By now, the discussion of what’s going to happen to power rates is pretty clear: a little handout from Nalcor a few weeks ago, with its current rate projections, suggests power will go from 11.7 cents a kilowatt hour to 22.89 cents a kilowatt hour by 2021, and reach an almost-incomprehensible 32.46 cents a kilowatt hour by 2040.
You might be thinking of that in terms of how you might have to sell your dryer, wring out your clothes by hand and let them dry out strung up on lines in your kitchen, one of the only rooms in your house you’ll actually be able to afford to heat.
But that’s not the half of it.
And that’s where the multiplication comes in.
Another interesting set of Muskrat Falls numbers comes from the Canadian Federation of Independent Business (CFIB). Now, the CFIB is, first and foremost, a small- and medium-sized business interest group. It pushes the agenda of its members, and for that reason, its statements should always be viewed in the light of that allegiance.
This week, CFIB released the results of its own Muskrat Falls analysis. The CFIB took bills for small- and medium-sized businesses and extrapolated what impact Muskrat Falls power increases would have; the number they came up with? Well, an additional $179 million in costs a year, with 85 per cent of those businesses saying they didn’t see a way to curtail electricity use to save money.
Now, here’s a simpler, non-math question.
Where do small businesses get money from?
If you answered “you and me,” you guessed right.
They aren’t charities, and they can’t absorb losses. Their pockets just aren’t that deep, and besides, this isn’t like waiting for economic fortunes to change.
So, their costs are your costs, but wait — with an additional bonus just for you.
Just as the provincial government will benefit from the windfall of the 15 per cent HST on your doubled electric bills, that same government stands to earn 15 per cent on every part of that small and medium-sized business expense that gets passed on to you.
The fundamentals in this situation are more than frightening.
Have a look at bigger companies, and the numbers are even more alarming. Take Empire Corp., the parent company of Sobeys; its latest fiscal results indicate that, for the 13 weeks that ended on May 6, 2017, the company turned a profit of $50.2 million.
Sounds great, right? But they had sales during the same period of $5.8 billion, meaning a profit of 0.88 per cent. Where, in that less than one per cent return, do you hide a 100 per cent increase in the cost of electricity?
The answer is that you don’t — you pass it on in food prices. Immediately. Now, count the open-top coolers and the freezers in your local Sobeys, and imagine what their electric meter looks like, spinning.
I’ve pointed out before that other things come home to roost just as quickly. Last week, the City of St. John’s paid its $86,533.97 power bill. When that bill jumps to $172,000, who will be paying that extra tab? In 2016, Corner Brook paid $1,740,290.24 for electricity. Doubling that power bill means a five per cent increase in the city’s entire annual budget all on its own.
The provincial government has said that it wants Nalcor to find ways to mitigate the rate increase.
This is from the provincial budget: “Future electricity rate management is a priority of our government. Nalcor has been directed to source $210 million to lower electricity rates starting in 2020-21, with this preliminary rate reserve growing to $245 million in the following fiscal years. We are committed to ensuring electricity rates are competitive and will undertake work to further define mitigation actions and dollars required.”
What does mitigation even mean? How do you “source $210 million”? How to you “grow” it to $245 million?
Is it a case of taxpayer Peter paying ratepayer Paul? Are you taking money out of one government pocket and putting it in another? If it is, it’s a mug’s game.
But the real question?
For all but the very richest among us, where’s the money going to come from?
Russell Wangersky’s column appears in 30 SaltWire newspapers and websites in Atlantic Canada. He can be reached at firstname.lastname@example.org — Twitter: @wangersky.