No, this is not an April Fool’s joke almost a week late.
In answering a question on the source for government electricity price forecasts that are more than double actual experience recently, natural resources minister Shawn Skinner told the House of Assembly on Tuesday that CBC National News is his source for high-level energy intelligence:
… The CBC National News did a survey; they project up to a 50 per cent increase in the electricity rates.
Mr. Speaker, the reason we are developing Muskrat Falls is to solve that problem, and by solving it we will be able to ensure that the rates will increase by 0.7 per cent per year as opposed to the 4 percent to 6 per cent that they are increasing now.
What Skinner didn’t say is that the recent CBC news report he cited - dated March 30, 2011 - actually includes the Muskrat Falls rates as part of its projection for greatly increased electricity prices by 2020.
In other words, CBC wasn’t forecasting. The report was describing the result of the government’s proposal to double domestic electricity prices.
But wait.
It gets worse for Skinner, who seems to have misunderstood his briefing notes very seriously.
For starters, none of the story used actual demand forecasts for Newfoundland and Labrador based on its situation. Skinner basically used possible events in Alberta - and other places - as justification for actual decisions in this province taken before the CBC story even hit the Internet.
Then realise that the increase in electricity rates over the next decade CBC is talking about isn’t actually a forecast. They are really just suggesting a possible conclusion based on some of the prices being paid to producers in Ontario and other places in central Canada for some new technologies. Even the language is obviously conditional:
…it seems to mean inexorable price hikes…
Seems to mean?
You hope someone would say “will definitely mean” before Skinner signed on to a guaranteed doubling of electricity prices for his constituents, as a minimum. Evidently he didn’t notice the obvious problems related in the story by people on fixed incomes when faced with electricity price increases of the magnitude he is obviously comfortable with. Hint: Perhaps someone should point out the province’s own demographic forecasts for the Minister.
So yeah, maybe, theoretically prices might skyrocket if you can judge by the biogas and other similar experimental or relatively small-scale projects CBC cited. Unfortunately their speculation is pretty much shite: they didn’t do a detailed analysis of the total energy generating mix and what might actually happen to prices if consumption rises 23% in the next decade, as forecast by the National Energy Board.
Talk about faulty reasoning.
Even that is not the end of it, sadly.
That 35% increase in prices over the past five years or “recent years” that Skinner and Premier Kathy Dunderdale like to talk about?
Turns out it is actually a 20 year average rate of change adjusted for inflation:
Altogether, it seems to mean inexorable price hikes for a commodity that's already 30 per cent more expensive than in 1990, after adjusting for inflation.
So if you were really forecasting for the next decade based on the preceding two decades, you might want to try a 15% increase adjusted for inflation. Math geniuses will pretty quickly tell if that works out to be a 50% increase unadjusted for inflation or any other way.
And if all of that isn’t bad news consider that the La Romaine project in Quebec will produce electricity at a cost of less than half the Muskrat Falls total of 14.3 cents per kilowatt hour. Hydro-Quebec will get its power from La Romaine for 6.4 cents per kwh. That project is also more cost effective than Muskrat Falls, producing 1550 MW compared to the Nalcor project’s 824 MW and at about the same price ($6.2 to $6.5 billion forecast).
So if you take the province’s natural resources minister at his word, he is relying on media speculation to make serious decisions about the province’s future.
Talk about three guys and a magic eight ball.
You simply cannot make this stuff up.
As a last point, CBC can’t even get its basic facts straight on electricity generation in Newfoundland and Labrador.
The chart of current and forecast projects:
- includes Gull Island even though that project has been shelved for the foreseeable future;
- omits the Menihek power plant that sells electricity from Labrador into Quebec;
- omits an 18 MW hydro project at Star Lake seized by the provincial government in 2008; and,
- still shows Fortis as a co-owner of a power project on the Exploits even though that the province seized that as well in 2008 and turned it over to Nalcor. According to the company’s most recent annual report, Fortis is still in negotiations with the provincial government on compensation for the seizure of its assets.
- srbp -