Smart meters dumbed down by Muskrat agreement
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