Prepare for higher power bills

NDP wants to talk relief for ratepayers

Ashley Fitzpatrick afitzpatrick@thetelegram.com
Published on March 28, 2016
A digital electric power meter.

Costs have ballooned on the province’s landmark Lower Churchill Project, Newfoundland and Labrador Hydro’s capital budgets have skyrocketed and Newfoundland Power claims greater demand on its operations.

It all adds up to higher power bills ahead. But how much higher? When?

Newfoundland Power can’t say.

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“As we understand it, the Muskrat Falls project will cost about $9 billion upon completion. This is approximately three times the value of the current investment in the province’s electricity system (Newfoundland Power and Newfoundland and Labrador Hydro combined),” stated Karen McCarthy, Newfoundland Power’s director of customer and corporate communications, in an emailed response to questions.

“This will then mean a significant increase in customer electricity rates in the future, something which concerns Newfoundland Power considerably.”

When sanctioned in 2012, the project was estimated at $6.2-billion but now stands on the books at $7.65-billion. Another update is expected later this year.

It is not the only factor in rates.

In documents on file with the Public Utilities Board, from fall 2015, Nalcor suggested the all-in cost for the average residential customer by 2020 would be 19.8 cents per kWh — a 53 per cent increase from current rates.

The estimated figure includes a 15 per cent HST. The Liberals waved off that tax increase, but have also not stood firm in related messaging since.

As for other avenues of relief, Premier Dwight Ball has mandated Natural Resources Minister Siobhan Coady to see excess power from the Muskrat Falls project sold and the revenues applied, like a salve, to help ratepayers.

But how much money might reasonably be expected through the sales? How will it be distributed (for example, how much to commercial versus residential ratepayers)?

Consumer Advocate Tom Johnson said he has not been involved in any detailed discussions around applying revenues from power sales. But he suggested people can expect more certainty on their power costs with time.

Edith Fitzgerald is a senior living in an apartment in the east end of St. John’s and wrote a letter earlier this year about taxation in the city and the rising cost of living, citing the uncertainty around her power bills.

“I think the power bills are ridiculous,” she said Monday. “They’re going up and up and up and I just don’t know how people are going to live.”

She receives a subsidy from Newfoundland and Labrador Housing for her costs, but noted not everyone is in a position to receive the same assistance.

On March 21 in the House of Assembly, NDP MHA Gerry Rogers asked about the affordability of power.

“Like the Member opposite,” Ball replied, “we, too, understand that we have many people in our province right now — many low income, particularly widows and so on, many of our seniors right now — they do struggle. It is not lost on us with an understanding of knowing that electricity rates play an important part.”

The province actually has the highest number of seniors (by percentage) in the country receiving a Guaranteed Income Supplement (GIS) in addition to their Old Age Security (OAS). The GIS is a monthly, non-taxable supplement for OAS recipients with low income. In statistics from March 2015, the province was cited as having 95,374 OAS recipients with 48,392 also receiving GIS.

For comparison, at least five provinces and territories have under 30 per cent of OAS recipients also receiving GIS.

Then again, there are plenty of people juggling bills, even with higher incomes.

At Credit Counselling Services of Newfoundland and Labrador, Al Antle said his office has been sitting down on cases where the combined income well above average, but are still being slammed by an unmanageable consumer debt load.

He said the office maintains a “superb relationship” with Newfoundland Power, finding arrangements wherever possible to help clients pay monies owed to the utility.

But he also said he has recently had clients working in the public service mention they expect to see a freeze on income growth for the next few years, even as their costs — not least of all being power — are going up.

“So how are people going to cope with that? That concern is starting to be expressed at this point.”

The Telegram reached out to government communications March 23 regarding this story. The following statement was received shortly after 4:30 p.m. Monday, attributed to Minister Coady:

“The Public Utilities Board is responsible for the regulation of electric utilities in our province to ensure that the rates charged are just and reasonable. Final electricity rates after Muskrat Falls would be set by the Board of Commissioners of Public Utilities through a future general rate application. As part of government’s mandate, we are committed to selling surplus power generated from Muskrat Falls and to use that revenue to mitigate increases in electricity rates. After the rate application has been filed, government will review the proposed rates and determine the level of mitigation required. ”