Smart me­ters dumbed down by Muskrat agree­ment

Northern Pen - - THE OPINION PAGE -

Dear ed­i­tor;

Gov­ern­ment is mak­ing smart me­ters dumb.

Why else would Nal­cor hire Nav­i­gant to study how and to what ex­tent smart me­ters could and should be used in New­found­land and Labrador?

Smart me­ters were de­signed with a 21st-cen­tury, cre­ative, ope­nac­cess en­ergy par­a­digm in mind (not Nal­cor’s in­flex­i­ble, take or pay, power pur­chase agree­ment).

While gov­ern­ment (and the Lib­eral party) both support the use of smart me­ters to re­duce en­ergy use and to in­crease out­side en­ergy sales, Nal­cor’s non-com­pet­i­tive, mo­nop­o­lis­tic Muskrat Falls power pur­chase agree­ment (PPA) neuters the ben­e­fits of smart me­ters - and Nal­cor knows it.

The Muskrat Falls power pur­chase agree­ment states, in part, that:

“Not­with­stand­ing any other pro­vi­sion of this Agree­ment ... un­til the date on which the ini­tial fi­nanc­ing is paid in lull, NLH’s obli­ga­tions to make the base block pay­ments shall be ab­so­lute, un­con­di­tional and ir­re­vo­ca­ble, and shall not be sub­ject to any re­duc­tions un­der any cir­cum­stances what­so­ever.”

More than any­thing else, Nal­cor’s fore­casted in­crease in en­ergy use has been, and is, the ba­sis on which Nal­cor has been able to claim that the Muskrat Falls’ debt pay­ment obli­ga­tions will be met.

How­ever, if in­creased en­ergy use is nec­es­sary to meet debt-pay­ment obli­ga­tions, then smart me­ters (which will fa­cil­i­tate a re­duc­tion in en­ergy use) are in­com­pat­i­ble with the Muskrat Falls power pur­chase agree­ment.

Debt-pay­ment obli­ga­tions must be met. Pe­riod.

With­out elec­tric­ity rate in­creases, Nal­cor’s loss of rev­enue from its own N.L. ratepay­ers will far ex­ceed any rev­enue from the out-of­province sale of such ex­cess en­ergy.

Nal­cor rec­og­nized this fact when it stated, ear­lier this year, that “go­ing for­ward the business case (of a con­ser­va­tion pro­gram) would be as­sessed based on the value con­served en­ergy that could be sold into ex­port mar­kets.”

In other words, how much real support can Nal­cor give to an ini­tia­tive that re­places 18 cent per kilo­watt-hour rev­enue ( from N.L. ratepay­ers) with four or five cent per kilo­watt-hour rev­enue from Nova Sco­tia?

Such a loss of rev­enue (through the use of smart me­ters) could only be mit­i­gated by a sig­nif­i­cant in­crease in elec­tric­ity rates for N.L. ratepay­ers.

While smart me­ters would al­low some busi­nesses and high­in­come ratepay­ers to pro­duce their own en­ergy and to use less en­ergy from the grid, those ratepay­ers who can­not af­ford to pro­duce their own en­ergy will thereby have to pay an even greater share of the rev­enue Nal­cor/NL Hy­dro will need to meet its Muskrat Falls debt pay­ment obli­ga­tions.

Smart me­ter­ing, in Nal­cor’s mo­nop­o­lis­tic/Muskrat Falls power pur­chase en­vi­ron­ment, is not good news for low and mid­dle in­come ratepay­ers.

If those who can af­ford to take ad­van­tage of smart me­ter­ing use less en­ergy (pay­ing less rev­enue to Nal­cor/NL Hy­dro), then rates will have to go up (and the re­main­ing, mostly low- and mid­dle-in­come) ratepay­ers will have to pay more.

While Lib­eral leader Dwight Ball ar­gues that smart me­ter­ing can re­duce N.L. ratepay­ers’ en­ergy use, that ar­gu­ment ap­plies almost ex­clu­sively to busi­nesses and to higher in­come ratepay­ers.

In sum­mary, NL ratepay­ers will still have to pay the full amount needed to meet NL Hy­dro’s Muskrat Falls debt pay­ment obli­ga­tions. Those who can af­ford to make full use of smart me­ters will in­deed pay less, while low and mid­dle in­come earn­ers will pay more.

Clearly, the rigid le­gal re­quire­ments of a power pur­chase agree­ment which has been ex­pressly de­signed to push through an un­eco­nomic, 19th-cen­tury Muskrat Falls hy­dro­elec­tric project not only con­strains the prov­ince from trans­form­ing its elec­tric­ity gen­er­a­tion, trans­mis­sion and dis­tri­bu­tion sys­tem into a 21st-cen­tury, ope­nac­cess/de­cen­tral­ized model, but also demon­strates how de­fi­cient gov­ern­ment and Nal­cor has been with re­spect to the de­vel­op­ment and im­ple­men­ta­tion of a co­he­sive, ra­tio­nal and strate­gic project plan­ning process.

The ef­fec­tive in­te­gra­tion of proven and new tech­nolo­gies such as smart me­ters in a way that will ben­e­fit low- and mid­dle-in­come earn­ers has all but been elim­i­nated.

By ne­ces­sity, Nal­cor’s fo­cus is sin­gle minded, and to the ex­tent that Nal­cor has shifted its fo­cus away from what is good for ratepay­ers, it is (at least in this way) - world class. Mau­rice E. Adams


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