A Canadian Press story on Muskrat Falls this week starts with economist Brendan Sullivan’s recent critique of Muskrat Falls:
He said in an interview that the province and its Crown corporation Nalcor Energy are using "voodoo economics" to justify a long-term power purchase agreement.
…
But Sullivan argues the agreement essentially writes off depreciation later — "kicking the can down the road" for future generations — and that it wouldn't get past private shareholders who expect faster return on investment.
CP also gives Nalcor boss Ed martin some space. Curiously he tosses out some additional voodoo as if to prove Sullivan’s point without realising it.
Try this for starters:
In an email, Nalcor CEO Ed Martin said the province needs more power and that Muskrat Falls is cheaper than if Newfoundland generates its own energy, much of it dependent on an aging oil-fired plant.
Two bits.
First there’s the claim that MF would be cheaper than generating energy on its own.
It’s a weird way to say it: “cheaper than if Newfoundland generates its own energy.” After all the end-users foot the entire bill either way so whatever that curious phrase means it doesn’t matter.
Second, the infeed system isn’t cheaper than the alternatives. Nalcor hasn’t studied the alternatives and won’t have studied them before government sanctions the project. At best they don’t know. At worst, as some of the critics have suggested, Muskrat falls is actually more expensive and potentially the most financially risky choice of all the ways to me the island’s electricity needs.
Third, look at this:
Muskrat Falls "moves the island from dependence on thermal generation to the use of clean, renewable hydropower," he said.
The island isn’t dependent on thermal generation now. Thermal is part of the mix. Any place that has a majority of its year-round generation from thermal sources is “dependent”. The island uses Holyrood for less than three months a year. Some years, Holyrood supplies a mere 11% of the island’s electricity needs.
Fourth, and, as Ed Martin knows, if he spent a few hundred millions, he could shutter Holyrood for about 15 years. Martin has a supply of hydro available from the old Abitibi properties to displace Holyrood. The problem is that the line between the generators and the consumers on the Avalon can’t handle the extra load.
And for fifth, recall another wonder bit of voodoo on Martin’s part: the Muskrat Falls scheme actually includes more thermal generation for the island than is currently installed at Holyrood. It’s right there in the same Manitoba Hydro report Martin keeps citing when he pronounces himself baffled that the public utilities board refused to answer his set-up question with Martin’s pre-determined answer.
- srbp -