Bor­rowed time

The Southern Gazette - - Editorial -

This isn’t a new story, but it’s one worth re­peat­ing. A few weeks ago, New­found­land and Labrador Hy­dro’s pres­i­dent, Jim Haynes, tes­ti­fied in front of the Pub­lic Util­i­ties Board in a hear­ing on in­creas­ing elec­tri­cal rates.

Not un­ex­pect­edly, the ques­tion of the huge rate in­crease com­ing with Muskrat Falls arose, along with the ways the govern­ment, Nal­cor and Hy­dro are try­ing to re­duce or mit­i­gate that jump in rates.

“The whole rate mit­i­ga­tion is­sue, ev­ery­one re­al­izes that Hy­dro can­not man­age that on its own,” Haynes told the PUB, adding that Hy­dro was part of a govern­ment com­mit­tee look­ing at ways to help con­sumers when Muskrat Falls comes on line.

“There are a lot of things on rate mit­i­ga­tion that are out­side of Hy­dro’s con­trol that would be likely re­quired,” Haynes said, “and some of those ba­si­cally re­quire share­holder Nal­cor com­mit­ments or govern­ment changes.”

Haynes hinted at a range of the op­tions be­yond Hy­dro’s con­trol - and be­yond the PUB’s abil­ity to reg­u­late as well: “Well, you know, if you’re go­ing to re­de­ploy div­i­dends from Nal­cor back into Hy­dro rates that is - or if you’re go­ing to put money back in from the govern­ment di­rectly or from oil and gas or what­ever the case was, that’s not in Hy­dro’s con­trol, nor the board’s, with re­spect.”

It’s a theme Haynes re­peated: “(If) you want to have rate mit­i­ga­tion down to the level that has been im­plied by the govern­ment in var­i­ous com­ments or speeches or what­ever, we can­not do that with­out as­sis­tance from Nal­cor and pos­si­bly the provin­cial govern­ment.”

Here’s the prob­lem: mit­i­gat­ing rates takes money - money the province doesn’t have right now.

Since we’re al­ready in a deficit po­si­tion, if the province has to sig­nif­i­cantly in­ter­vene in elec­tri­cal prices, it can only do that by bor­row­ing more money some­where else.

That’s an ex­per­i­ment that is al­ready set to cost the province of On­tario, and its tax­pay­ers, bil­lions of dol­lars.

On­tario brought in leg­is­la­tion to bring down power rates by bor­row­ing money. The On­tario govern­ment dealt its util­i­ties reg­u­la­tor, the On­tario En­ergy Board, out of the mix. (Re­mem­ber Haynes’ com­ment about mit­i­ga­tion be­ing out­side the PUB’s con­trol?) The govern­ment bor­rowed $18.4 bil­lion to pro­vide an im­me­di­ate “savings” to con­sumers.

Prob­lem is, those “savings” were re­ally just punt­ing costs down the road. The $18.4 bil­lion will have to be re­paid, al­beit 10 years from now, but it will also add (at cur­rent rates, which are ex­pected to rise) $21 bil­lion in in­ter­est charges.

In other words, use power now, but pay much more for it later.

That’s a model built to get votes while, in the process, fis­cally pun­ish­ing fu­ture gen­er­a­tions.

Let’s hope our govern­ment isn’t look­ing at sim­i­lar plans to mol­lify us in the present and fis­cally crip­ple us in the fu­ture.

In other words, use power now, but pay much more for it later. That’s a model built to get votes while, in the process, fis­cally pun­ish­ing fu­ture gen­er­a­tions.

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