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Newfoundland and Labrador power solution includes exports, electrification, experts

When Muskrat Falls power comes online in several years, ratepayers will pay substantially more for electricity, but Premier Dwight Ball says his Liberal government is working to limit that increase.
The Public Utilities Board has released two interim consultant reports related to its work on mitigating electricity rates. — Stock photo

Consultant says N.L. Power could also take over retail at N.L. Hydro

Everyone in Newfoundland and Labrador will be affected by the results of the ongoing review of power rates by the Public Utilities Board (PUB), at the demand of the Liberal government.

The PUB has released two interim reports submitted from the experts it hired to help: Liberty Consulting Group and Synapse Energy Economics.

Nalcor Energy will be required to file a response to the interim reports by Jan. 11. But any member of the public can also offer comments to the PUB. The deadline is Friday, Jan. 18.

Export revenues

The sale of excess power will not cover the Muskrat Falls bill on its own.

Synapse Energy Economics has suggested a base case of — before applying tariffs, line losses and other costs — $92.5 million in electricity export revenue in 2021, growing to $142 million by 2030.

There are high and low scenarios offered as well, with the greatest forecast revenue at $168 million by 2030, assuming the province aggressively promotes energy conservation and electrification.

Electrification

There are recommendations for the aggressive pursuit of incentives and regulations to promote the switching of homes, businesses and public buildings from oil heat and power to electric.

Synapse suggested it offered the most promise for offsetting Muskrat Falls project costs and recommends the PUB look at a collection of actions. One example is time-of-use rates for electric vehicle chargers. Another is incentive for anyone currently using oil heat at home, who could make the switch to electric heat pumps.

It recommends the government also add infrastructure encouraging electric vehicles, including more charging stations for the public “and government customers.” The consultant’s suggestion is to, as much as possible, tap federal funding under existing greenhouse gas reduction programs for the purpose.

It’s noted ratepayers will lose out if the government aggressively pursues electrification without also finding ways to increase local energy efficiency, through conservation and demand management (CDM) programs.

Additional CDM efforts

CDM programming has the potential to keep the demand for electricity in check (particularly at peaks, like during a stormy night in January) and offer more for export.

Synapse notes Newfoundland and Labrador energy utilities have “historically implemented limited CDM programs, relative to other provinces and states.” Essentially, the province can spend to save long-term, including through its TakeCharge line of energy saving programs.

There is a recommendation to increase the amount put into CDM programs, but also the creation of an “Energy Efficiency Stakeholder Advisory Group.”

Fleeing the system

Synapse noted it will need to dive deeper into price elasticity — something Memorial University of Newfoundland economist Jim Feehan and others have already flagged in relation to Muskrat Falls project costs.

Essentially, the concern is that customers will begin to reduce their electricity use in response to the significant increase in the cost of power. As usage drops, the cost will be greater on the remaining users.

How big could the swing be?

“Retail sales in 2030 could be as much as four to 11 per cent lower than they would be without the Muskrat Falls project, depending upon how much the project increases retail prices,” the Synapse report notes.

It will be conducting more work to nail down numbers on all fronts.

Changes at Nalcor Energy

Liberty Consulting has looked at the structure of Nalcor Energy and areas where costs might be reduced, including the possibility of fewer managers.

It’s recommended a review of how staff are managed and offered incentives at Nalcor’s Newfoundland and Labrador Hydro.

It’s also suggested Newfoundland Power potentially take over retail operations for isolated Hydro customers. There is also opportunity for greater co-operation between the utilities on contracting.

The consultant also said there is an opportunity to reduce ratepayer costs with an elimination of the internal return on equity.

Other options would require fresh negotiations with the federal government, financing and ratings institutions, including changing the federal loan guarantee agreements for Muskrat Falls and in the overall structuring of project debt.

More to come

The interim reports are just that, with both consultants noting further work is required.

The PUB will be filing an interim report to the provincial government by Feb. 15, 2019.

The final expert reports are generally expected to be filed in August and September. A round of public hearings is expected in November 2019.

The PUB’s final report to government is due Jan. 31, 2020.

The Telegram is reviewing both consultant reports and will have more on the ongoing review.

ashley.fitzpatrick@thetelegram.com

Have your say

Citizens can submit comments to the PUB for consideration in the review of power rate options. All submissions are due by Jan. 18, 2019.

Email: rmreview@pub.nl.ca
Mail:  Public Utilities Board
Rate Mitigation Review
P.O. Box 21040
St. John’s N.L. A1A 5B2

Hand deliver: Suite E210, 120 Torbay Rd., St. John’s N.L. (8:30 a.m. to 12:30 p.m., 1:30 p.m. to 4:30 p.m.)

If you wish to have your comments placed on the record to be considered by the board, you must provide your contact information — full name, address, phone number and/or email.

Use of personal information
Please note that all documents placed on the record are posted to the board’s website and are available to anyone who files a request. If you do not want your name and contact information published, you may request that your comments be identified by your initials only. In addition, you may identify other personal information which you prefer not to be released. Information which is identified as personal and private will not be released publicly or provided to any party in the review without your prior consent.


RELATED STORIES:

Liberals call in PUB for Muskrat mitigation

‘You wouldn’t have needed Muskrat Falls’: N.L. economist

RELATED LINK:

PUB Review: Rate Mitigation Options and Impacts


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