Con­cern for ratepay­ers too lit­tle, too late

The Southern Gazette - - EDITORIAL -

Hy­dro’s con­cerns about ratepay­ers should’ve come to fruition be­fore the Muskrat Falls es­capade.

The 18 per cent rate hike was pro­posed by Hy­dro to come into ef­fect July 1, know­ing the le­gal limit for a hike was 10 per cent by the PUB in any year.

Where was the con­cern for ratepay­ers a decade ago from Hy­dro? De­ci­sion Gate 2 had Muskrat Falls power pegged at 16.4 cents per kilo­watt hour or a 50 per cent in­crease in power bills — not a peep from Hy­dro about ratepay­ers at the time. Now, 18 per cent is too much for ratepay­ers, yet a sin­gleyear in­crease of 50 per cent passed through Hy­dro’s board of di­rec­tors for Muskrat Falls with­out any ques­tions or con­cerns?

Hy­dro also en­dorsed the in­sane de­mand fore­casts go­ing up to 10,500 gi­gawatt hours by 2041 from 2010’s 7,600 GWH with Long Har­bour be­ing the only new con­firmed power cus­tomer. Hy­dro fur­ther en­dorsed the de­mand fore­cast in­creas­ing to 12,000 GWH from 2041 to 2067.

Nal­cor/Hy­dro/Pro­gres­sive Con­ser­va­tives ig­nored price elas­tic­ity for res­i­den­tial de­mand; even New­found­land and Labrador’s most in­fa­mous Muskrat Falls booster, Wade Locke, had a slide in his Har­ris Cen­tre pre­sen­ta­tion that said, “em­pir­i­cal data has shown for ev­ery 20% price in­crease for elec­tric­ity there is a cor­re­lat­ing 5% de­mand de­cline.”

Us­ing the em­pir­i­cal data, New­found­land and Labrador’s res­i­den­tial de­mand should de­crease by 12.5 per cent un­der Muskrat Falls’ ex­ces­sively high kWh De­ci­sion Gate 2 rate.

Hy­dro used the last 40 years of power de­mand un­der­hand­edly, as the last 20 years res­i­den­tial de­mand has re­mained flat; the first 20 years was when homes switched to elec­tric heat.

Elec­tric­ity prices from Holy­rood Ther­mal might’ve in­creased to 16.4 cents per kWh if oil had re­mained at $100 a bar­rel, but Hy­dro as­sumed ratepay­ers would con­sume the same amount of power even with yearly in­creases.

The least-cost op­tion had $100 oil and Holy­rood Ther­mal op­er­at­ing at three times its cur­rent out­put over a 57-year pro­jec­tion — talk about rig­ging a process to a pre­de­ter­mined out­come. The con­clu­sion? That Muskrat Falls is the only op­tion for the province.

Nal­cor failed in its fidu­ciary duty by bundling the Labrador Is­land Trans­mis­sion Line in with the Muskrat Falls dam, when they should’ve been viewed sep­a­rately. The Labrador Is­land line cost of $4 bil­lion would’ve been $100 mil­lion a year for 40 years, or an in­crease of 19 per cent for res­i­den­tial ratepay­ers. The Labrador Is­land line and the third line from Bay d’Espoir would’ve low­ered the fuel con­sump­tion at Holy­rood Ther­mal by mil­lions of bar­rels of oil, thereby sav­ing New­found­lan­ders and Labrado­ri­ans hun­dreds of mil­lions in elec­tric­ity pro­duc­tion costs over that 40-year pe­riod.

Be­tween re­call power and a Hy­dro-Québec power pur­chase agree­ment to make up the dif­fer­ence with the Labrador Is­land line, New­found­lan­ders and Labrado­ri­ans could’ve been look­ing at a max­i­mum of 16.4 cents per kWh, not a floor or base of 16.4 cents kWh as we had then.

De­ci­sion Gate 2’s 16.4 cents per kWh was roughly $900 more in power bills per home an­nu­ally. Now, with the up­dated 22 cents per kWh from Boon­dog­gle Falls, it’s $1,800 more in power bills per home. Alec Camp­bell Mount Pearl

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