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PUB report on Muskrat Falls rate mitigation suggests review of Labrador electricity rates

Aerial View of the Muskrat Falls site – looking upstream.
Aerial View of the Muskrat Falls site – looking upstream. - Contributed

Mayor, MHA warn of dire consequences if rates increase in Labrador communities

Dire consequences could be coming for Labrador if some of the items in the Public Utilities Board Muskrat Falls rate mitigation options report are followed through, a Labrador MHA warns.

In the Electricity Rates Policy section, the PUB talks about NL Hydro reviewing the rates for rural customers in isolated diesel communities and the Labrador Interconnected system.

Labrador West MHA Jordan Brown is concerned a review could lead to Labrador paying the same electricity rates as the island, which would have a huge impact in the region. FILE/THE LABRADOR VOICE
Labrador West MHA Jordan Brown is concerned a review could lead to Labrador paying the same electricity rates as the island, which would have a huge impact in the region. FILE/THE LABRADOR VOICE

Jordan Brown, MHA for Labrador West, says the suggestion in the report could have serious repercussions for all of Labrador.

He said the reason the low rates were put in place was to protect vulnerable ratepayers, such as those who live in rural and isolated areas. In Labrador where people use heat for six to nine months of the year because of the cold, he worries people will get bills in the thousands of dollars if the rates change to match the island portion of the province.

That electrical rate is a big draw for business and employees, he said, and changing it may change the mind of someone wanting to work there.

“It’s cost prohibitive, it’s going to make it extremely prohibitive to live in the north. If you start playing with electrical rates and things like that, people are going to look at it and think ‘I may as well go live in Alberta and take my skills there.’”

The rate for the Island Interconnected System in Newfoundland, isolated diesel systems and the L’Anse au Loup system is approximately 12 cents per kilowatt hour (kWh), with the diesel rates subsidized. The rate for customers on the Labrador Interconnected System is just over 3 cents per kWh.

Brown said a change in the rates could be a big detriment to the economy of Labrador and prevent it from moving forward.

PUB suggests connecting systems

Happy Valley-Goose Bay Mayor Wally Andersen said the suggestion from the PUB concerns everyone on the Labrador Interconnected Grid. FILE/THE LABRADOR VOICE
Happy Valley-Goose Bay Mayor Wally Andersen said the suggestion from the PUB concerns everyone on the Labrador Interconnected Grid. FILE/THE LABRADOR VOICE

The PUB report references a proposed transmission line from Muskrat Falls to Happy Valley-Goose Bay, saying the connection makes the two interconnected systems one. The interconnections raise the issue of whether these two systems should continue to be treated separately in the long-term, the report says, and ‘whether Government’s direction that the rates for Labrador Interconnected customers are not to include any Muskrat Falls Project costs will continue to be appropriate.’

This exact issue was one of the concerns raised by the Labrador Interconnected Group, comprised of representatives from municipalities, businesses, and other impacted parties when the proposed transmission line was first brought up in 2017. Happy Valley-Goose Bay Mayor Wally Andersen told SaltWire at the time he was concerned the transmission line was a step towards altering electricity rates for customers on the Churchill Falls grid in Labrador.

“We’re very concerned,” Andersen said. “Every citizen in Labrador who uses power from the Upper Churchill should be concerned. Take a look at the winter we had this year, we had 35 to 40 days where the temperature, with the windchill, was probably -30. Imagine the impact that would have just on the ordinary person, not to mention the industry in Labrador.”

He said it would put huge stress and strain on people and all the employers in the region.

Labrador customers are not paying any of the costs of the Muskrat Falls project, as per a provincial government Order in Council from 2013 that directed Muskrat Falls cost “shall be recovered in full by Newfoundland and Labrador Hydro in Island interconnected rates charged to the appropriate classes of ratepayers.”

Andersen referenced the order when speaking with SaltWire, saying they will hold the government to that commitment. He added another government order would be required to have it changed.

Both Andersen and Brown referenced the impacts Muskrat Fall has had on Labrador. It was built there with very mixed support, may have long-term environmental impacts and the vast majority of the power is being sent elsewhere.

“If there is any organization or group who took the brunt of Muskrat Falls more than Happy Valley-Goose Bay, I’d like to see it,” Andersen said. “We’ve had to deal with issues that should never be on the council agenda.”

He said town council is using it’s Gas Tax funding from the federal government to fix town roads damaged by the multitude of vehicles going to and from Muskrat Falls, just to name one example.

Brown pointed out Labrador doesn’t need the power from Muskrat Falls and said it’s frustrating it would be brought up in the context of rate mitigation

“It’s not rate mitigation. We don’t even use Muskrat Falls power, so this is what was concerning to me, that it was brought up in this and that there was very little consultation from Labradorians. We’re brought into this report to review our rates, but at what cost? They want us as a mechanism to pay a bill for something we don’t even use.”

The report said the rate mitigation plan and the various policy issues should be reflected in Hydro’s general rate application, scheduled to be filed in September, 2020, to recover the costs of the Muskrat Falls Project.

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