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BRIAN JONES: Dwight Ball’s ‘rate mitigation’ nonsense hits new low

From left, federal Natural Resources Minister Seamus O’Regan, Premier Dwight Ball and Natural Resources Minister Siobhan Coady speak with reporters following a news conference at Memorial University’s Signal Hill campus on Monday. Joe Gibbons/The Telegram
From left, federal Natural Resources Minister Seamus O’Regan, Premier Dwight Ball and Natural Resources Minister Siobhan Coady speak with reporters following a news conference at Memorial University’s Signal Hill campus on Monday. - Joe Gibbons/The Telegram

Please tell me you’re angry and disgusted. Please tell me you weren’t fooled.

Premier Dwight Ball’s self-congratulatory non-announcement Monday marked a highpoint — or, rather, low point — in the ongoing fantasy that there will be “rate mitigation,” and Newfoundlanders won’t actually have to pay for the Muskrat Falls project.

Ball and his Liberals don’t have the courage to say it, so let’s be clear and put it here: Newfoundlanders — whether ratepayers, taxpayers or both — will pay for Muskrat Falls.

Any talk of “rate mitigation” is merely shifting coins from one pocket to the other, or, in the larger governmental sense, shifting numbers from one bank account to another.

Unless the battery is low in your bull---- detector, you will have noticed how quickly Ball jumped in front of the microphones to announce his supposed solution. The Board of Commissioners of Public Utilities (PUB) released its report on rate-mitigation options last Friday. Ball called his news conference for Monday.

Wow, that is one responsive government. It listens, and acts, all while being transparent and riding a unicycle.

The timing is your first clue. People barely had time to settle in for a comfortable read of the PUB’s 128-page report, when Ball steals the spotlight with his hat-and-rabbit act.

So, let’s do what Ball obviously doesn’t want us to do, what he hoped his shenanigans on Monday would forestall us from doing: let’s compare what he announced to what the PUB said in its report.

If the jargon-laden phrase “cost-of-service model” made your head hurt, take solace in the knowledge you’re not alone. You would think — erroneously, of course — that with a topic as complex as Muskrat Falls financing, politicians would make an extra effort to be clear and concise.

In fact, they want the opposite. They want you to remain confused, but dazzled and impressed by their competence, rather than revolted by their ineptitude.

“Cost-of-service model” simply means a producer — in this instance Nalcor Energy and the provincial government — forgo profits and dividends in order to sell widgets — in this instance, electricity — for a lower price.

How much lower? Well, the premier didn’t say.

Nalcor Energy needs $726 million from ratepayers in 2021, the first full year that the $12.7-billion boondoggle will pump juice to provide Newfoundlanders with heat and light.

According to Friday’s PUB report, “approximately $620 million would be required in mitigation in 2021 to keep domestic electricity rates at 13.5 cents/kWh in 2021.” (Page 97.)

The “total mitigation potential” of applying profits and dividends toward cutting power bills is $170 million, while operational changes to Nalcor Energy and Newfoundland and Labrador Hydro could provide another $22 million, for a total of $192 million (that's on page 76).

The “cost-of-service model” apparently has a shortfall of at least $428 million ($620 million minus $192 million).


Newfoundlanders have a government that isn’t brave enough to tell the public the unfortunate truth.


“With a target rate of 13.5 cents/kWh the total estimated (rate-mitigation) requirement would still be over $400 million.” (Page 100.)

Our enthusiastic but math-challenged premier declared Monday, “What this does is it mitigates the full impact of Muskrat Falls.”

No, it doesn’t. More like 31 per cent of the impact, if you trust the PUB report over Ball’s assertions.

Maybe I’m reading it wrong. Maybe I calculated it incorrectly. After all, I’m a mere scribbler. If any of the mathematicians or economists at Memorial University can correct me, please do. (Not you, Wade Locke.)

In particular, the premier and the experts need to explain this line in the PUB’s report: “It is estimated that, in the absence of additional rate mitigation (beyond applying profits and dividends to subsidize rates), the average domestic customer rate on the Island Interconnected system would be over 19 cents/kWh (in 2021).” (Page 102.)

Ball and his Liberals have performed their charade long enough.

Newfoundlanders have a government that isn’t brave enough to tell the public the unfortunate truth, which is, “One way or another, you will pay for Muskrat Falls, either through taxes or power bills.”

Money you put toward your mortgage is not available to buy groceries. Money you spend on groceries can’t be used to pay your power bill.

Similarly, any money the government allots to “rate mitigation” can’t be spent on, say, schools, roads, hospitals and whatnot.

Or, as the PUB report puts it, “If these funds are applied to rate mitigation they would no longer be available for other government priorities.” (Page 104.)

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

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