Russell Wangersky was right when he said in the Telegram on
October 27, 2018 that Muskrat Falls is “a win for investors but the risk’s on
us”, the ratepayers. “The fundamental
assumption in the financing of the project is that the revenues charged to
island ratepayers for the generation and transmission of Muskrat Falls power
will flow unfettered to the lenders to satisfy debt payments.”
In this post I examine the underpinnings of this “fundamental
assumption”, beginning with the take-or-pay power purchase agreement (PPA), the
role of equity and the concept of freedom of choice. Does the PPA lock us in to
an abusive relationship, not for 65 years but for 50? Is it another Churchill
Falls Agreement which strips us of our rights? In my next post I will ask if
the PPA makes Muskrat Falls self-supporting and whether revenues from rates
will cover all costs and generate dividends for the government of Newfoundland
and Labrador (GNL).
