We’re headed for energy poverty, big time

I offer some observations on energy poverty in Newfoundland and Labrador.

The European Union Energy Poverty Observatory defines energy poverty as not being able to afford adequate warmth, cooling, lighting or the energy to power appliances that guarantee a decent standard of living and health.

One rule of thumb is that energy poverty exists where a household spends more than 10 per cent of disposable income on power. The Observatory estimates that some 50 million EU households now qualify.

In Germany, with the collapse of its Energiewende, energy prices have doubled since 2008, with the basic rate at 36 cents per kilowatt hour (kwh). About 20 per cent of households exceed the 10 per cent threshold.

In Britain, rates are up by 29 per cent in a decade with a household rate of 22 cents per kwh and a dramatic increase in deaths from inadequate heating. Similar data exists for the U.S.A.

It is not unreasonable to expect, therefore, that some 20 per cent of N.L. households could face (or are already facing) energy poverty as defined here — some 40,000 to 50,000 households.

A related concept is something called demand elasticity/inelasticity. Some people can afford large increases. Their demand is elastic therefore. This will be true for those consumers not on electric heat. On the other hand, many consumers will not be able to afford higher prices and will reduce demand. Their demand is inelastic. People on domestic all-electric rates will suffer the most and we have a very high domestic all-electric population. Again, low-income people will be hit the hardest.

A recent magazine article I came across made reference to a U.S. Senate study that found that with every 10 per cent increase in electric rates, some 800,000 U.S. households would face energy poverty. Some people are talking about a doubling of rates in this province, which if U.S. elasticity is a guide would mean catastrophic energy poverty in the province. It is my considered opinion that even a 50 per cent increase in rates is impossible in this province. The system would collapse.

Talk of rate mitigation is misleading if not an outright lie. It is a fundamental law of economics that all costs must be paid. The $13 billion to $14 billion cost of Muskrat Falls will be paid for by the people of N.L. in either taxes or rates. The other option is default partial or full. This is my preferred option and has occurred repeatedly throughout history. And life goes on, somehow.

Why should those Newfoundlanders who did not support this fraudulent project be required to pay for the “mistakes” of an, at best, incompetent House of Assembly? The intergenerational inequity would be astounding with a 50-year repayment period at $1 billion a year.

Finally, I fear the future of this province will be further prostituted with an attempt by a provincial government of whatever stripe (they are all the same) to sell assets belonging to the people (such as the 2041 free power) at fire sale prices because of the “mistakes” of Ches Crosbie (who referred to Muskrat Falls as such), Tom Osborne and Paul Lane.

Will sufficient numbers of people realize what is going on or will the scam that is N.L. politics continue? Who knows.