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Liberals call in PUB for Muskrat mitigation

Premier Dwight Ball and Natural Resources Minister Siobhan Coady at a news conference Wednesday at the Confederation Building.
Premier Dwight Ball and Natural Resources Minister Siobhan Coady at a news conference Wednesday at the Confederation Building. - David Maher

Public Utilities Board to investigate ways to keep electricity rates down

The taxpayers of Newfoundland and Labrador will not know how much the Muskrat Falls hydroelectric project will really cost until after they cast their votes in 2019.

Premier Dwight Ball and Natural Resources Minister Siobhan Coady called their news conference on Wednesday a “major announcement” on mitigating the impact of the Muskrat Falls project on ratepayers.

What they actually announced assures decisions affecting any tax dollar requirements and final power rate increases will not be offered until after Jan. 31, 2020, after the Public Utilities Board (PUB) files a final report. The government will continue to look at possibilities such as using funds from the public purse to keep electricity rates in check, while the PUB will look at recommendations for production and use of power, but any decisions are further down the line.

The Liberal government has put a special reference question to the PUB, under the Electrical Power Control Act. The PUB is expected to review aspects of electricity production and costs, reporting back to the provincial minister of Natural Resources.

The review will not go into what taxpayers could or should pay to keep rates manageable, including any use of oil money from Nalcor’s oil and gas division.

The review will be expected to look closely at some of Nalcor Energy’s electrical business, consider ways to save money and offer recommendations for trimming the cost of power.

To date, the PUB has only completed regular, in-depth reviews involving Nalcor Energy subsidiary Newfoundland and Labrador Hydro, a regulated utility. The Liberal government has now opened the door for the regulator to dig into the operation of the Labrador-Island Link and other Muskrat Falls-related assets under Nalcor Energy’s control.

The province is asking for ways to help mitigate rates (keep them manageable) to 2030 or earlier — or whatever range the PUB sees fit, as long as it doesn’t look beyond 2030.

The PUB will be able to look at the potential for more, or more lucrative, power exports and make recommendations on power sales through Nalcor Energy Marketing.

The PUB can also look at the company responsible for the still-undeveloped Gull Island hydro site.

The regulator is asked to consider whether or not ratepayers could and should be encouraged to save more energy, and whether or not the provincial government should put more into encouraging greater use of power in the province — for example, by transitioning public buildings to electric versus oil heat.

In an interim report, due Feb. 15, 2019, the PUB is expected to offer some preliminary findings, including how much energy from the Muskrat Falls project is actually needed on the island.

But Muskrat Falls construction costs are not part of the review.

The Churchill Falls hydro plant, specifically the business of the Churchill Falls (Labrador) Corp. (CFLCo), will also not be part of the review.

Ball says it’s been Liberal policy to have the Public Utilities Board look at the Muskrat Falls project and play a role in setting rates since at least 2012. He says his government has waited until Year 3 of its mandate and the middle of a byelection campaign to bring the PUB in because the 92 per cent completion of the Muskrat Falls project puts the PUB in a good position to begin its analysis.

“Once you’re near the completion date you have a better understanding of the schedule and the costs,” he said.

“It gives better information to the Public Utilities Board as they manage and analyze what the impacts of the project would be on the province.”

It will be up to the PUB to look for cost savings and new revenue streams at Nalcor and make recommendations to the government.

“They’ll give an indication of how much Muskrat Falls power is required for the province and how much we can afford to pay for that. The rest of it, we have committees working on other options within government,” said Coady.

“We’re working on how do we ensure additional revenues, how to make sure costs are low, so we can actually afford to pay for the Muskrat Falls project. It’s part of the full plan that’s been put in place since 2016.”

The committees referenced are internal committees within Nalcor and the Department of Natural Resources that are working at the same time from the government’s perspective on rate mitigation. Coady did not commit to releasing the work of those committees.

Progressive Conservative Leader Ches Crosbie repeated previous comments that he’s pleased to see the government take his recommendation to go to the PUB for insight. But he also called the announcement Wednesday a “nothing burger.”

“I was recommending a process they’ve now decided to accept, which makes sense, which will look at all the things the premier talked about today and land on a rate mitigation,” he said.

“What happens after that is what we don’t know about.”

Crosbie said the federal government has to get involved and negotiate as part of any rate mitigation plan.

New Democratic Party Leader Gerry Rogers says she is appalled the government would take this long to announce a measure it should have introduced as soon as the Liberals got into office.

“This is a sham. There’s nothing new that was announced here. We’ve been calling for the involvement of the PUB since the beginning of the project,” Rogers said.

“The Conservatives took it out from under the PUB, the Liberals have been in power for three years and now, during a byelection, they say they’re going to bring in the PUB. This is fishy. This doesn’t pass the smell test.”

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