The evil that men do lives after them; the good is oft interred with their bones.
William Shakespeare, Julius Caesar
In his latest post on Muskrat Falls, energy analyst Tom Adams argues that the provincial government wants to finance Muskrat Falls in a way that shifts the costs and the risks to future generations.
“This proposed financial model inappropriately mixes elements of a power purchase agreement (PPA),” writes Adams, “often used in some elements of the utility industry, and government subsidies to create what Jane Jacobs described in her book Systems of Survival as a “monstrous hybrid”. This monstrous hybrid imposes escalating costs and obsolescence risks on consumers over the next 57 years.”
Adams says that Atlantic Canadian governments have been especially prone to financing schemes that are described as innovative but that turn out to be disasters:
Usually, the purpose is to promote riskier investments than could be justified using conventional approaches. Sometimes, such as with the franchise model innovated by the New Brunswick government in the late 1990s to promote natural gas distribution, the innovation fails spectacularly. Except for industrial consumers, New Brunswick natural gas consumers now pay by far the highest gas rates in North America. The growth rate for the local distribution utility is below a rate that is financially sustainable.
What’s more, the project hasn’t received adequate review, Adams contends.
And, in the end, Hydro-Quebec controls power output from Muskrat Falls since it effectively controls the water flows on the entire Churchill river.
Read the full post – “Newfoundland’s Muskrat Falls Megaproject Fails Test of Intergenerational Ethics” – here.
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