The average consumer in Newfoundland and Labrador should expect to pay 51% more for electricity compared to their current rates once Muskrat Falls comes online, according to SRBP’s estimate. Nalcor figures available at the time of writing.the original version of this post suggested a rate increase of 51%.
A household that current pays $156 $179.25 a month for electricity (not including HST, basic charge or provincial rebate) will see their monthly charge increase by $94 $282 a month with Muskrat Falls included in 2020. Those calculations use Nalcor figures and current domestic electricity rates.
Former Premier Danny Williams, the man behind the project, dismissed the cost increases for the project as “mouse droppings” and nothing more than the “cost of doing business.”
Nalcor boss Ed Martin said last week that consumer prices would go up by an additional seven dollars a month due to the most recent increase. Martin didn’t explain that those calculations were merely the added costs from the latest increase added to Nalcor’s earlier forecast based on cost over-runs. What Martin also didn’t say was that Nalcor’s calculations started from an assumed price that was significantly higher than actual consumer rates at the moment.
Figure out your own bill
Figuring out how much you will pay each month for electricity with Muskrat Falls is pretty easy.
For starters you’ll need three things. Two of them are on your monthly electricity bill.
1. You need to know how much electricity you use. It’s usually given in kilowatt hours per month. It’s on the line labelled “Energy Charge.”
2. You also need to know the cost of electricity in cents for each kilowatt hour. That’s on the same line.
The third thing is the rate for electricity once Muskrat Falls arrives and that’s where it gets interesting.
How much you pay for electricity will depend on how much Muskrat Falls finally costs. We won’t know that until the whole thing is done. Nalcor and the provincial government also have a few ways they can mask the real cost of the project.
The one thing we do know is that the only customer they have for the electricity is you and everyone else in the province. Export sales are entirely imaginary so we cannot use them at all to figure out the cost to consumers.
For now we only have the cost calculation Nalcor has provided. The most recent one is from the middle of 2014. It showed that the anticipated consumer cost for electricity including HST in 2018 was 16.4 cents a kilowatt hour, up half a cent from December 2012. Nalcor also said the average household that didn’t have electricity heat used 1517 kilowatt hours of electricity a month.
How much more will you be paying?
Let’s use round numbers and figure it out.
The figures are all for 2018, except the first column of numbers. That’s the calculation for the actual cost of 1500 kilowatt hours in the middle of 2015. The current domestic service rate is 10.573 cents per kilowatt hour, according to Newfoundland Power. With HST included, the rate would be 11.9 cents per kilowatt hour.
In the original post, SRBP inadvertently excluded the HST. The table below revises the figures accordingly. There’s also a new column including Nalcor’s forecast for 2020 prices. All the figures show electricity retail cost plus HST. They do not include the basic monthly charge or any discounts that may apply to some consumers.
All the others calculate the difference between the projected costs at different times and the current monthly electricity cost.
| 2015 Actual* | Nalcor (Dec 12) | Nalcor (Jul 14) | Nalcor 2018** (Oct 15) | SRBP (Oct 15) | |
| kWh/mo | 1500 | 1500 | 1500 | 1500 | 1500 |
| Price |
11.95 | 15.9 | 16.4 |
16.7 | 18 |
| Total |
179.25 | $238.5 | $246 | $253 | $270 |
| $ Diff | 0 | + +$59.25 |
+ 67.75 |
+ 73.75 |
+ 90.75 |
| % Diff | 0 |
+ 33% |
+ 38% |
+ 41% |
+ 51% |
Since everyone likes to calculate the cost of Muskrat Falls from an artificial starting point in December 2012, let’s use that one. It’s the baseline Nalcor used for all their subsequent increases.
At that point, Nalcor assumed you would be paying 15.9 cents a kilowatt hour for electricity. That would be an increase of $79.50 $59.25 over current costs each month for a consumer using 1500 kilowatt hours a month. That’s a 33% 50% increase over current retail prices plus HST.
In the middle of 2014, Nalcor revised its forecast upward. At that point, Nalcor expected our average consumer to pay an additional $67.75 $87 a month compared to the current cost. That was a 38% 55% increase for consumers.
Nalcor’s most recent forecast adds another seven dollars a month on top of that other estimate. That works out to a rate of 16.8 cents a kilowatt hour, retail cost plus HST. A consumer who today uses 1500 Kwh a month pays $179.25 $156. Once Muskrat Falls comes online, that same consumer will see an increase of $73.75 $94 a month compared to what the consumer paid in the middle of 2015. That’s a 70% increase over current costs.
The last column of numbers in that table is SRBP’s forecast of what prices we’d be looking at if we continued to increase Muskrat Falls according to the experience we’ve had with it so far. We’d wind up at about 18 cents a kilowatt hour or 41% 70% above current rates
How wrong were they?
One of the rationalizations Nalcor and the provincial government relied on to justify their decision to build Muskrat Falls was that electricity prices would only go up due to ever-increasing costs for oil.
“Rising oil prices and the increasing demand for power mean that electricity rates are increasing,” according to the official government site for the pro-Muskrat campaign. “Rate increases we are experiencing today have nothing to do with the development of Muskrat Falls, and are tied to the ever changing oil prices and our reliance on Holyrood and oil to generate power.”
Officially, the pro-Muskrat website said that electricity “rates between 2011 and 2016 for the average ratepayer on the island are projected to increase by an additional 16% or approximately $30 per month.”
They’ve actually gone down.
The result is that Muskrat Falls will guarantee electricity prices that are much higher than they need to be.
Tomorrow today
The 2014 Nalcor rate forecast linked above includes an interesting set of rate projects both for December 2012 and for July 2014. Here’s a table to summarise them
| December 2012 | July 2014 | October 2015 | |
| 2018 | 15.9 | 16.4 | 16.8 |
| 2020 | 16.1 | 17.3 | |
| 2025 | 16.2 | 17.7 | |
| 2030 | 16.6 | 18.4 |
The current Nalcor forecast rate for 2018 – three years from now – is actually more than Nalcor originally forecast consumers would be paying 15 years from now.
The SRBP projection is that a figure Nalcor projected we wouldn’t see until 2030.
-srbp-
* Revised 13 Oct 15 to include HST of 13%. Comparisons adjusted accordingly.
** Explanation: To prepare this comparison, your humble e-scribbler used Nalcor’s projections released in 2014. They appear to be the rate for electricity to consumers from Newfoundland Power with and without HST. The original base figure for this post used the retail price set by the public utilities board but left out the HST add-on. The revised version of this post shows the old figures scored out and the new calculations in their place.
Consumers should be able to use all of the rates except the one in the column marked with a double asterisk (**)
Nalcor released a new estimate on Tuesday using a figure that converts the total for a theoretical average household using 1517 kilowatt hours a month into a charge for kilowatt hour. This approach is misleading since it cannot reliably indicate rates for anything but the average.
Consumers should be able to use the figures in the main table in this post to calculate their own potential costs, with the exception of one column.