Muskrat Falls — we’ll pay and pay and pay

The Southern Gazette - - EDITORIAL - Rus­sell Wanger­sky Eastern Pas­sages Rus­sell Wanger­sky’s col­umn ap­pears in 30 SaltWire news­pa­pers and web­sites in At­lantic Canada. He can be reached at rwanger@thetele­ Twitter: @wanger­sky.

It’s called mul­ti­pli­ca­tion. And it’s tough — at least, it’s go­ing to be tough on you.

By now, the discussion of what’s go­ing to hap­pen to power rates is pretty clear: a lit­tle handout from Nal­cor a few weeks ago, with its cur­rent rate pro­jec­tions, sug­gests power will go from 11.7 cents a kilo­watt hour to 22.89 cents a kilo­watt hour by 2021, and reach an al­most-in­com­pre­hen­si­ble 32.46 cents a kilo­watt hour by 2040.

You might be think­ing of that in terms of how you might have to sell your dryer, wring out your clothes by hand and let them dry out strung up on lines in your kitchen, one of the only rooms in your house you’ll ac­tu­ally be able to af­ford to heat. But that’s not the half of it. And that’s where the mul­ti­pli­ca­tion comes in.

An­other in­ter­est­ing set of Muskrat Falls num­bers comes from the Cana­dian Fed­er­a­tion of In­de­pen­dent Busi­ness (CFIB). Now, the CFIB is, first and fore­most, a small- and medium-sized busi­ness in­ter­est group. It pushes the agenda of its mem­bers, and for that rea­son, its state­ments should al­ways be viewed in the light of that al­le­giance.

This week, CFIB re­leased the re­sults of its own Muskrat Falls anal­y­sis. The CFIB took bills for smal­land medium-sized busi­nesses and ex­trap­o­lated what im­pact Muskrat Falls power in­creases would have; the num­ber they came up with? Well, an ad­di­tional $179 mil­lion in costs a year, with 85 per cent of those busi­nesses say­ing they didn’t see a way to cur­tail elec­tric­ity use to save money.

Now, here’s a sim­pler, non­math ques­tion.

Where do small busi­nesses get money from?

If you an­swered “you and me,” you guessed right.

They aren’t char­i­ties, and they can’t ab­sorb losses. Their pock­ets just aren’t that deep, and be­sides, this isn’t like wait­ing for eco­nomic for­tunes to change.

So, their costs are your costs, but wait — with an ad­di­tional bonus just for you.

Just as the provin­cial gov­ern­ment will ben­e­fit from the wind­fall of the 15 per cent HST on your dou­bled elec­tric bills, that same gov­ern­ment stands to earn 15 per cent on ev­ery part of that small and medi­um­sized busi­ness ex­pense that gets passed on to you.

The fun­da­men­tals in this sit­u­a­tion are more than fright­en­ing.

Have a look at big­ger com­pa­nies, and the num­bers are even more alarm­ing. Take Em­pire Corp., the par­ent com­pany of Sobeys; its lat­est fis­cal re­sults in­di­cate that, for the 13 weeks that ended on May 6, 2017, the com­pany turned a profit of $50.2 mil­lion.

Sounds great, right? But they had sales dur­ing the same pe­riod of $5.8 bil­lion, mean­ing a profit of 0.88 per cent. Where, in that less than one per cent re­turn, do you hide a 100 per cent in­crease in the cost of elec­tric­ity?

The an­swer is that you don’t — you pass it on in food prices. Im­me­di­ately. Now, count the open-top cool­ers and the freez­ers in your lo­cal Sobeys, and imagine what their elec­tric me­ter looks like, spin­ning.

I’ve pointed out be­fore that other things come home to roost just as quickly. Last week, the City of St. John’s paid its $86,533.97 power bill. When that bill jumps to $172,000, who will be pay­ing that ex­tra tab? In 2016, Cor­ner Brook paid $1,740,290.24 for elec­tric­ity. Dou­bling that power bill means a five per cent in­crease in the city’s en­tire an­nual bud­get all on its own.

The provin­cial gov­ern­ment has said that it wants Nal­cor to find ways to mit­i­gate the rate in­crease.

This is from the provin­cial bud­get: “Fu­ture elec­tric­ity rate man­age­ment is a pri­or­ity of our gov­ern­ment. Nal­cor has been directed to source $210 mil­lion to lower elec­tric­ity rates start­ing in 2020-21, with this pre­lim­i­nary rate re­serve grow­ing to $245 mil­lion in the fol­low­ing fis­cal years. We are com­mit­ted to en­sur­ing elec­tric­ity rates are com­pet­i­tive and will un­der­take work to fur­ther de­fine mit­i­ga­tion ac­tions and dol­lars re­quired.”

What does mit­i­ga­tion even mean? How do you “source $210 mil­lion”? How to you “grow” it to $245 mil­lion?

Is it a case of tax­payer Peter pay­ing ratepayer Paul? Are you tak­ing money out of one gov­ern­ment pocket and putting it in an­other? If it is, it’s a mug’s game.

But the real ques­tion?

For all but the very rich­est among us, where’s the money go­ing to come from?

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