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BRIAN JONES: Don’t fall for ‘rate mitigation’ fantasy

Without rate mitigation, Newfoundland and Labrador Hydro projects power rates would reach 22.89 cents per kWh by 2021, up from the current average rate of 12.26 cents.
The whole notion of 'rate mitigation’ is pure spin, Brian Jones writes. — 123RF Stock Photo

Before you mark your X on May 16, be clear about one thing: there is a better chance that Santa Claus will bring you “rate mitigation” before either Dwight Ball or Ches Crosbie will.

Some will object that Santa Claus doesn’t exist. No. And neither does “rate mitigation.”

The ongoing “rate mitigation” fantasy is a measure of politicians’ addiction to manipulating voters, and of the electorate’s gullibility.

It is a cruel con, and so far it has been successful because the conned want to believe it, need to believe it, are desperate to believe it.

But “rate mitigation” is a euphemism. It is a stand-in for the more accurate and truthful “rate subsidization.”

Talking about a rate subsidy would include the admission that the money is being redirected from one use to another use.

In contrast, “mitigation” implies the magic of coming down the chimney and appearing underneath the tree.

Despite what Ball and Crosbie would have you believe, there is no magical solution to the economic disaster that is Muskrat Falls.

Every dollar they plan to put into “rate mitigation” is a dollar the government could have spent — but didn’t — on roads, schools, hospitals, etc.

Try to apply it to your household budget. Aim for “mortgage mitigation.” What a great idea. It will cut your mortgage payments in half. What a boost to the household finances, and you don’t even have to ask your boss for a raise, since “mitigation” does not require — according to Ball and Crosbie — an increase in revenue.

There will be consequences. The grocery budget will have to shrink. Cable TV might have to go. That new car you want will likely have to be a used one.

But not in Ball and Crosbie’s fantasy world. According to them, “mortgage mitigation” won’t cause cutbacks in any other household spending. The thumpity-thump sound you hear is hooves on the roof.

Preposterous plans

Ball’s “rate mitigation” plan requires $725 million every year to hold electricity rates at 13.5 cents per kilowatt hour — 1.2 cents more than the current rate of 12.3 cents per kWh.

His proposal includes an annual subsidy of $200 million straight out of the provincial government’s bank account. If anyone has ever heard Ball use the word “subsidy” in this regard, please let the rest of us know.

Ball’s plan also presumes the federal government, i.e., Canadian taxpayers, will contribute $200 million per year for the next half century. Just wait until people in B.C. hear about this one. They’ll be ecstatic, because a precedent could be set and they can demand that the feds help pay for the Site C dam, B.C’s answer to Muskrat Falls.

Will Canadian taxpayers be willing to pay $200 million per year for the next two generations because of Newfoundlanders’ self-imposed folly? Let’s be daring and guess no.

Over in the Crosbie camp, the Progressive Conservatives’ boondoggle blueprint would keep electrical rates at 14.67 cents per kWh — the .67 being proof the PCs are incredibly good at math.

Will Canadian taxpayers be willing to pay $200 million per year for the next two generations because of Newfoundlanders’ self-imposed folly? Let’s be daring and guess no.

Crosbie said in March his plan requires annual funds of $575 million.

The bulk of Crosbie’s $575 million would come from diverted — i.e. appropriated — revenue from Newfoundland and Labrador Hydro ($123 million) and Nalcor Oil and Gas ($231 million), the latter being some of the province’s offshore revenue.

This is all government money that won’t go toward other services. Every time you hit a pothole, be glad for “rate mitigation.”

Ball and Crosbie’s fantasy becomes epic when they both suggest shutting down the Holyrood Thermal Generating Station. Ball says its closure will save the government $186 million annually, and Crosbie says it will save $150 million — and those millions will go toward “rate mitigation.”

The transmission line from Muskrat Falls to the Avalon Peninsula is strung across 1,100 kilometres of rugged, isolaterd territory that is subject to blizzards, wind-blown freezing rain and ice storms. If you liked DarkNL — the weeklong power outage in January 2014 — and wouldn’t mind a weeks-long repeat every few years, by all means, close the Holyrood plant.

Brian Jones is a desk editor at The Telegram. He can be reached at brian.jones@thetelegram.com.


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