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EDITORIAL: Red flag

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.
When Muskrat Falls power comes online, ratepayers, consumers, businesses and municipalities will all feel the budgetary pressure. — Stock photo

It’s tempting to compare the budgets brought Monday by the City of St. John’s and the Town of Conception Bay South.

The former raised residential and commercial property taxes as well as the water tax, while the latter held the line on taxes and fees.

But it’s not a straight comparison — St. John’s has a larger population with aging infrastructure and decreased residential property values, while C.B.S. is a younger, growing town with property values that saw a slight increase this year.

Both municipalities seem focused on spending to maintain core services — things like clean drinking water, road maintenance, snowclearing, storm sewers. (Though we have to ask: while we agree it makes sense for St. John’s to have a climate change co-ordinator, does the starting salary for this new position have to be in the six-figure range?)

But comparisons aside, a notable item in the list of increased costs facing St. John’s this year is one that should grab all of our attention.

The capital city expects to pay nearly $700,000 more in electricity in the coming year than last year. And with electricity rates expected to rise once the Muskrat Falls hydroelectricity project comes on stream in 2020, expect that amount to increase.

And watch for it to be more of a factor in the next couple of years — something that will directly affect households and businesses in a multitude of ways.

The capital city expects to pay nearly $700,000 more in electricity in the coming year than last year.

And with electricity rates expected to rise once the Muskrat Falls hydroelectricity project comes on stream in 2020, expect that amount to increase.

Now it’s true, this fall Premier Dwight Ball asked the Public Utilities Board to try and find ways to mitigate those rates — ironic now, given that the PUB was deliberately shut out of the review process for Muskrat Falls before it was sanctioned — but the key word is “mitigate”; no one should expect rates to stay flat, whatever the PUB comes up with.

Small and medium-sized businesses in the province have already warned that higher electricity rates from Muskrat Falls could cost them nearly $180 million a year — and that effect won’t just trickle down to St. John’s residents; the pain will be felt provincewide.

In St. John’s, businesses are already unhappy with a budget that includes a mill rate hike of 1.4, bringing the rate to 26.1. When higher electricity rates are tacked onto that, businesses will feel the pinch even more keenly.

And of course, it’s not just businesses who will have to pay more for electricity — think of airports, hospitals, schools, government buildings and other institutions. All of those costs will have to be covered and some of the money will come out of our pockets in the form of higher priced goods and services and higher taxes or reduced services.

In other words, taxpayers and consumers could pay the price on many fronts as electricity rates put increasing pressure on already strained budgets.

It’s not exactly a rosy outlook, but we’re going to have to grapple with it.

Something’s gotta give.

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