Newfoundland Power CEO says brace for higher bills
Gary Smith tells board of trade gathering he can’t even guess at Muskrat Falls charges
Following on the heels of an announced increase in costs on the Muskrat Falls power project, the lead hand for the company responsible for putting power bills to customers was taking questions.
Newfoundland Power president and CEO Gary Smith spoke at a previously scheduled luncheon for the Conception Bay Area Chamber of Commerce at the Manuels River Hibernia Interpretation Centre on Wednesday.
He outlined his company’s operational reach, plugged the utility’s relatively new ability to send text and email alerts on outages and its continued high levels of reliability in power distribution.
But the first question to him post-speech was about Muskrat Falls.
Newfoundland Power is dependent on Newfoundland and Labrador Hydro for the majority of its power supply. Under current legislation, it is locked in to having its customers cover construction costs on Nalcor Energy’s now $7.65-billion hydroelectric project (Nalcor is parent to N.L. Hydro).
“To try to give you a sense of the scale of the project, right now if you took all of Newfoundland Power assets and Newfoundland and Labrador Hydro’s existing assets and you roll them together as a dollar value, you would get a number of … something that looks like $2.5 billion. So when Muskrat Falls is finished and put online, we’re going to add another $7.5 to $8 billion on top of that price,” Smith told the gathering. “So obviously it will have a big impact on the cost of electricity.”
He said it is important to con- sider hydroelectric plants will run for a long time. Newfoundland Power has some small hydro plants of its own, he said, in operation for as much as 130 years. That time means a long period of amortization, a spreading out of costs and some easing of the short-term, upfront impacts on the individual power customer.
But the question was really about the bottom line on power bills.
“To go back to your specific question with that in the background, I really can’t tell you today what that will be on your bill, at $7.65 billion. Those numbers have not been finalized. The project is still under construction,” he said.
Speaking with reporters following the luncheon, Smith said the increase in the estimated capital cost for Muskrat Falls was “significant.”
As for bills right now, N.L. Hydro is before the Public Utilities Board (PUB) seeking a power rate increase unrelated to the capital cost on the project.
Newfoundland Power is due to submit a separate general rate application in the next two weeks, requesting a rate increase of its own. Smith did not provide any specific figures.
“Once we take Hydro’s number and Newfoundland Power’s number, put it all together, the question will be: will there be a rate increase? And I think there will be a rate increase. How big it will all be, it’s too early for us to say at this time.”
Muskrat Falls will be reflected on bills, with a separate increase, when it comes into service. First power is now expected sometime in 2018.