Update needed on rate mitigation: PCS
Premier says project’s financial mess must be fixed before commissioning
With time ticking toward the planned fall commissioning of the Muskrat Falls hydroelectric project and the expected near doubling of electricity rates thereafter, the province’s official opposition pressed Premier Andrew Furey Tuesday for an update on rate mitigation talks with the federal government.
Progressive Conservative Interim Leader David Brazil also wanted to know if the Lower Churchill project was being negotiated in the same conversation as the Atlantic Loop — an idea to connect the Atlantic provinces and potentially Quebec in a green energy network, with Muskrat Falls playing a key role.
He also noted that Monday’s federal budget contained no mention of the Lower Churchill project.
“It’s been two years since this has been talked about. If negotiations are happening there must be some progress,” Brazil said.
“We have the asset. Muskrat Falls is the asset here for Atlantic Canada, and if Quebec is involved that’s fine, but we have to ensure that the decisions that are being made are not made in a boardroom in
Quebec City, they are made somewhere in Atlantic Canada that benefits the people of Atlantic Canada, but, particularly, the people of Newfoundland and Labrador.
“We need to know the information that’s being shared and what’s being negotiated. Getting no updates after two years is disheartening and is disturbing. This is something people are looking forward to if it benefits the people in this province and achieves the goal of ensuring that Muskrat Falls is viable, and that the rate mitigation is part and parcel of all negotiations.”
Furey said negotiations with the federal government are continuing, and have picked up steam since the caretaker mode of government — in place during the election — ended.
The premier said he hopes to have updates soon that he can share with the province.
He stressed that the Muskrat Falls problem must be fixed before the province can enter into more in-depth discussions with the other provinces and Ottawa regarding the Atlantic Loop.
“Make no mistake, if we don’t do something electricity rates will spiral out of control (after commissioning),” Furey said.
“We’ve been adamant with the federal government that we want to participate in the Atlantic Loop, we love the Atlantic Loop, we think that we can be the battery for the Atlantic Loop, but we need help in renegotiating the Lower Churchill projects first. Of course, they will be a part of the Atlantic Loop, but in order to be a part of the Atlantic Loop we have to solve that issue first.
“We have to make sure we fix Muskrat Falls first.”
In April 2019, the Liberals under then-premier Dwight Ball announced a plan to keep electricity rates at 13.5 cents per kilowatt hour.
The province’s Public Utilities Board (PUB) later released a report that found that in order to keep the cost of electricity at that rate, hundreds of millions of dollars annually will have to be spent to subsidize electricity rates due to the massively overbudget Muskrat Falls project.
Furey noted Tuesday that without help from the federal government, electricity rates — which are set by the PUB — will increase.
Brazil said that’s why the people of the province are concerned and need to be updated on the negotiations.
“We would have thought and hoped that part of the negotiations around rate mitigation would have ensured that 13.5 cents per kilowatt would have been indeed entrenched in what was being negotiated,” he said. “Tie that into the Atlantic Loop, there is no reason why that couldn’t be achieved.”
Furey said the provincial government is not waiting until the 11th hour to find a solution that will keep electricity rates down. He said the province has a good working relationship with the federal government that will help move the process along.
“We are focused right now on fixing the financial mess of Muskrat Falls so we can do what we need to do to create sustainable opportunities for families here in the province,” he said.
New Democratic Party Leader Alison Coffin also expressed her party’s concerns.
“We’ve been waiting six years for some resolution on Muskrat Falls and we are still waiting,” she said. “The people of Newfoundland and Labrador need to know what is happening to their power rates.”
Andrew Parsons, minister of Industry, Energy and Technology, put out a statement later on Tuesday: “The 2019 rate mitigation plan stated: ‘We expect that consumers would be paying approximately 13.5 cents per kilowatt hour in 2021 if costs increased due to normal Newfoundland and Labrador Hydro operations, and without any impact from Muskrat Falls.
“Prior to the commissioning of the Muskrat Falls project, NL Hydro will file its general rate application with the PUB, as required to establish the new rates with Muskrat Falls coming into service. The PUB will review the submissions and determine the rate per the submission. Rates will subsequently be reviewed and adjusted regularly as per usual by the PUB to consider the annual cost for Muskrat Falls and the other electricity assets servicing the electricity needs of the province.”