Deal on rate mitigation is crucial: premier
One of the biggest fears in the province in recent years is the potential for a substantial increase in power rates once the Muskrat Falls hydroelectric project comes online. And time is ticking. The estimated $13.1-billion project — billions over budget, and delayed — is scheduled to power into action in November.
Premier Andrew Furey said Friday the provincial government is continuing talks with the federal government on a plan to deal with Muskrat Falls. He also said this week the province’s dire fiscal situation has been compounded “exponentially” by Muskrat Falls.
Furey said if a deal with the federal government is not reached by November, Muskrat Falls coming online will “trigger a series of fiscal problems for the province.”
“If we don’t have a deal by November, the $600 million kicks in for rate mitigation and that debt is transferred to the books of the government, essentially. As Dame Moya Greene pointed out (in the Premier’s Economic Recovery Team report released last week), that largely belongs to Nalcor but assumed by our treasury, and triggers a significant fiscal problem for us.”
The premier said both the province and the federal government are working hard toward a deal.
“Great talks with (Prime Minister Justin Trudeau), mainly surrounding the Muskrat Falls hydroelectric project, and we continue to make good progress on that,” Furey said Friday.
“Let’s not forget that all of these fiscal implications we are talking about have been incredibly compounded by Muskrat Falls. So, if you look at what we are paying on interest on debt every year ($1.5 billion) you need to throw on an extra $600 million for rate mitigation. So we are over $2 billion in, and we haven’t paved a road or paid a teacher, so we need to deal with Muskrat Falls, and I’m confident given the prime minister’s commitment on hydroelectric projects here in the province, particularly Muskrat Falls, that we will make good progress in the coming weeks and months.”
In April 2019, the Liberals under then-premier Dwight Ball announced a plan to try to keep electricity rates at 13.5 cents per kilowatt hour when Muskrat Falls comes online. 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.
Andrew Parsons, minister of Industry, Energy and Technology, put out a statement last month that stated, “prior to the commissioning of the Muskrat Falls project, Newfoundland and Labrador Hydro will file its general rate application with the (Public Utilities Board), 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.”
The provincial budget will be delivered by Finance Minister Siobhan Coady on May 31. The issue of Muskrat Falls is expected to be covered in the budget.
Seamus O’regan, federal minister of Natural Resources and St. John’s South-mount Pearl MP and this province’s representative in the federal cabinet, said earlier this week that while officials kept working on the Muskrat Falls issue during the drawn-out provincial election campaign, both sides were “back at it as soon as the government was formed.”
“There is lot of goodwill and we are heading in the same direction, so I’m hopeful it will come to a good resolution on Muskrat Falls,” O’regan said. “We have a fair idea of what’s at hand, and we share priorities. The devil is always in the details trying to figure it out, but that’s the toand-fro of getting at it at the negotiating table.”