Wednesday, 8 August 2018

PREMIER SHOULD SEIZE ON BETTER SOLUTION FOR POWER RATES

Guest Post by David Vardy
Premier Dwight Ball said this week that power rates will not be allowed to double. This statement is an important step toward a better solution. It recognizes that the take-or-pay power purchase agreement (PPA) is not a workable solution to the question as to who will pay for Muskrat Falls. The PPA places the burden on ratepayers which is unfair because ratepayers did not ask for Muskrat Falls. It was imposed by an overbearing government, supported by a relatively small group of people who stood to benefit.

The government proposes that ratepayers bear roughly half the cost and that taxpayers pay the rest, citing 2021 rates in the Maritimes at 18 cents per kWh, compared with 12 cents on the Island. Such high power rates, even when reduced from 23 cents to 18 cents per kWh, would still be unaffordable for low income people. They represent an increase of 50%.
PlanetNL, in his Monday blog post, refuted the Maritime benchmark and showed that rates in Nova Scotia, New Brunswick and PEI are on a par with current Island rates and are expected to remain stable. PlanetNL proposes a better solution to the allocation of the burden, one which calls for the reinstatement of the role and powers of the PUB.

His better solution is to charge ratepayers only for the least cost option, which is its proper mandate under legislation which calls for the power system to be managed in a way   “that would result in power being delivered to consumers in the province at the lowest possible cost consistent with reliable service.” PlanetNL proposes that the PUB decide how much it will cost to supply power if the least cost option had been selected and to allow only these costs to be charged to ratepayers. The PUB would disallow costs in excess of these least costs by declaring them to be “imprudent.” Costs over and above “prudent” costs will be charged to taxpayers.

Rates and rate design are important both from an equity and an efficiency standpoint. Demand for electric power is elastic and higher prices will cause demand to collapse and make the investment unused and useless. Stability of rates is a better solution both from the standpoint of social justice and economic efficiency.
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Related to this Post:
Muskrat: A Fair Rate Idea That Won't Shock You
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Dr. James Feehan, in a report filed July 31, 2018 with the PUB, shows that a 50% increase in rates could lead to a drop in demand of 1.4 to 2.1 billion kWh. This would eliminate the need for Holyrood power and for power from Muskrat Falls. Feehan also points out:

“The counterproductive impacts of raising electricity rates following completion of Muskrat Falls are a signal that simply raising the price-per-kWh is an incorrect approach to rate design. Setting prices in that way is not related to the core economic principles of marginal cost pricing and, as demonstrated herein, it fails to take account of consumer response to higher prices. The higher rates for Island customers would push them away from consuming electricity even though the benefits to island consumers from using that electricity may well exceed the export revenue it earns.”

This solution proposed by PlanetNL is better in a number of ways. We need to look at the question of equity: who has benefited from Muskrat Falls and who is being forced to pay the costs. They are not the same people. Power rates are regressive and place too much of the burden on low income people, compared with our progressive tax system. Recovery through taxation means those higher income people who benefited greatly from Muskrat Falls will pay for these imprudent costs. By keeping rates in check citizens will not be forced to make further investments to avoid the crushing costs of Muskrat Falls. If rates are set to reflect Muskrat Falls costs then demand for power, including Muskrat Falls power, will collapse and our investment in Muskrat Falls will be an unused and useless stranded asset. By resolving the uncertainly over future power rates government will restore confidence in our economic future.

In order to implement this better solution to the dilemma of rates government must reinstate the powers of the PUB. Government must enable the PUB to regulate the Muskrat Falls assets of Nalcor, removing the PPA which demands that NL Hydro purchase only from Nalcor and immunizes Nalcor from PUB regulation.

Government must rescind the Orders-in-Council which exempted the Muskrat Falls project from the Board’s jurisdiction. Government must also rescind the regressive and repressive legislative changes enacted by the House of Assembly in December of 2012, when Muskrat Falls was sanctioned. This legislation enhanced the monopoly powers of Nalcor Energy and degraded the powers of the PUB in a fit of petulant rage.

These legislative changes prevent the retailer, Newfoundland Power, from sourcing power from outside the province. They impose the same restriction on industrial enterprises. They restrict independent power producers from building new generating facilities. At the same time the amendments gave the government the authority to issue directives to the PUB on a wide variety of matters, including the rate of return on equity and even on whether a hearing should be held. These changes represent a further weakening of the powers of the PUB, on top of the exemption of the project from its jurisdiction.

In order to function effectively the PUB must be independent from political interference. We cannot turn back the clock but we can make public policy more rational and reinstate the rule of law over the rule of hubristic leaders. The better solution is to restore the authority and independence of the Public Utilities Board and allow the Board to decide how much of the burden of Muskrat Falls, if any, should be included in power rates and how rates can best be designed so that consumers will pay only for “the lowest cost power consistent with reliable service” and have “equitable access to an adequate supply of power”.

Muskrat Falls is not the lowest cost power source nor is it equitable or efficient to make ratepayers pay its unaffordable costs.  Premier Ball did not sanction Muskrat Falls but it is his government which must deal with unaffordable rates by finding a better solution, one which recognizes that the benefits and costs of Muskrat Falls are not being shared equitably. The present course, continuing the direction set by the previous government, is doomed to failure. Premier Ball has signalled his willingness to change direction.  Let us hope he will seize upon a better solution for power rates.

David Vardy

75 comments:

  1. Now is the time to clean up the accounting books. Too much debt and liability is hidden, or like pension funds, misleading because of intentional underlying deceptions like unrealistic investment earnings. We should set the kWh rate to the lowest cost option, set realistic budgets for basic government services / healthcare / roads (probably cut back on everything except hospitals). We have to decide what we can sell and what we should not sell. Do we want a Greece style asset strip? Can we accept commission of government?

    We then present the impossible debt to the rest of Canada and suggest starting options: These should include: 1) Increased oil royalities 2) renegotiating of the upper churchill 3) defaulting on the federal loan guarantee 4) defaulting on all debt. Then there is the nuclear option -- independence. We'd be poor initially, but would have vast marine, oil and marine resources and be strategically positioned between North America and Europe and could allow immigration and free trade like a northern Hong Kong backed by China. Clearly Canada doesn't want this, so it would be good leverage. I'd actually prefer this option, but I'm not sure if most people would be willing to embark on an initially rough ride.

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  2. In my post today I explain why the authority and independence of the PUB should be reinstated. If the PUB’s jurisdiction over Muskrat Falls had not been removed it is unlikely that this “boondoggle” would have been sanctioned.

    Rates need to be set at the correct level if Muskrat Falls energy is to be used and useful. Ratepayers should pay only for least cost power and not for the cost of a misguided make-work megaproject.

    To be perfectly clear there are two challenges: one is how to pay for the project, whose costs will amount to over $78 billion over 50 years. The second is to make best use of the high cost energy.

    If we charge ratepayers the full cost then we will be defeated on both of these challenges. Ironically, if rates are set too high the contribution from ratepayers will decline and not increase. The solution proposed in my post today will generate as much revenue from ratepayers as possible, while making full use of the assets created. It will not leave ratepayer revenue on the table.

    The $12.7 billion in capital cost translates into enormous annual revenue requirements or costs to be recovered, which more than double the cost of electric power. We will be spending as much on electricity as a society as we do on education, $1.5 billion. Because of the back end loading it gets worse over time. Most of the cost recovery (72% of the $78.5 billion) takes place after 2041.

    Make no mistake the remaining burden for taxpayers will be formidable, requiring massive retrenchment. The alternative is to sell off our patrimony, to break open the piggy bank and squander the savings we had left for our beleaguered children.

    Our patrimony is our sovereignty, our legacy assets, our heritage. They include the resource revenues accruing under the 1985 Atlantic Accord, Churchill Falls, our renewable fishery resources and our political sovereignty. We can go on bended knee to Quebec City or to Ottawa or we can take tough but prudent management/governance decisions. There will be no free ride.

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    1. Hard to understand how our "Patrimony" won't be on the bankruptcy auction block. As a member of the Canadian Federation we won't actually go bankrupt, but we will be stripped of crown jewels (CF, offshore royalties) and will not be allowed near banks/investors again without adult supervision. The idea that the MF and all other government debt can be paid down by high-end taxpayers won't fly. Doctors, dentists, and all other professionals will simply leave. We lost our sovereignty when Daniel pulled his ABC tantrum. Prudent management/governance decisions is an oxymoron in this locale.

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    2. "If we charge ratepayers the full cost then we will be defeated on both of these challenges. "

      And if we charge taxpayers the full cost then they will get themselves out of here and it will kill businesses.

      And if we split the full cost, then we loose on both sides because even once splitted, the cost is too high to be absorbed even by the entire province.

      There are no solutions before a bailout. Because the bailout will have its own terms, we must know these terms before deciding of any action to finish the redress.

      If power is to be provided by HQ from now on, then PUB will remain out of the equation for the price.

      If the terms determine a specific price, again the PUB will remain out.

      Trying to define a solution outside a bailout / bankruptcy is speculation.

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    3. David Vardy's analysis remains however relevant and appropriate. An optimal rate has to be determined and definitely some burden has to be shifted to the taxpayers.

      But the above doesn't exclude the more drastic (and required) actions. So, I totally agree with you Heracles that a win - win solution still must be found and agreed to. Your scenario of extending UC's contract past 2041 (at market prices), and HQ providing wholesale power to NL, NS + maybe NB&PEI (and HQ possibly operating MF - if operable) definitely presents the most potential.

      And all the above may occur without a bailout/bankruptcy if NL seriously addresses its chronic budget deficit.

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    4. Hi Ex-mil,

      If UC contract is to be extended, it must be at production cost and not market price. If HQ has to pay market price for UC power, then they will have no benefit. The benefit for HQ is to have UC power at production cost, like provided by the Power Contract. As such, to extend that benefit, it must remain at production cost.

      Production cost revealed itself to be more than 2 mills; that's why HQ designed the GWAC and other agreements for. So an extension that would be of value for HQ would be one at maybe 4 mills but definitely not at market price.

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    5. You mentioned that UC has a present value of about $20B, isn't it?

      In a scenario that HQ gets to provide the power to NL and NS;

      Let's say that we extend UC's contract for another 65 years.

      If we get HQ to pay all this hydro up front at fair market value, how much would that be worth, $12B?

      That's one possible win -
      win scenario that would allow NL politicians some face savings (ie not having given away UC) while obtening a fair price for this 65 years extention.

      Those $Bs (whatever the exact amount is) would help a great deal in diminishing NL debt.

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    6. Indeed, the UC power plant has been estimate at 20B during the latest court case. But that is for ownership of the plant and because HQ already has 34.2% of CFLCo, it already owns 34,2% of these 20B. If the ownership is fully transfered to HQ, then HQ will need protection for not to be taxed in an unreasonable manner. So this is transferring ownership of both MF and UC to HQ : MF with its debt and UC with its revenue.

      If ownership is not transferred, the difference between production cost and local resale cost generates about 2B per year. Newfoundland receives about 30% from dividend, the rest is divided 34 - 66, so HQ ends up with about 25% and Newfoundland, 75%.

      Without an extension of the power contract, HQ can expect about 500 millions per year from UC. An extension where HQ pays the power at production cost, around 4 mills, means HQ returns to about 2B per year, so is a benefit of 1.5 billion per year. If we have to pay back MF's debt of 13B with its interest, it will take a solid 12 years minimum just for capital. If we need to pay to secure the North Spur, the transmission line, etc, HQ will need an even longer extension to cover for these as well. Also, remember that his benefice for HQ would start only in Sept 2041, so we must absord the cost and interest until that. Add to this the recurring costs for operation and the minimum extension can easily be 20 years +. So that would be transferring MF and its debt to HQ with an extension of the contract instead of ownership. Here, HQ will require protection for Newfoundland to stick to their words and not return to court and fight their own words again.

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  3. Why does Mr. Vardy, say it so much better and explain it better than I do but I said exactly the same thing in the last post by PlanetNL. So people take heed, but especially governments and follow Mr. Vardy's plan. No need to huff and puff and delay about a panel of experts as if they will be sent by God or some other magically means. Get down to brass tax and solve the dam problem. And if I hear Debbie or Lynn talking nice to chess in the next couple of months about nice to see you on my show, and not simple questions to ask like what is your plan, and what will you do about the 28,000,000,000 that we owe, and continue to push that down the throats of our politicans at every chance they get, and tell their bosses to shove it, and stand up and do your job. Of course I mean all media, where the hell are you, at chase the ace???? Or is everyone hung up on the weather media. Get a real life and deal with the real issues, for Christ sake, says the average Joe.

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  4. Several problems, I think, with artificially keeping rates low so those with more income will be taxed more. Zero in-migration of anyone who doesn't want there hard earned income decimated by govNL, those already here who are relatively well off will head to Port Aux Basques for the one-way voyage outta here, all young adults will move as soon as they leave the nest. What a mess.

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  5. It is interesting that you mention the Premier should be reverting power back to th PUB. I don't know if you are able to check it out, on FreeNL one of our members Susanne Costigan asked questions to the Premier at a function on Harbour Main regarding power rates.
    In his responses he eluded to they will always use the PUB for determination of power Rates. If you get a se ins.. check it out

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    1. That's a very easy meaningless thing for the Premier to say. Only the PUB can set rates so at least he recognized that fact. The problem is the PUB has been legislated to accept all costs of Muskrat with no argument and zero disallowance. They are forced to set the rate to recover all required revenue. The Premier abuses power and trust when he spouts such disingenuous sympathy and concern.

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  6. Everyone should take a deep breath before jumping on PlanetNL and Mr. Vardy's insufficiently thought out suggestion.

    Just a few thoughts:

    This solution all but ignores the former Conservative (Harper) and current Liberal (Trudeau's) enabling roles, and now moral, political and perhaps legal responsibilities.

    The province's financial difficulties (although in large part due to this MF boondoggle) are now much greater than just electricity rates alone (and therefore are now well beyond the sole responsibility and expertise of the PUB --- a "utilities" regulator).

    Do anyone really think that by effectively shifting the burden of MF from ratepayers to taxpayers that in that way only the highest income earners/wealthiest segment of society will pay a much greater share of the province's debt obligations?

    As a political principle, should the quandary we find ourselves now in be all but shifted to non-elected, non-accountable political appointees/bureaucrats? We can't vote them out can we?

    About 30% of existing (low to low-middle income) homeowners are NOW all but protected from MF costs because they do not use electricity to heat their homes. That protection is largely eliminated if increased taxes are used to ensure rates stay low. They will be become the target of significant increases in taxes, levies, fees (while the wealthy, with their professional incomes and businesses will all have well paid accountants to avoid/reduce their taxes (their share of the MF boondoggle).

    Too much reliance on taxation will help keep NL in the dinosaur age rather than fostering and carefully guiding citizens toward a new, high tech, decentralized and efficiency oriented energy paradigm.

    Need to keep this short. So I will stop there.

    Perhaps it would make more sense not to operate the MF generation component (and thus reduce the multi-million dollar annual operating costs)

    We need a BALANCED approach. There is no silver bullet --- not even taxation.

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  7. David you are spot on as usual!
    First we need to all acknowledge that Muskrat Falls is not an economic project. The project costs need to largely be written down to the current value under realistic assumptions - That means billions of dollars need to basically be written-off, just as happens with any overvalued asset. The write down on this project however, needs to be shared between both levels of government as both financed the Boondoggle. The feds largely financed the mess as bondholders would never have bought the debt without federal guarantees. how this write down gets shared will obviously be contentious.
    Next step is as you say reinstate the powers of the PUB to fully regulate the electricity rates in NL. Politicians should have no say in setting the electricity rates for a monopolized industry that government controls. The conflicts and politics are clear, independent, public processes are the only reasonable means to regulate a public utility.
    You are also right to point out that it makes no sense to charge NLers more than the market rate (the average Atlantic rate in this case) as it will only cause consumption to decline and then we sell the surplus power for an even greater loss. This is what is going to happen if we stay the course. The principal problem is that we the people have not yet accepted the fact that this project is really worth very little in real economic value.
    Most of the cost of muskrat falls will eventually find its way onto the public debt as it should, just as the costs of all our prior grand political schemes have.
    We just need to accept the facts and move on!
    All political parties would be wise to acknowledge this truth.

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  8. A few points: but one at a time.....
    Vardy says "demand for electric power is elastic ....and higher rates will cause demand to collapse"
    Few average Joes understand the word ELASTIC, it being an economic term. To most elastic means like a rubber band, it can stretch.
    Elastic as to power rates is almost a dirty word, talked in hushed tones. In 2015, at a rate hearing it got mentioned briefly, obviously a concern, as to what the elastic number would be. Everything hinges on this elasticity, but all ignored with evaluation of MFs, and largely ignored since. Vardy has repeatedly put importance on it, but not as the Average Joe would understand it. As to writing on it, especially for UG, Vardy has wanted to defer to Feehan,(because Vardy is a very nice person) and now Feehan has spoken, but 6 years too late, as to elasticity.
    Now I could probably explain it, and long ago intended to, but wanted to defer to Vardy, who wanted to defer to Feehan, and on it goes.
    So the average Joe might say "What the F--K is this elasticity that is so important? Spell it out in plain language. What has Nalcor, Nfld Power, Fortis, and the PUB kept from me about elasticity? Is it a virus?
    A secret code"?
    I ask Vardy and /or Feehan, or UG to dedicate a piece just to ELASTICITY, because it is key.
    Sermon 1
    Winston Adams

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    1. Winston, can't say I agree with you totally. I just watched a 20 minute video online, and great if I were doing economics 101, or maybe 301, but I an not and never plan to do so. But realized that I have been using elasticity and inelasticity all my life. Especially at the grocery story and other places too. Ask any sharp lady grocery shopper( well maybe not any, but most) and they can make your head spin, of what an item cost at Walmart, sobeys, Costco, or dollar Rama, if you need it, or just nice to have, and can you do more or less with it, what are the substitutes, lots or few etc. And don't need to know those dang old formula. But yes, guess an overview might be nice, as it applies to power rates. Been doing it with the price of gas, how much I drive, and watches the price go up or down weekly. But then others will tell you, you have to be an educated moron, to figure that all out. I know some fishing mater experts that could'nt read or write, but don't try and fool them, They took their ships to Spain, or the carribean, with just a magnetic compass and a log, of course sails too. Guess you know some too, says average Joe.

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  9. Surprise, the new boy from the Right, Ches, asks Ball to trust in the PUB regarding rate mitigation, and THE PLAN. It is well and good that David, and others on the BLOG seem to have led the way towards reinvigorating the public involvement, (in the absence of Liberal bias towards common sense).
    How prepared are we all for the Inquiry into past corrupt management by both parties? Is the lineup for hearings already set? Summer of heat is almost over. Hit the books. Attention Media. Ready camera, Action. However, keep the "Shadow" Inquiry instincts alive on the Blog. Note the previous exchange with Des, who seems to be comfortable with Government backed cash for the Bondholders. Globally, the Debt cycle is about to crash. Is there not a high risk involved, given the extent that NL has mortgaged our children and future cash flow? Oh well Mother Ottawa is going to bail us all, given time. Without cheap Saudi oil, M. Irving has other plans; Buy American! But Trump has his agenda also. Hope the Fall Harvest will see us through til Spring elections and all.

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  10. Just wondering. Do the Saudis hold any Bonds in Muskrat Falls? If they do they are now trying to dump them-at a loss I might add-so maybe the provincial government could make a counter offer at say 1% of their recent value. Just think of te irony. A dictatorship owning Bonds in a NL construction project and then selling them to the provincial government for a song.

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    1. Good question. Just listening in on Edmonton Radio on the Saudi mess, and find out that Saudis have invested in Canada's Wheat Admin. Now they embargo wheat imports from Canada to spite our tendency to carry on "Twitter Diplomacy". Russia cashed their US Treasuries for gold recently. Can somebody track how Saudi investment in Canada will trade? What would you think Muskrat Bonds go for, and who is buying?

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  11. Wow, Mr Vardy strikes right on target again.
    You explain extremely well many relevant fundamental notions here (I shortened some):

    “Demand for electric power is elastic and higher prices will cause demand to collapse and make the investment unused and useless”
    => We all agree on that one. And no points of ending up with surplus/unsold hydro that basically is indeed useless.

    “Setting prices (too high) that is not related to the core economic principles of marginal cost pricing…”
    => Indeed; “take-or-pay” and still ending up with unsold/surplus hydro doesn’t make any senses.
    However, if in order to meet demand, we must (by example) continuously run Holyrood, then Holyrood becomes the “marginal cost pricing” driver.

    “Higher rates will push away from consuming electricity even though the benefits from using that electricity may well exceed the export revenue it earns”
    => So well explained! Excessive rates is bound to cause much damages to the economy, and indeed that damage can only minimally be recovered by the (surplus) hydro export revenues.

    “By keeping rates in check citizens will not be forced to make further investments to avoid the crushing costs of MF”.
    => We also all agree on that one, even Winston now, I guess…

    “If rates are set to reflect MF costs then demand for power, including MF power, will collapse and our investment in MF will be an unused and useless stranded asset.”
    => Totally logical and unfortunately perverse consequence.

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    1. I repeat at the risk of irritating Narley. Isn't it great to live in a country where wealthier provinces pay to help poorer provinces balance their budgets and reduce debt and deficits. Also we have a federal government that helps settle inter provincial disputes by purchasing pipelines and supporting projects that are deemed to be in the national interest.

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    2. Eric, Ex military:
      "Demand for electric power is elastic and higher prices will cause demand to collapse" We all agree on that one you say. Really?
      1. How elastic is electricity here? Elastic enough to cause demand to collapse? Tell that to the power companies who are still spending heavily to keep Holyrood at peak 490MW capacity?
      And are we (Dave Vardy and you) talking energy sales, kwh demand collapse or winter peak demand collapse? They don't go hand in hand. Peak demand is key whether we need MFs or Holyrood, or both, or neither.

      "By keeping rates in check citizens will not be forced to make further investments to avoid the crushing costs of Mfs" You say: We all agree on that one, even Winston now, I guess...."
      You were right to say, I guess, and I use that when I'm not sure.
      You guessed wrong. Here's why.
      Further investments (in energy efficiency).....
      Take minisplits, 50 units in 2009, 5000 total from 2009 to 2014, so growing exponentially, with rates 10 cents of less.NS installed 20,000 in 2011 alone, but with incentives.
      Who FORCED customers here to invest? There were no incentives.It is very economic to that. Likewise for insulation , air sealing, and soon triple glaze windows. This is happening economic without MFs costs or 18 cent power, but below 11 cent power. No one forcing them , and much more of that to come. The vast majority of such costs are modest, not crushing. Crushing only to the very low income group who would suffer heat poverty with baseboard heat. Quantify that as to the overall impact and reevaluate that statement, whether accurate or speculative.
      Winston

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    3. So Winston, you now advocate having high rates (even w/o mitigation?), and not just that "optimal rate"- where EE starts kicking in.

      What good will it be when the "diminishing returns" lowering the overall revenues to the point of transferring an even bigger burden to the taxpayers.

      So we would end up with prohibitive rates, coupled with an even bigger taxation burden, and resulting in more surplus/unsold hydro.

      That looks like a lose - lose scenario to me.

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    4. I suggest a case, and perhaps a good case can be made for high rates, and if not 23 cents, then certainly more than 12, and maybe 18 or 20, as compared to taxation. And also growing the power consumption with the transportation sectorto counter declines on space heating.
      As to the magic rate for diminishing returns, no one know where that is. And it is a time factor also, as customers moves to efficiency is not abrupt, but planned, and subject to awareness of the best options, expectations of where rates are heading, and often done when decisons are made for serious renovations ( studies support that). So the magic rate, we are in the dark to knowing. ANd add the fact that power companies keep customers uninformed as to best measures for power saving.
      What you call prohibitive rates, say 23 cents, is not prohibitive for Boston or NY, so why here?
      As to elasticity, and Average Joe's comment, I say is elasticity hard like a rummer hockey puck or soft like a bungie cord? Something like Brexit, if Britain leases the EU will it be a hard landing so a soft one? There are serious calls over there to stock pike food if they leave.
      So with rate here, do we get a collapse of power sales and also collapse of peak demand. If both we need neither Holyrood nor MF.
      FO now MFs operation is not even assured, and maybe not probable. If so, collapse of peak demand is essential,more so than collapse of power sales.Collapse of peak demand allows Holyrood unnecessary for energy production.
      As to a Green economy, from higher rates, it seems that investing in that increase GDP 7 dollars for every dollar spent, So Ontario says.
      I see Maurice suggest a paradigm shift to more forward. Perhaps Ball should use such a Green shift as THE WAY FORWARD.
      Do I advocate high rates now? I suggest it deserves weighing, least we miss prudent alternatives, and make false assumptions as for MFS.
      Winston

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    5. Many spelling errors, so, where obvious, correct it in your mind, sorry.
      WA

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    6. Winston, you question why the high rate is not prohibitive in Boston or NY. I suspect the overall cost of living in Mass and NY states is much lower than in NL and I also suspect the overall family income is much higher coupled with overall lower taxation. 23 cent power is probably much easier to cope with.
      I predict that unfortunately we will lose the pending ownership of the UC in exchange for mitigation of the DW/KD boondoggle financial disaster.

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    7. NY etc are stable markets, always expensive, therefore no elasticity as no major changes occurring. Interweb tells us avg NY residential monthly consumption is merely 600 kWh and they use use gas for heating and more. These markets are not comparable.

      The Ontario debacle is a model to not be repeated. Studies show major manufacturing sector losses attributable to increased electricity costs. Partisans of the McGuinty/Wynn era may spin it otherwise. As we know, governments and their consultants will claim they made the sun rise this morning.

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  12. UG readers may find this of interest:
    Nfld Power owns 23 hydro plants on the island ranging from 19-118 years old. They produce 439Gwh per year, and has a value of 61 million a year in offsetting fuel at Holyrood, fuel at 85 dollars per barrel. The largest plant , Rattling brook produces power at a cost of 1.81 cents per kwh. Holyrood fuel equates t oa cost of 13.8 cents per kwh, while the fuel for the recent gas turbine , 123 MW peak, is 26.5 cents per kwh.
    Heracles suggests trading our 66 percent of CF for MF debt. With hydro plants operating to 118 years of live and still efficient, would we want to think twice of keeping our share of CFs , if possible. Oil fields are dry in 20 years, and destroy the environment. Yet about half our hydro energy is wasted through customer inefficiency.
    Winston

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    1. But MF still has to be paid for starting in 2020/21. The big problem is that we can't afford the pending rates in the interim (which is a long, long, long time)

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  13. Feehan now forecasts a big drop in energy sales at 18 cent power, and so will eliminate the need for MFS and Holyrood. Can a link be provided to his report, as I wonder about his assurance if any, to the necessary reduction of winter peak to permit that?
    Feehan also says that simply raising rates is an improper approach to rate design, as it pushes customers away from using electricity. Yet prior to MFs, Feehan argued, correctly, that winter high costs for Holyrood should have just been passed along to customers, as customers would respond with energy efficieny etc to reduce the need for Holyrood or MFs. Now he makes a 180, and argues the opposite. However , he likely will say circumstances has changed.
    Vardy says ratepayers did not ask for MFs. Nor did they ask for conservation and efficiency. Ratepayers, if they did not ask for it, generally did not oppose MFs. And their Consumer Advocate certainly advocated that it was the best option. Should ratepayers get a free pass?
    They were tuned out, despite high power rates being forecast, though deceptive as least cost. Do we excuse the ignorance and apathy of ratepayers?
    Vardy says we cannot turn back the clock,(as to the debt burden I guess) but to give back power to the PUB, to permit imports of cheap power, or more independent power production on the island,etc, is turning back the clock is some respects, so what would be the impact of that?
    WA

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  14. The term elasticity is a deceptive simplification. If this was a cell phone, then you could raise the per minute rate and people would have shorter conversations or lower the rate and they might talk for hours. Demand isn't fixed, it is a function of cost.

    Using a definition from investopedia: "Elasticity is a measure of a variable's sensitivity to a change in another variable. In business and economics, elasticity refers the degree to which individuals, consumers or producers change their demand or the amount supplied in response to price or income changes."

    Heating in Newfoundland is different. We will turn down the baseboard thermostat to a point in response to higher rates, but if forced to switch to oil then a massive electric demand reduction becomes permanent. Electric demand drops 90% and never recovers. (electric baseboard to oil furnace for heat and hot water).

    In science, elasticity refers to the ability to return to the starting point -- steel is elastic. Our power demand will be elastic until it permanently breaks. Therefore setting the optimal power rate will be very difficult because if you get a little too high and force mass conversion from baseboard heat, it is too late.

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    Replies
    1. Your comment is too simplistic as to effect of higher rates on power sales,as to the many uses, (baseboard heat the most important ) and says nothing of impact on winter peak demand.
      And no one is forced to use oil, that being but one alternative for heat.
      If planning a 6 billion mega project, one would expect a more detailed assessment of elasticity, but seems your few lines may exceed what Nalcor did.
      WA

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    2. This comment has been removed by the author.

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    3. FWIW, about 50/60 years ago, when it got known that electric heating was cheaper than oil furnace, Quebecers massively switched to baseboard heating.

      If the above is of any indications (and combined with a considerable rate increase), I could definitely see a considerable (massive?) reduction in electric consumption in NL.

      And believe me, HP vendors will ensure that everyone (and their dogs) will be informed&convinced that HP with save them a fortune... ;-)

      Delete
    4. Regarding the notion of ratepayers fleeing baseboard heat for oil-fired to reduce their electrical bills, government will gouge these ratepayers by implementing a "heating fuel levy" so as to ensure their asinine "Take Or Pay" scheme raises the required revenue to cover the horrendous costs of the colossal Williams/Dunderdale Boondoggle.

      Make no mistake about it...

      Delete
    5. Ex-Mil - yes, you are correct on the electric heat adoption but we should mention the political backdrop I've found in my research. The 70s oil crises were used by the Fed/Prov govs to promote electric heat as an alternative to oil risk. Build electric projects and upsell it and discount it to get utilization. It may have been a valuable booster to ensure expanding HQ capacity would be quickly used and perhaps that was justified to minimize the debt costs of projects. Closer to here, hydro expansion in NL was the same. Also nuclear in ON and NB came under that umbrella plus other motives for sure, whether truly valid or politically hyped. Nothing is new except the overhyping gets worse.
      PlanetNL

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    6. And Eric, Heracles suspects that I may be one of those vendors.
      Now NS and NB encourages conversions from oil and baseboard to HP. Ontario was to do the same until Ford got in. If you go from baseboard to oil you loose the whole space heat load, but HP you retain about 40 % of that electric load, plus with cold climate models reduce peak load.
      It conforms to GHG reductions also, so can be helped by carbon tax. But THE WAY FORWARD... Ball has no ideas, and Ches says let the PUB figure it out. We lack the consumer representation which happened in NS. So, Nfld Power, a Fortis company, 2nd worse in Canada here for Conservation, no improvement.
      WA

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    7. Hi Winston,

      In a previous post, I told you why I suspected you being one of these vendors : Considering a solid 80% of your posts are about HP / efficiency / going green and that you proved yourself unable to make the difference between MF's impact and heating cost, such a tunnelled vision was for sure from a personnal interest.

      You stated that you are not such a vendor. Good enough. I never claimed the opposite since you stated that.

      As for everyone else going after HP and efficiency, Yes, it is very good for them. That's the point : it is good FOR THEM. Because THEY are not engaged in a Take-Or-Pay contract and they pay only what they take.

      Free yourself from your Take-Or-Pay contract for MF power and efficiency will be as good for you as it is for others. Until then, to pay for efficiency will just add to the fiasco, which should already be big enough not to be agravated in any way, efficiency or other.

      Delete
    8. Salut Heracles31, myself and many others clearly understand and accept your logic... unfortunately the HP fanatics either refuse or are incapable, likely because they need to convince themselves the significant amounts of cash they've invested in their contraptions was justified. So your comments are best directed accordingly.

      Delete
  15. La Romaine has very high costs for energy surplus to HQ needs and therefore high rates associated with it. No discussion about that. Why is that?

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    Replies
    1. Hi Anon 18:45,

      Indeed, La Romaine has the highest production cost of the entire fleet. The reason is simply that it is the latest...

      La Romaine is a complex with a reservoir. As such, its power can be of higher value because it helps sustain peak load. Most of HQ's plants are run of the river type, so baseload only. When in perspective with peak cost, La Romaine is still sound in business terms.

      HQ stated that they would not build any new plant after that one. As you said, the surplus are significant and even during last winter highest peak, HQ exported more power then they imported. That meaning they would not need any import to sustain our own peaks.

      Because hydro plants take years to plan, design and build properly, HQ don't do it last minute. Also, it is important for HQ not to be dependant of UC in 2041. Should they be, they would not be able to negotiate good terms. With a surplus equivalent or bigger than UC, we can simply walk away if Newfoundland's terms are not reasonable.

      So at the end, La Romaine is still sound on business terms, but no need to do more.

      Delete
    2. Interesting that anon @ 22:40 salutes Heracles and his wonderful logic; Heracles who wants to exchange our ownership in CF for the debt of MFs, or another 40 or 60 years of dirt cheap power for HQ at 2/10 of a cent rate.
      Now CF makes more profit than any and many off shore oil. This profit going mainly to HQ, but should offer these high profits for Nfld in the future. HPs puts 1000 dollars a year into homeowners saving. But some here hate HPs but like Heracles, who advocates we lose the CFs asset as the logical solution. Heracles logic, yes, very clear. As he has stated, "Nflders has to be hurt to say they have had enough". Only logic of Heracles that is sound is that MFs is not the fault of Quebec.So, ban HPs and we safe CFs?
      PF

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    3. Hi PF,

      If you think you have another asset valued high enough, for which you have an interested buyer, than by all means propose it.

      If you think you can get out of the mess without selling assets and using only Newfoundland's money, show us your math because for now, the structural deficit, previous government's debt and MF debt is about 400% of the government's annual income.

      If you think a new economic vector can generate enough value to save the day (ie: about 3 billions of revenue per year), again by all means share it with us.

      Lastly, I certainly do not hate heat pumps and once the Take-Or-Pay contract is neutralized, they will return to the very interesting option they should be. But with that Take-Or-Pay, not to take thanks to HP is of no benefit because you still have to pay for what you don't take.

      Delete
    4. The Take-or-pay contract will be neutralized, changed through legislation, caput, null and void, gone with the wind, as we will elect a government that plans, as their first order of business is to get rid of that contract. Second, the enablers boondoggle will be hande over to the Feds and Nova Scotia, as we don't need it, along with their 6,000,000,000$ loan guarantee. Since we have already invested 3 or 4 billion into the boondoggle, then we will have to take the remaining couple of billion, and we will then charge the Feds and Nova Scotia access rights to transport their power over the 1100 Km power route through our lands. We will be looking pretty dam good in a couple of years. Nope, not wishful thinking just reality. So, put that in your pipe and smoke it, as for me, have never taken a draw in my life, and never expect to, says Joe blow.

      Delete
    5. Of course Heracles, you know that we can divert the headwaters of La Romaine into the CF reservoir and thereby increase the power production of the Churchill plants by about 10% or so. It would be a more efficient use of these waters as you probably know.
      2041 is not that far out and N & L Hydro or Nalcor should be shopping the resources of the Churchill River south of the border to see what can be done to develop this valuable natural resource now.
      Transmission routes of course are important in that conversation.

      Delete
    6. Hey Anon 16:46,

      What a great way of collaboration it would be. In all cases, 100% of UC is HQ. The price was determined by the capacity of the first 44 years, so any increase is technically free for HQ.

      Thanks for the gift and let this great collaboration going!

      (P.S. : an example of those who need to see more of the anti-Qc spirit Ex-mil, Etienne and I talked about...)

      Delete
    7. oh Waldo.. still hitting your dog with that hammer? I guess it makes as much sense as you last statement

      Delete
  16. Let me get this straight... those who are both rate-payers and 'poor' middle-class will still bear the brunt? I guess it's better than just the rate-payers being solely burdened with the bill but surely there has to be a better way. Hard to swallow the double whammy since oil has caused property taxes to more than double, gas it sitting higher now than when the barrel of oil was over $100, and the cost of living here is far beyond what made this place desirable... er, palatable. Top that off with successive inept and corrupt governments that'll make you squirm. And our world-class leaders/managers of this project, from DW on down, that only ever managed to inflict economic despair on the lot of us. Sad to say, my children will be encouraged to leave.

    dm

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  17. Further to my 08 Aug., 10:06 comment above, here is an except from Ashley Fitzpatrick's (today's) Telegram article (note Crosbie's reference to the feds enabling role and responsibilities and a need for a balanced approach :-

    " (Ches) Crosbie said the next steps are what the Liberals don’t want to deal with publicly.

    “We have to decide where the balance is going to come from. My position is it can’t come from Newfoundland and Lab- rador taxpayers. That leaves the federal government with which we have to have an extensive negotiation,” he said.

    He was asked how the federal government could possibly negotiate to help keep provincial power rates down in the province, to give something to this province and not another.

    He said the federal government “enabled” the Muskrat Falls project through its loan guarantees, and said it now has responsibility to follow through on the outcome."

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  18. Mini-split (HP) question.... Has it been proven that the initial cost, once paid off, will reap rewards (and be a good investment), or will the thing need mtce. and replacement parts that will sink more money? In other words, have they stood the test of time, or can anyone truly answer that yet, since they are relatively new. Right now, i see it as a good option, but i'd like to know once it's paid off, it wont cause me grief in repair bills (like my car).

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    1. With regards to cost of heat pumps, do your research .

      I was in New Brunswick last month, and heat pumps are common sight alongside homes throughout the Maritimes. Upon my making inquiries about them, the owner of the lodgings where I stayed told me he had two heat pumps installed in his dwelling the year before, at a total cost of $4200 for both units. He paid for the units and installation himself, without going thru NB Power's heat pump loan program.

      I was somewhat taken aback by that, as I had researched the cost of purchase/installation by local heat pump dealers here in NL, and the going rate for a HP and installation was around $5000 for only the one unit. Total cost for two units and the installation was in the neighborhood of $10K.

      So I asked him again to make sure, "It cost you $4200 for purchase and installation of TWO units"?

      "Yes" he said.

      So in view of my investigation into the cost of heat pumps, it would appear that there may be some kind of clandestine local HP cartel in operation engaged in price fixing so as to keep the cost of purchase/installation of these contraptions artificially inflated.

      Delete
    2. Speaking of levies, what's up with the vile "deficit levy" concocted by the Ball/Bennett government as a "temporary" measure so that the bloody NL government could manage to fund the payroll of it's horrendously bloated public service

      So when will this heinous "temporary" gouge on taxpayers finally be terminated?

      And why do such questions have to be posed by the victims of the Ball/Bennett gouge on private blogs like UG, when they should be posed directly to these bloody instigaters by a local media apparently no longer committed to exercising the most basic of jounalistic due diligence for the public it serves?

      WTF is up with that??

      Delete
    3. Hey Levy,

      HP are basically like everything else. There are good products and bad ones. It is true that a good product can reduce power consumption to the point of paying back for itself in a few years. They do require maintenance, but mostly cleaning and proper maintenance is not so expensive.

      Only problem for Newfoundland is that because of the Take-Or-Pay contract, there is no point saving power because whatever is saved (not taken) is still to be paid. Once free from that contract (and it is not as simple as cancelling it by law as suggested by someone in a post above), HP wll return to a very interesting option to consider.

      Delete
    4. Listen to Heracles31, he is exactly right.

      You'll be stuck paying for the over-inflated cost of a heat pump from the local heat pump cartels, and the more money you save on electricity, the more money the incompetents running the NL government will gouge back from you in the form of excessive taxes on gasoline, home heating fuel, income, "deficit levies", "carbon taxes", and any other means available, so that these bloody idiots can make up the shortfall in order to meet the financial thrall of the "Take-Or-Pay" MRF scheme.

      Delete
    5. Relax, the bitcoin driven Data crowd will eat up any an all surplus expensive power;

      http://www.cbc.ca/news/canada/newfoundland-labrador/great-north-data-muskrat-power-1.4780676

      Maybe some bright, (MUN Grads), out migration from the Avalon will actually move to Labrador and will become "Livyers", working in data centres.

      Delete
  19. Really? Ball on the wrong side of concern for the environmental by polluters?

    http://www.cbc.ca/news/canada/newfoundland-labrador/ball-no-carbon-tax-1.4780629

    Where is public opinion with respect to climate change and mitigating high carbon lifestyle? Fundamentally the planned close down of Holyrood Plant was known years ago to be the first to go. NL now a follower of hard right, Trump sponsored fossil fuel mentality?

    Very disappointing.

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  20. Ratepayers should mount a class-action lawsuit against both the NL and federal governments, as well as Nalcor/NL Hydro, for gross negligence and dereliction of duty. Passing legislation counter to the public good by barring oversight by the PUB is but one example of culpability by the NL government's foisting the Williams/Dunderdale Fiasco on to unwitting NL ratepayers...

    http://www.thetelegram.com/opinion/columnists/pam-frampton-nl-politics-through-the-looking-glass-232934/

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    Replies
    1. If we won the lawsuit, guess who will end up paying the bill if we stay here? We are in a no win situation

      Delete
  21. Levy Payer, This blog continues to get misinformation posted as to minisplits, needing correction against the fake news.
    1. A most cost effective HP unit for most of Nfld is a minisplit (MSHP), but that is insufficient information.
    2 It MUST be CCMSHP, not just the standard promoted by Take Charge, which will likely under perform, designed for south of Boston climate. CCMSHP are for our climate.
    3 Types of CCMSHP can be found on Efficiency NS links.
    4 CC means they are `Cold Climate`make and models
    5 A good model and good installation, I assume 18 year life, and just clean the indoor filter about 4 times a year, and keep the outdoor unit from drifting over with snow, and protected reasonably from excess winds.
    6 The low cost mentioned as to NB likely reflects an inferior model,and self install, not a cartel here. State the NB mfg and model number to know for sure, or if on the NS list.
    7. Like your fridge, units can fail anytime, many have compressor warranties 7-10 years. 30 year life is possible.
    These statements you can take to the bank. Heracles says that what you gain you lose by other means, this is an unknown, that I take with a big grain of salt. To the contrary, we need to move to a Green sustainable solution and avoid the waste of about 50 of electricity production by customer inefficiency. This needed by the planet and generation behind us.
    Alberta modelfor carbon tax is to have 500 dollars a year given back to households........we should demand that and more, not feeding that to the polluters, which is to the plan. Ratepayers should demand this reverse levy.
    Winston

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    1. Your 1st, 5th, 6th, and 7th statements are personal opinions based merely on speculation and conjecture, therefore cannot in fact be "taken to the bank" as you've emphatically declared.

      Additionally, your statement... "Heracles says that what you gain you lose by other means, this is an unknown, that I take with a big grain of salt." ... is again a personal opinion that actually smacks of wishful thinking and denial in the face of reasoned, logical arguments as to the facts of the matter regarding the "Take-Or-Pay" scheme contrived by the Williams/Dunderdale/Nalcor cabal.

      Other than that, your submission has a few valid points.

      Delete
    2. That you agree with 3 out of 7 is a start, so 43 %
      As to item 1, gnd source is best for coldest inland locations, and offers savings on hot water. Air source for space heat and hot water available but more expensive option. So most CCMSHP, yes
      So for most of Nfld , CCMSHP is best. Now you explain why this is wrong?
      As to item 5: Take Charge says 12 years, USA studies, some say 18 years is a good estimate. If you do not use blue fin coating and near the salt water, corrosion may give less than 10 years. I think 15 years is economic in the sense that with continuous improvements in efficiency, about 20% over the last 10 years, that after 15 years it would make sense to replace them even if still working ok
      What issues of maintenance to you see that is regular needed ?
      Clarify why item 5 is inaccurate.
      Items 6, lowest cost installed, anywhere, I have seen is 2500.00 for the smallest unit they make, and that on a contract involving over 100 units. Here for a 2 ton unit, 24,000 Btu heating at 47F, I see about 4000-4200, tax included,for CC models, sometimes a bit more.So your opinion likely personal opinion , you state nothing to support your view.
      Item 7: Units can fail anytime .....is this not a fact?
      many HPs have compressors with 7-10 year warranties , is this not a fact?
      30 year life is possible: MSs on the go since 1983. First in Canada about 1991 and still operating, so 27 years. Why is 30 years not possible. Considerable fridges and freezers go to and exceed 30 years.
      Last item and Heracles: yes personal opinion, but Heracles says that any individual it is good for them to go HP. Wishful thinking that the Feds have responibility? Yes, on my wish list, that we save our CFs if possible. Some wishes come true. Some hope we lose it, maybe like Heracles.
      WA

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    3. Ha Winston boy, annoy14:25 took on the wrong guy, about HPs. He didn't know that you know more about heat pumps than the Germans know about Volkswagens. But of course he is allowed to think that, until he realizes he has no answers to your questions. But in a meantime we are all learning something, including anonymous. Keep on trucking and giving the public reliable information. Cheers, Joe blow.

      Delete
    4. Like the tobacco industry and climate change deniers, anon @ 14:25 does not say I am wrong but says I am more wrong than right, and sows doubt to others, this is their method, and they hide their identity, so what is their motive and qualification.
      I await the response to items 1, 5 , 6 and 7.
      Winston
      I

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    5. Well Joe, you and I must be connected by the Spock mind meld, as to the timing and thoughts. Rather strange.
      But here at my cottage at Quilty's Cove, capelin came to the beach this morning,(the first time in over 20 years) and my son and grandson got 9 nice cod just off Coopers Head in 20 minutes.
      Tomorrow I leave Nfld, fed up, but with hope. I am heading to the land of the free, Texas, and may see where Davy Crockett made the supreme sacrifice, and then was avenged by Sam Houston.
      But I go not really for sight seeing, but to the number one cancer hospital in America, Anderson: to try our luck and their world class expertise. Our 3 billion a year cost here gives poor results, thought some first class people. I say this from experience this past 8 months here.
      As General McAuthur said after the Japanese drove him out, in WW2, "I'll be back". I'll take my laptop that I keep abreast of UG, and, I understand they are are advanced enough that they may have internet there!
      Cheers,
      Winston

      Delete
    6. It is most unfortunate that, in the face of the indisputable logic and rational argument put forth on this blog, there are those who still continue to harbour the bizarre notion that the solution to the looming fiscal disaster of the MRF fiasco is for all ratepayers to shoulder the additional excessive expense of installing a bloody heat pump.

      On an even more depressing note, it has become a waste of time for the well-meaning such as Heracles31 to try to reason with this group, as their dreamy misconceptions and obsessively perpetual sermonizing on what amounts to little more than a side-topic... appears to have prevented them from fully grasping the devestating reality of the MRF "Take-Or-Pay" scheme.

      Most unfortunate... most unfortunate indeed.

      Delete
    7. Did the General not say, "I shall return", lol same meaning. But as the local schooner skipper said, "I always went and got, wherever they sond me" as he sailed his vessel world wide. Now what does that mean? Well, he was right to the point, but meant, "I carried on a world wide trade for my owners, and went whoever they had cargo, and a need to send their ship, and always returned home safely". So let it be with you and your loved ones, and you find the right treatment there. God speed. Cheers, average Joe.

      Delete
    8. Joe, what a beautiful day at Bishop's Cove, with capelin,,cod, and whales,and then to leave that and head east, through St John's, so now at the town of Logy Bay. Last minute things to do: private service for blood test at home at 7am, then try like hell to get the result before days end, our flight being 5am Tuesday. This sometimes takes a week here, though the testing is automated and done in about 2 hours. If we go to the right place, and get lucky, and with some 5 pieces of ID, and if the staff not on holidays here, I may succeed. This can save me maybe 1000 dollars, to avoid repeating this at Anderson. At Anderson such test result gets posted to the internet, and we access it on our computer. So after 2 hours, when the doctor gets it, you get it at the same time, at your hotel on your ipad or iphone, or laptop. Here, you are put through hell and time and expense and need to navigate the system, if you can. It is hard and inefficient by design. So lately I found out they have Navigators here for that, to help a little. For the first 4 months I never knew they existed, and about a 6 weeks ago found where they hide.
      Yes, the General said I shall return. I will stick with will return, which my wife says is less certain than shall. That is fine, as who can be definite? I will return please God, if the plane don't crash. Or if I am not shot by some Texan as to Stand Your Ground. I shall not be packing heat myself. My last hand gun was about 1957, maybe Roy Rogers type, and my Paledin card I long ago lost. Now McAuthur would say shall, as he was equal to God, in his mind.
      Much to to tomorrow: including try and get tumor pathology slides from here to there. The only person here handling this was on holidays last week, so hopefully back tomorrow.This may have to go Purulator courier, as likely not permitted through customs, maybe fearing a chemical agent. Our last CT scan we have on a disk, so we can take that with us. Other medical information was already forwarded last week, reports from oncology, surgeons etc. One very important report, the Tumor Board note, they denies us access!
      One might do well as a small business here to help people travel outside for care, and Eastern Health offers no assistance, so you are on your own.
      Thanks for your sincere good wishes.
      Winston

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    9. Anon @ 10;26, man do you hate HPs to refer to them as bloody. They offer about 10 times the efficiency as fuel burned at Holyrood, and 3-4 times that of baseboard heaters. Now who would hate that. Hmmm, lets see, maybe Nalcor or Nfld Hydro people, or Nfld Power or especially Fortis shareholders. or even vendors of oil or propane.
      As to the well meaning of Heracles, he says Nflders should get hurt big time by this fiasco.
      As to a side topic, for a long time it was, but now James Feehan confirms the power of the little minisplit to close Holyrood and to eliminate the need for MFs. So, a side topic no longer. Now at centre stage!
      PF

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    10. PF, thank you for clearly demonstrating the validity of my comment, as lamentably unfortunate as its premise is... Anon 10:26.

      Delete
    11. So, outlaw minisplits. Jail those who use them. Charge double rates for anyone using them,and low rates for baseboard heat. Use 8 cent rate for monster houses so they use more. Heat a garage with the door open and offer them 3 cent rates, all to keep consumption high. The options are endless. Bloody HPs, blow them up. It is HPs not DW we should blame. And Adams at fault for exposing their benefit.
      PF

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  22. Replies
    1. Well done PF, you have frustrated, confused, outsmarted and demoralized the dam works of them. They no longer know left from right, up from down, sidewise to straight ahead, and the conversations have been turned completely on its head, as is obvious to anyone following for the past few months. The Take-or-pay will become as meaningless as the ABC campaign and the dire predictions of people leaving the island in droves. All is well that ends well says Joe blow.

      Delete
    2. Of course, HPs are a threat to Anon, who is right. But consider: they are still electric and use 40 % of the electricity that baseboards do, according to Feehan. Not bad enough, Adams mounted it in the attic and used only 25 % as compared to baseboard.
      But what of wood pellet stoves,anon? They have a fan using just 100 watts. So whereas a minisplit uses about 2kw instead of 6 kw, a pellet stove used 0.1kw. So that got to go, too. That is 20 times worse than minisplits as to reducing electricity. And worse still is wood stoves. No electricity at all! We must absolutely ban anything burning pellets or wood. And damn the oil and propane users as well, all will destroy the business case for Muskrat.
      Now Adams was ignored by Wade Locke, and rightly so. Andy Wells did wrong to let him before the PUB, because then Vardy started talking HPs. Heracles tried his best to shut him out of UG. But low and below, Feehan let it loose with his recent report, for Browne and the PUB.
      Now, how to ban those things? It is now a real big problem. Those bloody heat pumps, they'll bankrupt the province, for sure. Fanatics, like Adams, Tree huggers, fear mongers as to climate change. All bull, we know, as that was fake news statred by China.
      Heat pumps must fall, just like Rhodes, or General Lee. A plague for this province.
      PF

      Delete
    3. Hi PF,

      No need to make HP or wood illegal :-)

      What is important to understand is that HP - wood - similar are not and can not be the solution to the MF fiasco. The common error is this :
      --MF will increase the power rate by a big margin
      --So the power bill will increase in the same way
      --Power rate being fixed, the only way to mitigate the increase is to reduce the amount of power taken
      --The largest part of the power consummed by residential is for heating
      --So reduce the amount of power you need to heat your place
      --And that way, MF's impact is now mitigated

      The error in that logic is that MF comes with a Take-Or-Pay contract. No matter you take the power or not, you must pay for it in both cases. Once the power consumption is reduced too low, either the power rate will be increased to restore the power bill to high enough, or a separate channel, not related to power, will be created as a kind of tax.

      Newfoundland can not survive that Take-Or-Pay contract. There is not enough cash in the province for that. Actually, with such a structural deficit, there was not enough money in the province even before MF. Because MF basically double the amount of money the government needs, it is clear that there is no way for Newfoundland to get out of this by itself.

      Once Newfoundland is free from that contract and back on a sustainable basis. HP- wood - similar can return as very good options because the power they will save will translate in saved money instead of a new form of taxing.

      Delete
    4. Yes Heracles, Take or Pay problem was spelled out on the Vision2041 blog and by others 6 years ago, good to see you catching up on that logic.
      That a separate channel will need to be set up, as increasing rates without limits, as electricity sales keep dropping will not work. This is the logic of "You can't get blood from a turnip" or also elasticity. Good you now understand that. Economist Wade Locke missed this as very important.But he only heads up MUN economics dept, so we can't expect much there, can we?
      That Nfld cannot get out of this by itself seems likely, so a separate channel for that too, maybe the Feds, maybe a Quebec assistance win win, maybe tightening the belt here, or a combination of several things.
      Meanwhile logic says consumers will not wait political solutions for that before they switch to HPs, wood etc. The law of the turnip is logical, and customers are not that stun to do nothing and wait the miracle of mitigation. So for them, Take and Pay is secondary, but must be solved.
      PF

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