The Power Purchase Agreement (PPA) is not a sexy subject though it is important; far more
than suggested by the negligible attention it received two months ago.
The PPA defines
the terms, conditions and amounts ratepayers are obligated to pay Muskrat Falls
Incorporated, the Nalcor subsidiary holding the generating assets of Muskrat
Falls. A separate Agency was established for the purpose of holding and financing the Labrador Island (LIL). It is not clear if the 51 years
of “Base Block Payments”, rising from $148.5 million in year 2 to $933.3 million
in year 50, include the transmission costs, too, or whether we ought
to expect a second PPA.
This PPA
details, in 196 pages of legalese, a host of obligations on ratepayers via
Newfoundland Hydro (NLH). In typical Nalcor
fashion, no details accompanied its release.
Your
attention is drawn to Section 4.2(C) (d) (pp. 37-38) regarding “Base Block
Payments” which the PPA calls an “Irrevocable Obligation”. It states:
“Notwithstanding
any other provision of this Agreement, including Section 15.1, until the date on which the Initial Power Purchase
Agreement Page 33 of 76 Financing is Paid in Full, NLH’s obligations to
make the Base Block Payments shall be
absolute, unconditional and irrevocable, and shall not be subject to any
reductions under any circumstances whatsoever.” (Emphasis added).
Fundamentally,
that means Nalcor can lose the Water Management case now before the Quebec Superior
Court, the turbines coming from China can seize up, the water can dry up but your
obligation to pay is “absolute,
unconditional and irrevocable…”
Just
possibly, the Consumer Advocate might awaken from his blissful slumber and
report to ratepayers, on the implications for them, of this and many other
parts of the Agreement.
