Top News

Letter: Marshall, Williams and faulty facts

Both Ken Marshall and Danny Williams have stated that electricity prices were going to jump from 11 cents per kilowatt hour to 15 cents per kWh, even without Muskrat Falls. While that might’ve been true it blatantly ignores price elasticity (supply and demand) for the cost of electricity.

Economist Wade Locke, in his PowerPoint Harris Centre presentation on Muskrat Falls wrote of whether we need the power, “Empirical studies indicated that a 20 per cent increase in price should reduce demand by five per cent.”

Had electricity prices eventually increased by four cents per kWh, that would be a 36 per cent increase. Where is the correlating nine per cent demand decline?

Nine per cent demand decline based on 2010’s 7,600 gigawatt hours (island load) equals 684 GWh. Muskrat Falls’ initial cost to consumers was 16.4 cents per kWh, increasing power rates by 49 per cent. Somehow the empirical study wasn’t applied (if not omitted) to this increase that equals a 12.25 per cent demand decline or -931 GWh.

Prices might’ve gradually increased to 15 cents or 16.4 cents kWh based on $150-a-barrell oil, but Muskrat Falls proponents ignored supply and demand to bolster their weak case for the project.

Last update for Muskrat Falls power was 22 cents kWh, or double 2010’s rate. If you think this will have no effect on the economy or that most can afford this, congrats — you qualify to host “Open Line.”

Alec Campbell
Mount Pearl

Recent Stories