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EDITORIAL: Rate mitigation and other fantasies

Premier Dwight Ball speaks at an announcement about the government’s plan to deal with mitigation of electricity rates at Confederation Building Monday morning.
Premier Dwight Ball speaks at an announcement about the plan to deal with mitigation of electricity rates in this file photo. — Telegram photo

You could call them the “Robbing Peter to pay Paul” reports.

Or the “You can’t get blood from a turnip” reports.

Or the “Money doesn’t grow on trees” reports.

But whatever you call them, the facts remain depressingly the same.

Ratepayers are on the hook for all of the delays, cost increases and additional interest costs of the Muskrat Falls project, and while Premier Dwight Ball and his government have maintained electrical prices won’t rise dramatically to cover those costs, the money has to come from somewhere.

Having made that rate mitigation promise, Ball’s government then passed responsibility for actually delivering on that promise to the Public Utilities Board, and the PUB has sought expert help. This week the board released two new reports from its consultants, Liberty Consulting Group and Synapse Energy Economics Inc.

The reports are quite technical, and explore everything from the possibility of getting rid of 113 jobs, “many of them at Nalcor and (Newfoundland and Labrador) Hydro’s higher compensation levels (a Liberty suggestion) to “high levels of policy-supported electrification” (suggested by Synergy) to spread the pain across more customers and lower the overall cost per kilowatt hour.

But many of the solutions have impacts beyond the simple price of power.

Ratepayers are on the hook for all of the delays, cost increases and additional interest costs of the Muskrat Falls project, and while Premier Dwight Ball and his government have maintained electrical prices won’t rise dramatically to cover those costs, the money has to come from somewhere.

The province, for example, can decide not to take a return on the billions of dollars of equity it has — cash invested in the project. But without that return on equity, the money (which is part of the province’s long-term debt) will have to continue to be borrowed, and will continue to garner interest payments.

Some of the suggestions seem almost counter-intuitive: if we can shift businesses and individuals from oil to more expensive electrical solutions, we’ll at least spread the pain, with increased consumption effectively bringing the price of power down. At the same time, residents of this province are nothing if not individually resourceful: as soon as increased electrical prices loomed on the horizon, there was something along the lines of a 57 per cent single-year increase in the installation of energy-saving mini-split heat exchangers.

None of it means we don’t have to pay the money; if anything, it only means we don’t have to pay the money right away.

One unintended piece of hilarity? The capitalist fantasy of Muskrat Falls — that it would be a linchpin in the province’s profit-making “energy warehouse” — is going to require a top-down, intensely government-driven solution process that looks painfully close to socialism, in that the market would essentially shifted to help the whole, rather than having a free market that would benefit individuals.

Rest assured on one thing, as always: either we — or our children — will pay the bill.

And about those report titles? Maybe the “Rearranging the deck chairs on the Titanic” reports is the most apt.


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