Muskrat Falls seems to be intimately connected to magic, at least in some people’s minds.
For a while there, the gang at Nalcor sounded like they had found a way to make electricity and then ship it back upstream to Churchill Falls where it would be converted back to water. Sort of a water to wine to water miracle.
Not surprisingly, it turned out to be crap.
Now Muskrat falls is filled with another kind of magic.
Kathy Dunderdale told reporters on Monday [CBC video of scrum] that borrowing $6.0 billion dollars and spending it on Muskrat Falls would be different than borrowing money and spending it on stuff like schools or hospitals. With Muskrat Falls, you know how you will get your money back over 35 years.
You get it back from the rate payers, of course. In the case of Muskrat Falls, the rate payers are the people of Newfoundland and Labrador. Nova Scotians get their share of it for free. Originally, the gang at Nalcor figured they’d be able to make money off the rest of it by selling the surplus electricity into the United States or somewhere in the rest of Canada.
According to the joint environmental review panel, Nalcor based the original forecast cost of 7.7 cents per kilowatt hour on selling 80% of the electricity. The other 20% was the free bit for the Nova Scotians.
Kathy Dunderdale still believes that, apparently. She talked on Monday about the need to make the investments while we can in order to get off our dependency on oil money. She said that right before she talked about Muskrat Falls and why it was different from other spending.
Start listening at about 15:00 and let it run for a couple of minutes. It’s pretty clear that she imagines Muskrat Falls will replace all that money coming from oil right now. That’s consistent with what the Conservatives under Danny Williams have said since about 2009. It’s part of their whole energy warehouse philosophy.
Now maybe, theoretically, you might have been able to sell electricity from Muskrat Falls and Gull Island and pull in something like the couple of billions of dollars the provincial government has been getting from oil.
Maybe it was possible once.
If you clicked your heels together and wished really hard.
But you can be damned sure, it isn’t true any more. Natural gas from shale has changed all that in the couple of years since Dunderdale and her colleagues have been trying to get Muskrat Falls done.
If that wasn’t enough, three weeks ago the United States federal electricity regulator approved contracts that sell electricity in 15 minute lots instead of hourly ones. That makes it much easier for wind and other alternative electricity sources in the United States to enter the market.
Lots of electricity at low prices means that the 35 years of revenue Kathy Dunderdale is talking about from Muskrat Falls will come from just one source: the people who are paying for it all up front by borrowing billions and tossing billions more into it with oil money.
There is nothing magical about that, though, at least for the people of Newfoundland and Labrador.
It just means that Kathy Dunderdale and her colleagues plan to take billions of dollars in oil money and turn those non-renewable resource revenues into a perpetual tax on the people of Newfoundland and Labrador. This will not be a diminishing tax: it will increase every year.
Not surprisingly that sounds like crap, too.