New­found­land and Labrador Hy­dro pro­poses to raise rates to mit­i­gate Muskrat Falls ef­fect

Gov­ern­ment’s plan a mys­tery as ratepay­ers left in the dark

The Gulf News (Port aux Basques) - - Front Page - BY ASH­LEY FITZPA­TRICK

Take what you’ve heard about pro­posed power rate in­creases in the next cou­ple of years. Pic­ture it, now crunch it all up and toss it out the win­dow.

Af­ter set­tling some is­sues, New­found­land and Labrador Hy­dro’s pro­posal was whit­tled down to a pos­si­ble 1.2 per cent rate in­crease on Jan. 1, 2019. That would have brought power sup­ply costs to an av­er­age 12.4 cents per kilo­watt hour.

That’s not about Muskrat Falls, since costs for that hy­dro megapro­ject are not ex­pected to come into play in lo­cal rates un­til the hy­dro gen­er­a­tion site is fully com­mis­sioned. And the es­ti­mated date for hav­ing the project on­line is Sept. 1, 2020.

But Hy­dro has changed gears in its cur­rent rate ap­pli­ca­tion.

Pay­ing sooner for Muskrat Falls

Now, in con­sid­er­ing what lo­cal cus­tomers can han­dle, the Crown util­ity is propos­ing cus­tomers start to pay for the $12.7-bil­lion Muskrat Falls project sooner. The ex­tra money would be set aside by Hy­dro, to help re­duce — though not elim­i­nate — greater power rate in­creases ahead.

So, there’s a new pro­posal for a 7.7 per cent in­crease in the av­er­age power rate as of Jan. 1, 2019 (in­clud­ing a 6.5 per cent rate “rider” specif­i­cally for Muskrat Falls), bring­ing the cost to 13.2 cents per kWh (be­fore taxes).

Con­sumer Ad­vo­cate Den­nis Browne told The Tele­gram it’s not some­thing the Pub­lic Util­i­ties Board (PUB) is able to en­ter­tain even if it wants to.

“They’re still at these con­cepts where they’re try­ing to jump the rates in an­tic­i­pa­tion of Muskrat Falls,” Browne said Mon­day, July 23, call­ing the lat­est pro­posal by Hy­dro “un­ac­cept­able.”

He said rates are meant to be set with fig­ures as ex­act as pos­si­ble, with a de­tailed ex­am­i­na­tion of costs, and not in con­sid­er­a­tion of costs yet to be fi­nal­ized, like the con­struc­tion cost for Muskrat Falls.

“The board can­not sign on to any fic­tional rate by way of de­fer­ral ac­counts or rid­ers or any other scheme,” Browne said.

The PUB was barred from ex­am­in­ing Muskrat Falls costs in rate set­ting.

And now, Browne said, N.L. Hy­dro and Nal­cor En­ergy are push­ing for an even greater change in how rates are set.

The con­sumer ad­vo­cate is call­ing for a new ref­er­ence to be made to the quasi-ju­di­cial PUB by the provin­cial gov­ern­ment, to al­low the PUB and ratepayer rep­re­sen­ta­tives to dive deep on Muskrat Falls costs and re­de­ter­mine all costs and the best way to keep the sys­tem from col­lapse.

For one thing, Browne said, it needs to be bet­ter un­der­stood at what point power users will flee the lo­cal sys­tem.

Is it 18 cents per kilo­watt hour? Is that when you’d go bust, or off grid?

That’s where Pre­mier Dwight Ball and Nat­u­ral Re­sources Min­is­ter Siob­han Coady have said they want to keep rates. That re­quires not just the higher cost for con­sumers, but big money from the gov­ern­ment. Rates are pro­jected to hit just un­der 23 cents per kilo­watt hour with Muskrat Falls. N.L. Hy­dro is work­ing on the as­sump­tion the prov­ince will be able to cover any­thing over 18 cents a kWh, with ev­ery ex­tra cent cost­ing about $70 mil­lion a year.

Find­ing the money

That would mean a cash in­jec­tion of pub­lic funds of any­where from $280 mil­lion to $350 mil­lion a year. By way of com­par­i­son, the prov­ince’s last bud­get es­ti­mated all cor­po­rate in­come tax rev­enue for this year at $201 mil­lion.

So, even if ratepay­ers can col­lec­tively af­ford 18 cents per kWh, where does that money come from to keep that rate sta­ble, year af­ter year?

Last week, pro­test­ers out­side of the PUB had a sim­ple ques­tion for the gov­ern­ment: what

“They’re still at these con­cepts where they’re try­ing to jump the rates in an­tic­i­pa­tion of Muskrat Falls.” – Den­nis Browne, con­sumer ad­vo­cate

are you go­ing to do? Pro­ceed­ings in the PUB hear­ing room con­tin­ued with ab­so­lutely no an­swer to that ques­tion.

N.L. Hy­dro’s fil­ing says the cost of keep­ing rates down to 18 cents per kilo­watt hour is sim­ply “as­sumed to be borne by gov­ern­ment.” It of­fers no more than what has been pre­vi­ously re­ported — there is some­thing ex­pected, but who knows what it will be, or when it will ac­tu­ally be of­fered to the pub­lic.

“Gov­ern­ment has in­di­cated that rate mit­i­ga­tion will oc­cur to re­duce the cus­tomer rate im­pacts. How­ever, no de­fined plan has been re­leased to in­form cus­tomers on either the pro­jected cost of elec­tric­ity or the pace at which elec­tric­ity rates will in­crease,” N.L. Hy­dro has stated.

“Gov­ern­ment has stated it wants to be com­pet­i­tive with At­lantic Cana­dian rates, which it tar­gets to be be­tween 16 cents and 18 cents per kWh. There­fore, for il­lus­tra­tive pur­poses, Hy­dro has as­sumed that gov­ern­ment will pro­vide rate mit­i­ga­tion re­lief for res­i­den­tial rates be­yond 18 cents per kWh.”

N.L. Hy­dro’s pres­i­dent has said he pro­vides in­for­ma­tion to the prov­ince’s rate mit­i­ga­tion com­mit­tee, es­tab­lished in­side the De­part­ment of Nat­u­ral Re­sources, but of­fers no in­sights in the lat­est pro­posal to the PUB. So where are we right now? With­out mit­i­ga­tion, N. L. Hy­dro projects power rates would reach 22.89 cents per kWh by 2021, up from the cur­rent av­er­age rate of 12.26 cents. Even with a 1.2 per cent in­crease that had been pro­posed, it would leave a more than 10 cents per kWh gap to be cov­ered in roughly two years of fu­ture rate re­views and what­ever the gov­ern­ment might come up with.

Mean­while, Keith Fil­lier, an or­ga­nizer of a power rate protest out­side of the PUB of­fice on Tor­bay Road in St. John’s last week, spoke on so­cial me­dia about a plan is to do a sec­ond round of protest­ing on Fri­day, July 27.

J. R. ROY / SPE­CIAL TO THE GULF NEWS

With­out rate mit­i­ga­tion, New­found­land and Labrador Hy­dro projects power rates would reach 22.89 cents per kWh by 2021, up from the cur­rent av­er­age rate of 12.26 cents.

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