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Letter: Ratepayers simply can’t afford Muskrat Falls

Published on March 28, 2017

The Muskrat Falls hydroelectric site.

©Photo courtesy of Nalcor Energy

The Electrical Power Control Act, 1994, regulates this province’s electrical resources. The act requires the management of the province’s power resulting in reliable power at the lowest possible cost, with reasonable rates.

Muskrat Falls’ power does not produce reasonable, lowest possible cost rates.   The government prevented the Public Utilities Board from examining Muskrat Falls electricity rates. But the government knew in 2011 that Muskrat Falls would not result in the lowest possible cost reasonable rates.

The government prevented the Public Utilities Board from examining Muskrat Falls electricity rates. But the government knew in 2011 that Muskrat Falls would not result in the lowest possible cost reasonable rates.

Dennis Browne, Consumer Advocate

The 2011 Federal Provincial Joint Review Panel held 30 days of public hearings on Muskrat Falls in nine locations. The panel concluded that there were no known markets for that power, the need to bring that power to the island was not established, and there were alternate, economically viable and responsible ways to meet electricity demands. Government ignored its own expert panel.

The government then concocted two reference questions to place before the PUB dealing with least cost options and not lowest possible cost options. The PUB proceeded but found Nalcor had outdated load forecasts. The PUB requested current information, explaining it could not file a report until June 30, 2012 without this information. But the government instructed the PUB to file the report by March 31, 2012 “to ensure that members of the House of Assembly were not constrained in their ability to examine and debate the report” in the legislature’s spring session.

The PUB filed its report and did not endorse Muskrat Falls. It was not until Dec. 15, 2012 that Muskrat Falls went to the legislature, where the two opposition parties were constrained when requesting experts to testify. All opposition overtures were rejected. The government then sanctioned the largest expenditure in our history.

Now the project approaches $12 billion — double the initial estimate with no completion date. Ratepayers cannot absorb these consequences.

Our rates are stable — today 9.8 cents per kilowatt hour compared to 8.92 cents/kWh in 2006. Our population is aging and declining. In 2015, there were 520,000 people in the province. In 2025, the projection is 513,000. Ratepayers are in no position to assume the Muskrat Falls burden.

Section 92(A) of the Constitution Act, 1982, the resource amendment, enables legislatures to make laws on natural resource management, including the right to tax electrical energy generated here.

A one cent per kWh provincial tax applied to the roughly 33 billion kWh of electricity exported annually from Churchill Falls would realize hundreds of millions of dollars in annual resource tax revenues. Section 92(A) requires taxation without discrimination. The same one cent per kWh tax would apply to all electricity produced here. Our own electricity bills would reflect that increase.

A referral to the Court of Appeal would clarify the province’s jurisdiction to impose this electrical energy tax.

Also, Hydro-Québec will soon be negotiating new contracts that go beyond 2041.  Some contracts cover 25-year periods. It’s time for the government to appoint a best efforts panel of fellow citizens knowledgeable and experienced in electricity issues to meet with Hydro-Québec.   

A best efforts panel could include, among others: Stan Marshall, Brendan Paddick, Bernard Coffey, the clerk of the Executive Council and economist James Feehan.  The best efforts panel would inform the government as to what is attainable.  Past political failures should not hinder the possibility of future success.  Circumstances change. Move forward.  

Finally, Muskrat Falls politicians assumed the use of ratepayers as pawns to finance their folly. However, ratepayers have the right to the protection of the Electrical Power Control Act — reliable power at the lowest possible cost with reasonable rates. Ratepayers can be empowered to protect their own household economies through reasonable electricity rates.

To that end, ratepayers require mitigation options. One current option is to remove the five-megawatt cap offered on the net metering program/solar and wind. By removing this cap, stadiums, churches, fish plants, municipalities, fire halls and domestic ratepayers will have the ability to take control of their own energy.

There are other options as well, which will be explored in another letter at another time.

Dennis Browne
Consumer advocate