THE CONTINUED BECLOUDING OF ELECTRICITY PRICES by JM

On July 12, 2014 the CEO of Nalcor wrote a Letter to the Editor which was entitled “Muskrat Falls Remains the Best Option”.   Its intent was clearly to counter some of the recent discussion about the final costs of electricity within the province.  Unfortunately, it did little to remedy my concerns about where electricity rates in the province are heading. 

We should begin with a simple clarification.  Nalcor CEO, Ed Martin quoted that:

“In 2018, electricity rates for households on the island are projected to be 16.4 cents per kilowatt hour (kWh), which is about $249 for an average monthly bill, approximately half a cent higher than the rate estimated at sanction of the Muskrat Falls project (15.9 cents/kWh)”. 

Unfortunately,  Mr. Martin is not correct.  

ELECTRICITY RATES: AN INDUSTRIAL-SIZED MESS

It is rare that anyone expresses concern over how electricity cost increases affect industrial concerns, like Vale, Corner Brook Pulp and Paper or the Come By Chance Refinery. 

They possess the financial, technical, legal, and political heft to lobby Governments, seek recourse before agencies like the Public Utilities Board and, if necessary, the Courts.  The public rarely takes notice except when a company’s pending demise becomes front page news.

These days the Province is pretty cocky about its over-hyped economy. The Unions will only sulk when the jobs are gone.

Enlightened public policy will not disassociate the interests of industry from the public interest.

While this Province has long offered subsidies to the sector, this scribe is not fond of schemes that download operating costs to taxpayers and shift high capital costs and risk to their sponsor, the Government. That issue may be worth debating another day.

Still, such incentives are a feature of developed and developing economies alike; they are not likely to disappear.