“I’m optimistic the project is going to succeed,” Nalcor Energy chief executive Ed Martin told the Chronicle-Herald recently.
The delay in finishing the negotiations means that, as the CH put it, “the details under negotiation are being tapered to fit with the announced terms [sheet].”
Tapered to fit.
Great image.
The article just relates some information most SRBP readers would already know. It also contains one comment that would make you wince. The comment reflects the level of inaccurate or misleading information out there about who will pay what for Muskrat Falls power.
The cost of Lower Churchill power to Nova Scotia has never been defined.
Nalcor projects it will cost 16.4 cents per kilowatt hour for consumers in Newfoundland and Labrador. That’s up from the current rate of 11 cents but lower than the projected costs if the province were to stick with its oil-fired plants.
That first sentence isn’t true. The term sheet signed last fall makes it clear:
- Emera gets a block of power guaranteed each year in exchange for their upfront cost of the link to Nova Scotia. In effect, the cost of that electricity is zero cents per kilowatt hour.
- Beyond that, Emera gets the right to buy additional power for a cost of something around nine cents per kwh. That’s based on memory and subject to adjustment.
As such, Nova Scotians could actually see no change in their domestic electricity rates at all.
The second paragraph compares apples and oranges. The 16.4 cents figure is what Kathy Dunderdale cited in 2010 as the upper range of the wholesale cost of making electricity at Muskrat Falls. The lower end of the range was about 14 cents and that’s the figure the government has cited consistently.
But remember: it’s a wholesale price and – more importantly – it’s an estimate. If Muskrat Falls goes the way of every other government project since 2003 it will be over budget by more than 50%.
The 11 cents figure is the current retail price to consumers. it includes Nalcor’s blended cost from existing generation, most of which was paid off years ago or, in the most recent examples, for free as a result of government’s expropriation of private sector generating facilities. That figure also includes money for the electricity distributor and a tidy profit for both Nalcor and the Fortis-owned distributor.
In the future, consumers in this province will pay all of that plus they’ll have to cover the full cost of Muskrat Falls. That conclusion is based on repeated statements by Nalcor officials. That’s why Nova Scotians are getting free electricity up front and why they can buy extra power at a sweet discount. People in Newfoundland and Labrador will already have paid for it.
In addition to that, Newfoundland and Labrador consumers will now also have to pay a chunk to Emera plus a profit since Emera will now operate a portion of the provincial distribution system. Not bad, eh?
Well, unless you are a consumer in Newfoundland and Labrador.
And while Nalcor estimates all of this will cost less than the alternatives, the simple truths are these:
- Nalcor has never released detailed cost analysis of what this project will do to consumers.
- Nalcor hasn’t costed all the alternatives. That became clear during the joint environmental review panel hearings.
- Nalcor can’t tell what this project will cost consumers in Newfoundland and labrador because they don’t know.
- Whatever they wind up paying, it will be a lot more than 16 cents per kilowatt hour and it will always be more than any export consumers.
- srbp -
