29 June 2016

The little savory details #nlpoli

Nalcor chief executive Stan Marshall said so much last Friday about Muskrat Falls, it's probably true that most people couldn't possibly take it all in.

One of the folks having a hard time understanding all this is Tom Johnson.  He's the guy the Conservatives appointed to serve as consumer advocate at public utilities board hearings.  In practice he has sided with Nalcor and the Conservatives on everything, including their plan to force consumers to bear the full cost of Muskrat Falls, no matter how much it cost in the end.

The past few days he's been turning up in the media saying that the government will keep the cost of electricity down so consumers don't see much of an increase.  Not much like supposedly what the Conservatives promised.  Even Nalcor hasn't been pushing that nonsense for a year or more so it's astonishing that Johnson sounds like he is still taking orders from Danny Williams' missus.

The thing is - you see - even if the government does something to keep the electricity prices down, Consumers in the province will still take it in the neck through decreased services. There's only one customer for the power from Muskrat falls, you see, and he is us:  ratepayers and consumers are = with few exceptions one in the same person.  So if the government does something to keep electricity rates down,  then people will just have to pay for Muskrat Falls wearing their taxpayers' hat instead of their ratepayers' bonnet.   It is astounding that the guy supposedly protecting consumers' interests doesn't know who he represents.*

They might even have to keep paying the levy.  The whole thing is stunning given that, as Marshall said,  the whole argument for Muskrat Falls was based on wildly wrong forecasts for demand.  Johnson told CBC's Morning Show in St. John's on Tuesday that he hadn't heard anything to suggest Muskrat Falls wasn't the right choice.

Johnson is such a Tory shill that he is just a joke.  The only thing funnier than Johnson is Wade Locke.  The opening line in a story on Locke's reaction to the latest news on Muskrat Falls is the stuff that would make him thankful he has tenure and cannot be fired by the university.  James McLeod started his reaction story with this gem: "Memorial University economics department head Wade Locke said the numbers for Muskrat Falls are so big, he’s having a hard time understanding them."

Alright, so that isn't a quote but it's right up there with Locke's reaction to the sudden collapse in oil prices.  "I didn't see this coming."  You could not make this stuff up.  SRBP could only post about it. The guy who insisted that oil prices knew only one direction - up - actually admitted he just never saw the chance it would go down. The day before he said that to McLeod,  Locke was on open line dismissing low oil prices as a passing thing.  No biggie.  Temporary.

While Wade and Tom might be scratching their heads, the rest of us won;t have much trouble figuring out the immediate and obvious impact Muskrat Falls will have on our electricity bills.  It's simple. Take whatever you are paying now and double it.

Stan Marshall pegged the latest price to you and me at about 23 cents a kilowatt hour.  Muskrat Falls will actually cost something like 40 cents a kilowatt hour if you took it straight.  A blended price that folds in electricity generated from stuff we have already paid for a dozen times over would put the rate to you and me at 23 cents.

Some people - including Premier Dwight Ball - thought we'd be able to use sales of "surplus" electricity and use that cash to reduce consumer prices.  Stan put the blocks to that idea.  Selling the "surplus" would only reduce the consumer price in this province by less than one cent a kilowatt hour according to Marshall.

Part of the reason for that is because consumer prices everywhere else are so low that we can't get electricity all the way from Labrador to market and make much of a profit even if we charge very little for the electricity itself and only pay the cost of transmission. In 2009,  Nalcor started selling a tiny bit of surplus from Churchill Falls that we get.  They lost money at it some times and even in their optimistic projections when they started the whole thing could only expect prices that were about what they made selling the same electricity to Hydro-Quebec.

We told you about this on Tuesday.  SRBP also put the numbers out there in April 2009.  Go back and take a look.  Three and a half and four cents a kilowatt hour.  Nalcor had a hard time making money at it when they were using electricity that basically cost them nothing to produce.  You can see why,  more than a year later,  your humble e-scribbler was sceptical Nalcor could build the Lower Churchill based on export prices.  They didn't.

Danny Williams put a deal in place that forced consumers in this province to pay - wait for it - between 16 and 18 cents a kilowatt hour for electricity.  Even in 2010, that represented about a 50% increase in domestic electricity prices.  Kathy Dunderdale talked about the forecast electricity prices in 2010.  Any idea this deal was great at the start but went bad after Danny left simply doesn't match up with the facts. This deal was nuts from the start.  Little tidbits like that make you wonder how Wade Locke could produce a forecast in 2012 that talked about higher rates, eh.


Sometimes you miss the gems.

Remember from Tuesday's post that claim that Muskrat Falls ended Quebec's stranglehold over development in Quebec. Williams used it in his announcement speech and Russell Wangersky and Paul Daly included in their hagiography of Williams as if it was true.

In April 2009, Russell knew precisely what was going on:
Right now, we'll have Nova Scotian energy firm Emera handle the deals with customers.  But in fact, the big change involved is not as much the result of us meeting a giant challenge with some newfound strength and determination as it is that Hydro-Quebec changed its rules. 
Not only for us, and not recently, either. 
No, it's not so much our strength and determination as the creation by Hydro-Quebec of a transmission unit called Hydro-Quebec Transenergie, and something called the Open Access Transmission Tariff. 
In 1997. It hasn't been a secret, either.
Maybe it's time to write the book about the Lower Churchill since 2003 before people forget all the little details..  The story is so incredible and sucks in so many people and events, that in the future you might have a hard time getting anyone to believe it.


*  revised with new sentences to clarify comments and new paragraphing.