22 February 2011

Atlantic energy co-operation: where Lower is higher

Natural resources minister Shawn Skinner is in Halifax talking energy co-operation with his counterparts in the Maritime provinces.

Odd that the provincial government didn’t play it up more than issuing a few lines in a media advisory on Monday, the day the meetings started.

After all, New Brunswick energy minister Craig Leonard is interested in some of Skinner’s Lower Churchill electricity.  As Leonard told the Telegraph Journal:

"There will be a considerable amount of energy that's moving through the province," Leonard says.

"That's an opportunity for us. That's clean, renewable power that will be moving through our transmission system, whether it's en route to New England or we could utilize it ourselves."

Now as regular readers of these scribbles know, the Muskrat Falls proposal is a hugely expensive proposition that Premier Kathy Dunderdale and her Conservatives expect Newfoundland and Labrador residents to pay for. The cost to produce the power, according to Dunderdale back before Christmas will be at least 14.3 cents per kilowatt hour.

Now that is interesting given that the old NB Power deal with Hydro-Quebec was supposed to lower electricity rates in the near term. When the New Brunswick government unveiled the deal, consumer electricity rates were around 11 cents per kilowatt hour.  Hydro-Quebec had oodles of electricity, some of it from very low-cost operations and could have made a tidy sum off New Brunswick customers even at reduced current rates.

Leonard and his colleagues campaigned against the deal and if they now buy Muskrat Falls power, they’d be doing exactly the opposite from what the Shawn Graham deal would have delivered.

Maybe the crowd in Fredericton will just settle for making some cash off the power that Nalcor will wheel through to the United States.

Oh.

That’s right.

There’s a power glut south of the border.

- srbp -

2 comments:

Brad Cabana said...

14.3 cents? I would suggest,based on transmission costs, and loses due to under water transmission, it will be higher. That also only factors in the project coming in on budget - which we know won't happen. Does it figure in the cost of borrowing?Future interest rate fluctuations upon renewing bonds - if they can get them (which I doubt).What if the true cost is at least double? Now Hydro Quebec is marketing hydro at anywhere from 6-8 cents kwh for 30-35 year supply contracts. Who is going to absorb the loss between even the low ball of 14.3 cents and the market value of 6-8 cents?

It is the hydro equivalent of setting up a hardware store next to Walmart, and expecting to compete and make money. Quebec has numerous dams, and other eletrical power sources, to absorb costs and compensate for market fluctuations. We will have one very small dam?We really have to get the word out so people understand that the Pied Piper is leading them to the water...

Ursula said...

Brad ,well done we are lemmings the lot of us .