23 November 2012

Who Does Number Two Work For? #nlpoli

The House of Assembly on Thursday was sounding a wee bit like a cheesy remake of Austin Powers.

Liberal leader Dwight Ball asked for an updated cost of Muskrat Falls electricity delivered at Soldier’s Pond.  He asked twice in a row.

Twice Ball asked for the new number and twice natural resources minister Jerome Kennedy refused to answer.

This is an an important point because that’s the numbered that will be blended with other costs to figure out what consumers will pay per kilowatt hour after 2017.

While plenty of people asked for those sorts of numbers before, it took forever and the public utilities board to get the delivered price out of Nalcor using the original estimated cost of $5.0 billion for the Muskrat Falls dam and the line to Soldier’s Pond.

The old number was 23.9 cents per kilowatt hour, according to Ball in the House of Assembly.  Someone will undoubtedly send an e-mail  to the effect that this is too low for DG 2, but let us work with this one for now.

Ball didn’t ask the third time, which is too bad really.  In Austin Powers, Mustafa (right) caved in when you asked the same question the third time.

In any event, Kennedy did say a number of really interesting things, including that “people are going to pay electricity bills no matter what we do.”

Ball did go off on a ludicrous tangent by asking that the provincial government use the revenue from Muskrat falls to lower rates.  It’s a ludicrous question because the only revenue stream is coming from the people whose rates Ball wanted to lower. 

Finance minister Tom “Net Debt” Marshall leaped up on his hind legs to put down that question.  BRINCO,  said Tom.  BRINCO wanted to make money for its shareholders.  And then this:

When this project is done, the ratepayers will pay their rates, but any profits that are available will come back to the people of Newfoundland and Labrador. That is the difference.

Any profits, Tom should know, will come from those same ratepayers who, as Tom also knows, will also fund construction of the project themselves.  They pay for it and then they pay themselves back. BRINCO, as Tom ought to know, exported their power from Churchill Falls so that someone else paid for it, not BRINCO’s shareholders.

Later on Tom said that borrowing billions of dollars on the public account will not increase public indebtedness at all.

Clearly, Tom lives in the same fantasy world as Kathy Dunderdale

And Jerome?

Well, he’s shrewd enough to avoid talking about prices.  He’s shrewd enough to avoid talking about electricity prices for a project that was running at around $239 per megawatt hour (23.9 cents per kilowatt hour) when  a project cost 25% lower than the new estimate.

Meanwhile,  in New England, the day ahead markets for electricity are the ones Nalcor talks about for exporting some of Muskrat Falls. In October, those markets saw electricity trading for an average of $35 dollars per megawatt hour.  That’s three and a half cents.

That’s about 15% of the cost of Muskrat Falls electricity at Soldier’s Pond using the old numbers.  The October “spot market” price for electricity could be as little as 10% of the revised cost.

That’s why Jerome didn’t want to talk about real numbers:  talking about costs puts people off Muskrat Falls, big time.