Do the math

The Compass - - Editorial -

To say this prov­ince’s Pub­lic Util­i­ties Board is busy is an un­der­state­ment. The fact is that they’re jug­gling more balls than an act at Cirque du Soleil. Right now, the board is han­dling a ma­jor re­view of au­to­mo­bile in­surance, along with a gen­eral rate in­crease ap­pli­ca­tion from New­found­land and Labrador.

In lesser-known ap­pli­ca­tions, the board’s also be­ing asked by Hy­dro to ap­prove mil­lions of dol­lars of un­ex­pected pen­stock re­pairs at the Bay d’Espoir and a sur­prise $2.5-mil­lion re­pair at the Holy­rood Gen­er­at­ing Sta­tion. (The Holy­rood re­pairs are needed to solve an ash foul­ing prob­lem that means the three units have been able to op­er­ate at only 60 per cent ca­pac­ity.)

It’s reams and reams of pa­per and elec­tronic doc­u­ments - in­clud­ing in­for­ma­tion that’s con­tin­u­ing to flow from the in­ves­ti­ga­tion into 2014’s #DarkNL power fail­ure.

As part of that in­ves­ti­ga­tion, Hy­dro has to pro­vide semi-an­nual near-term gen­er­a­tion ad­e­quacy re­ports - the PUB is re­view­ing the util­ity’s May 2018 re­port now, ask­ing Hy­dro to an­swer 26 sep­a­rate ques­tions to clar­ify de­tails of the re­port.

Just an­other job on the PUB’s al­ready clut­tered desk.

But the re­port con­tains some in­ter­est­ing num­bers. First, there’s the win­ter peak de­mand for power: by now, un­der the orig­i­nal Muskrat Falls cal­cu­la­tions, peak power de­mand in this prov­ince was sup­posed to have reach 1,714 megawatts. In­stead, the high­est peak reached this past win­ter was on Dec. 17, 2017, at 1,563 megawatts. (Muskrat Falls’ ar­chi­tects ex­pected us to sur­pass that de­mand bench­mark in 2012.) But more in­ter­est­ing is what the re­port says about what hap­pens next.

“Both New­found­land Power’s and Hy­dro’s fore­cast load re­quire­ments for its re­tail cus­tomers cur­rently in­di­cate stag­nant or de­clin­ing en­ergy re­quire­ments across the next five years, con­sis­tent with weak­ness in the provin­cial eco­nomic out­look,” Hy­dro now says. Their fore­cast, “re­flects cus­tomer’s an­tic­i­pa­tion of sig­nif­i­cant re­tail price in­creases for elec­tric­ity, cur­rent eco­nomic fore­casts for the prov­ince in­di­cat­ing de­clines in cap­i­tal in­vest­ment in provin­cial ma­jor projects, and a weaker out­look for con­sumer spend­ing for the next sev­eral years.”

OK.

Why does that even mat­ter?

Well, there are two parts to your post-Muskrat Falls power bill. One is the cost and in­ter­est pay­ments for the project - what­ever that is, we pay it.

The other part has to do with con­sump­tion. Be­cause the cost will even­tu­ally be a fixed amount, what we pay per kilo­watt hour will de­pend on how many peo­ple are pay­ing it, and how many kilo­watt hours are used.

If fewer kilo­watt hours are used, the in­di­vid­ual unit price for each of the hours used has to in­crease - be­cause that over­all bill still has to be paid. If an­tic­i­pated de­mand doesn’t show up, the price per kilo­watt hour will rise.

The lower the de­mand for elec­tric­ity and the fewer peo­ple still here to pay for it, the more ex­pen­sive it will be.

It’s just math. Very ex­pen­sive math.

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