Letter: Concern for ratepayers too little, too late

Published on May 16, 2017

Hydro’s concerns about ratepayers should’ve come to fruition before the Muskrat Falls escapade.

The 18 per cent rate hike was proposed by Hydro to come into effect July 1, knowing the legal limit for a hike was 10 per cent by the PUB in any year.

Where was the concern for ratepayers a decade ago from Hydro? Decision Gate 2 had Muskrat Falls power pegged at 16.4 cents per kilowatt hour or a 50 per cent increase in power bills — not a peep from Hydro about ratepayers at the time. Now, 18 per cent is too much for ratepayers, yet a single-year increase of 50 per cent passed through Hydro’s board of directors for Muskrat Falls without any questions or concerns?

Decision Gate 2 had Muskrat Falls power pegged at 16.4 cents per kilowatt hour or a 50 per cent increase in power bills — not a peep from Hydro about ratepayers at the time.

Hydro also endorsed the insane demand forecasts going up to 10,500 gigawatt hours by 2041 from 2010’s 7,600 GWH with Long Harbour being the only new confirmed power customer. Hydro further endorsed the demand forecast increasing to 12,000 GWH from 2041 to 2067.

Nalcor/Hydro/Progressive Conservatives ignored price elasticity for residential demand; even Newfoundland and Labrador’s most infamous Muskrat Falls booster, Wade Locke, had a slide in his Harris Centre presentation that said, “empirical data has shown for every 20% price increase for electricity there is a correlating 5% demand decline.”

Using the empirical data, Newfoundland and Labrador’s residential demand should decrease by 12.5 per cent under Muskrat Falls’ excessively high kWh Decision Gate 2 rate.

Hydro used the last 40 years of power demand underhandedly, as the last 20 years residential demand has remained flat; the first 20 years was when homes switched to electric heat.  

Electricity prices from Holyrood Thermal might’ve increased to 16.4 cents per kWh if oil had remained at $100 a barrel, but Hydro assumed ratepayers would consume the same amount of power even with yearly increases.

The least-cost option had $100 oil and Holyrood Thermal operating at three times its current output over a 57-year projection — talk about rigging a process to a predetermined outcome. The conclusion? That Muskrat Falls is the only option for the province.

Nalcor failed in its fiduciary duty by bundling the Labrador Island Transmission Line in with the Muskrat Falls dam, when they should’ve been viewed separately. The Labrador Island line cost of $4 billion would’ve been $100 million a year for 40 years, or an increase of 19 per cent for residential ratepayers. The Labrador Island line and the third line from Bay d’Espoir would’ve lowered the fuel consumption at Holyrood Thermal by millions of barrels of oil, thereby saving Newfoundlanders and Labradorians hundreds of millions in electricity production costs over that 40-year period.  

Between recall power and a Hydro-Québec power purchase agreement to make up the difference with the Labrador Island line, Newfoundlanders and Labradorians could’ve been looking at a maximum of 16.4 cents per kWh, not a floor or base of 16.4 cents kWh as we had then.

Decision Gate 2’s 16.4 cents per kWh was roughly $900 more in power bills per home annually. Now, with the updated 22 cents per kWh from Boondoggle Falls, it’s $1,800 more in power bills per home.

 

Alec Campbell
Mount Pearl