ routinely buys discounted power on the spot market and resells it a higher rates for profit. We are really going to get them back. Muskrat is expensive, poorly thought through and has the potential to eclipse Joey's deal as a loser by a long long ways. Good Newfy joke or what?

  • Winston Adams
    October 25, 2012 - 09:42

    John, I told you that energy efficiency solves all those problems, at much lower cost. Act dumb on this if you like. And should'nt it be Nalcor that should prove this is not a risky venture? Why the reverse onus? Isn't the PUB our watchdog, which was put on a chain and muzzled. I recently suggested that Danny Williams and his business supporters should invest thier wealth into MF,see how anxious they are. The site 'Sir robert Bond Papers' proposes Danny do this, that MF be uses to make widgets, and Danny can be master our our 'widget warehouse'. It's good for a laugh, but is more than funny. It shows the hypocrisy of those business people who promote this as a wonderful sound project, but as a personal investment would likey run. Would you invest in MF John? And you say here,with MF, we will see prices go up a little. 40 percent rate hike between now and completion, if not more. A little ? Perhaps you should have the nickname LITTLE JOHN. We will be double Man , Que, BC. Some little increase. And you're worried about your energy bill?

  • NowIsee
    October 25, 2012 - 09:12

    John Smith, Are you so gulliable to believe we cannot work out something with HQ to provide power to the Lab mining companies? Power is not needed here lol. Its needed for the big companies using the power. I aint going to pay for them to rake in the cash. This PC govt is too weak and cowardly to deal with the the big bad people of Quebec so my children and I should have to pay? I would also like to know do you have any proof, documentation, or facts that would prove that this project is going to make any revenues? You must think the good old US of A is going to buy OUR excess power. Please man, let us know who has been offering to buy the excess power. Has govt made any attempts to sell it? Please let me know WHO will buy the power and WHEN will it start and HOW much can I expect off my power bill for the sale of this power? Also does it justify the fact we take upper churchill back in 30 years and will probably see power bills drop? Seems like a large chunk of cash to use power for 30 years.

    • John Smith
      October 25, 2012 - 10:05

      @NowIsee...this project is not supposed to make profit...Bayd'espoir is not supposed to make profit, Duffs in Holyrood is not supposed to make profit, Catarm is not supposed to make profit...they are supposed to provide electricity at a fair price as dictated by the PUB. The power will be sold on the spot market on an hourly basis, or will not be sold at all if the price is not acceptable to the Nalcor, and we will then store the water. Winston...I really don't like responding to you or Maurice but i will make an exception. Winston, right now today the combined rate we pay for power, that is the 10.5 cents a KWH combined with the yearly adjusment to pay for oil brings us to about 14 cents a KWH. The blended rate at soldiers pond will be 16.5 cents a KWH...an increase of about 2-3 cents a KWH...how is that 40%??? As well, we have seen our bills increase by 70% since 1998, and will increase a further 7% this March...and again this coming summer!!! That's what I care about Winston.

  • John Smith
    October 25, 2012 - 08:37

    Mr. Goodman...do you have any proof, documentation, or facts that would prove that this project will be a boondoggle? Of course you don't. As far as Nalcor selling power...well that's the whole idea behind this project. It is a way for us to provide power for the people of NL. The same thing we did when we built Bay D'espoir, Holyrood, Catarm. We built these projects to provide to the people of NL. What makes this project even better is that we can use some of the excess power to pay for a cable to connect us to the mainland, and we will possibly see revenues of 200-400 million a year from the sale of power.This is a project by us...for us...so we can get away from spending hundreds of millions a year on oil for Holyrood, and being at whims of oil prices when we pay for our power. With muskrat we will see prices go up a little, but then they will remain at one level for a very long time. We will borrow about 4 billion to pay for the project, we spent 18 billion on healthcare in NL over the past 5 years. We will need increased power over the next 5 or 10 years....how do you, Mr. Goodman propose we create it?