Major industry players are showing their nerves as the question of rate mitigation continues at the Board of Commissioners of Public Utilities (PUB).
A letter was delivered to the PUB on Jan. 18 outlining the concerns of Corner Brook Pulp and Paper, North Atlantic Refining and Vale Newfoundland and Labrador.
While the letter, written by the group’s lawyer, Paul Coxworthy of Stewart McKelvey, notes its commentary is only preliminary, the group offered its take on a recent preliminary report on rate mitigation by the Liberty Consulting Group and Synapse Energy Economics.
“It is the group's expectation that their future rates will not be subject to sharp increases and will remain competitive with rates paid by analogous industries in other competitive jurisdictions,” reads the letter.
“If that expectation, however reasonable, turns out to be ill-founded, then it can be expected that the issue of self-supply will come to the fore for one or more of the Island industrial customers.”
The Synapse Energy Economics report outlines concerns that if power rates increase dramatically, large industry players are “at risk of converting to self-supply or relocation.”
While the province’s Electrical Power Control Act provides something of a barrier to self-supply (having the industrial players generate their own electricity), the letter notes it’s something large industrial players may have to consider further.
“The potential for industrial self-supply merits consideration from the perspective of the overall system benefits it could provide, as it could avoid the need of other expenditures by the utility to ensure reliable service and might even serve as a source of additional capacity to the system in emergency circumstances,” reads the letter.
Corner Brook Pulp and Paper already has its own electrical generating capabilities, and sells some electricity to Newfoundland and Labrador Hydro when ordered to do so.
The concerns raised by the group put a finger on a potentially large problem facing the government as rate mitigation studies continue. The first interim report from the PUB on the matter is due on Feb. 15.
Corner Brook Pulp and Paper, Vale Newfoundland and Labrador, and North Atlantic Refining alone use roughly 76 per cent of the total provincial energy requirements, according to the Synapse Energy Economics report.
"We’ve made a commitment that rates will not double and we will remain competitive.” — Premier Dwight Ball
If those companies change how they interact with the provincial power system – whether by generating their own electricity or leaving the province outright, as mused in the Synapse report – the effect could have huge ramifications for the ongoing rate mitigation efforts.
Premier Dwight Ball couldn’t speak about the specifics of the letter, but says the government remains committed to keeping electricity rates affordable.
“This is the reason why we brought the PUB back into this process. We knew that rates couldn’t double,” Ball said.
“I often think about life as premier without having to deal with things like Muskrat Falls, but this is what we’re dealing with. We’ve made a commitment that rates will not double and we will remain competitive.”