Government accused of fudging Muskrat Falls rate calculator

James McLeod jmcleod@thetelegram.com
Published on November 1, 2012
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It was the centrepiece of the government’s Muskrat Falls sales pitch this week, but critics are saying the government’s online “electricity bill calculator” obscures the facts and delivers misleading information to the public.

Critics demanded the government say what the projected cost to consumers will be for Muskrat Falls power — the cost in cents per kilowatt hour — but that’s something Nalcor CEO Ed Martin was reluctant to do.

At a news conference Wednesday morning, Martin said the online bill calculator is the only tool consumers need.

“I encourage people to go on to that rate calculator, punch in your information, and you will know exactly what your monthly bill is going to be from now until whatever time frame you want to pick,” he said. “Other than that, we’re only confusing people with different types of numbers and blended rates.”

In fact, it is impossible for Martin to say “exactly” what the electricity rates will be in 2017.

Electricity rates are set by

the Public Utilities Board and take into account factors beyond Nalcor’s costs for the Lower Churchill — maintenance done on existing infrastructure by Newfoundland Hydro, for example.

Electricity rates are complex to calculate. Different sources of power — thermal in Holyrood, hydro in Bay D’Espoir, wind in Fermeuse — cost different amounts to produce, and all of those costs are blended together.

Beyond that, Newfoundland Power is given a regulated rate of profit for delivering power to consumers, and taxes are applied before a ratepayer sees the big number on the bottom of their bill.

Martin said all of those numbers only serve to obscure the debate.

“When you look at the cost of power, every time we get into this discussion in public, all it does is confuse the most important people that are impacted by this decision, and that’s the ratepayers,” he said. “We are answering the question in the simplest possible terms.”

On the promotional website, www.powerinourhands.ca, the government offers to simplify all of the complexity. Put in your monthly power bill today, and the calculator spits out the price you’ll pay in 2016-2018 and right out to 2030 — both under the Muskrat Falls plan, and under the alternative.

Martin said that will make it easy for consumers to understand exactly what Muskrat Falls will mean for them.

But the government doesn’t say how the numbers are calculated, and what the rate in cents per kilowatt hour will be in any of those years.

“We were told by Nalcor in our briefing there is no way to come up with a definitive figure until the energy starts moving in 2017 and they could not give us a figure for the rate,” New Democrat Leader Lorraine Michael said. “I think the calculator is a game to help people feel that, you know, they know what’s going on, and giving them wrong information.”

Nalcor provided a document late Wednesday which indicates that their projected rates in 2017 are 15.2 cents per kilowatt hour, rising to 16.6 cents per kilowatt hour by 2030.

However, an analysis done by the Liberals calls the online rate calculator numbers into question, too.

By putting in bill numbers and doing some calculations, the Liberals say they could deduce the rates that the government was working with.

Under Muskrat Falls, the Liberals said the government is assuming rates will be 14 cents per kilowatt hour in 2017, 14.6 cents in 2018 and 14.8 cents in 2020.

 

Analysis shows cost may be cheaper

Premier Kathy Dunderdale’s government has maintained up until this week that Muskrat Falls power would be delivered to consumers for 14.3 cents per kilowatt hour, but if the Liberals’ analysis is correct, their current calculation for 2017 — the year Muskrat Falls is supposed to come online — is actually cheaper than that.

Ball said that doesn’t make much sense, since this week the government announced the project will cost $1.2 billion more than previously forecast.

“It didn’t really seem to reflect any of the increases that you were expecting to see from Muskrat Falls power,” Ball said.

Natural Resources Minister Jerome Kennedy said some of the confusion may be explained by the fact that in the most up-to-date numbers, the government has factored in anticipated savings from a federal loan guarantee, which will make financing the project cheaper.

“We are going to release charts showing where we project rates to go by 2030,” he said. “Generally, the costs between DG2 to the ratepayer and DG3 have not increased, because even though there’s an increase in the cost of the project, that will be offset by the loan guarantee.”

 

jmcleod@thetelegram.com

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