06 April 2011

Another cheaper, greener alternative to Muskrat Falls

Former Progressive Conservative finance minister John Collins surprised a few people this past weekend by publicly criticizing the plan to double domestic electricity rates to build the Muskrat Falls megaproject.

Now while Premier Kathy Dunderdale may have blithely dismissed Collins on Monday, for those who know him or know of him, his public comments carry great weight.

CBC Radio Noon’s Ramona Deering interviewed Collins on Tuesday.  His comments are available as am mp3 file:  click here.

Collins hits on the major flaw in the entire scheme:  domestic ratepayers will consume only 40% of the Muskrat Falls output and that’s the entire basis on which the project will be made profitable.

The Dunderdale/Nalcor scheme is elegantly simple and chilling at the same time.  It doesn’t matter what actual demand is.  It doesn’t matter if export power is given away free.  The public utilities board is compelled by provincial law to set power rates that guarantee Nalcor’s financial stability and ensure it is profitable.

If electricity consumption goes down as a result of higher prices, Nalcor can simply go to the board and get another rate increase. If demand increases they can keep making money from higher rates.  And if they happen to export power and make a buck they can keep that as well and invest it in other projects.

Nalcor wins in every scenario and the only guaranteed losers in the scheme are the poor schmucks who will be forced – by law – to pay for the entire project.  This is, by the way, exactly the opposite of the policy that built Hydro-Quebec and that guided Newfoundland and Labrador Hydro before the current administration turned it into an energy franken-corp.

Collins systematically demolishes every argument offered in favour of the government scheme.

Then he adds a potential solution of his own:  use the 300 megawatts of power recalled from Churchill Falls and send it down a new line that connects the island to Labrador. 

That idea actually makes sense and it is one that Nalcor clearly hasn’t considered.  The provincial government could fund the line using the cash reserves it already has on hand and which it plans to use on the Muskrat project anyway.  The recall power – currently sold to Emera at a loss – plus some additional wind power, plus small hydro and the seized Abitibi assets would meet projected demand on the island.

The gigantic bonus is that it would not double electricity rates in the province.  Indeed, if Nalcor used oil cash to pay for the project, they wouldn’t need to borrow very much to get the job done. As a result the project could be profitable almost instantly and at far lower cost to consumers than the Muskrat project.

If Emera and Nalcor still wanted to build the line to Nova Scotia, the transmission infrastructure would allow development of new wind power projects primarily for export during the summer months when the island doesn’t use all the power produced here.  Since the cost of those projects is far lower than Muskrat, the export power would be competitive in the export market, something Dunderdale admitted yesterday that her project definitely isn’t.

Collin’s idea is cheaper than the Muskrat scheme.  Collin’s idea is also greener since it relies on an existing megaproject. and could support development of new wind power that Nalcor simply isn’t interested in, at all.

And the two dams on the Lower Churchill?

Develop them when there is a demand either domestic or export for the power.

There are plenty of lower cost alternatives to Muskrat Falls.

You just have to want to see them.

- srbp -