Government accused of fudging Muskrat Falls rate calculator

James
James McLeod
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— The Provinces Rate Calculator

It was the centrepiece of the government’s Muskrat Falls sales pitch this week, but critics are saying the government’s online “electricity bill calculator” obscures the facts and delivers misleading information to the public.

Critics demanded the government say what the projected cost to consumers will be for Muskrat Falls power — the cost in cents per kilowatt hour — but that’s something Nalcor CEO Ed Martin was reluctant to do.

At a news conference Wednesday morning, Martin said the online bill calculator is the only tool consumers need.

“I encourage people to go on to that rate calculator, punch in your information, and you will know exactly what your monthly bill is going to be from now until whatever time frame you want to pick,” he said. “Other than that, we’re only confusing people with different types of numbers and blended rates.”

In fact, it is impossible for Martin to say “exactly” what the electricity rates will be in 2017.

Electricity rates are set by

the Public Utilities Board and take into account factors beyond Nalcor’s costs for the Lower Churchill — maintenance done on existing infrastructure by Newfoundland Hydro, for example.

Electricity rates are complex to calculate. Different sources of power — thermal in Holyrood, hydro in Bay D’Espoir, wind in Fermeuse — cost different amounts to produce, and all of those costs are blended together.

Beyond that, Newfoundland Power is given a regulated rate of profit for delivering power to consumers, and taxes are applied before a ratepayer sees the big number on the bottom of their bill.

Martin said all of those numbers only serve to obscure the debate.

“When you look at the cost of power, every time we get into this discussion in public, all it does is confuse the most important people that are impacted by this decision, and that’s the ratepayers,” he said. “We are answering the question in the simplest possible terms.”

On the promotional website, www.powerinourhands.ca, the government offers to simplify all of the complexity. Put in your monthly power bill today, and the calculator spits out the price you’ll pay in 2016-2018 and right out to 2030 — both under the Muskrat Falls plan, and under the alternative.

Martin said that will make it easy for consumers to understand exactly what Muskrat Falls will mean for them.

But the government doesn’t say how the numbers are calculated, and what the rate in cents per kilowatt hour will be in any of those years.

“We were told by Nalcor in our briefing there is no way to come up with a definitive figure until the energy starts moving in 2017 and they could not give us a figure for the rate,” New Democrat Leader Lorraine Michael said. “I think the calculator is a game to help people feel that, you know, they know what’s going on, and giving them wrong information.”

Nalcor provided a document late Wednesday which indicates that their projected rates in 2017 are 15.2 cents per kilowatt hour, rising to 16.6 cents per kilowatt hour by 2030.

However, an analysis done by the Liberals calls the online rate calculator numbers into question, too.

By putting in bill numbers and doing some calculations, the Liberals say they could deduce the rates that the government was working with.

Under Muskrat Falls, the Liberals said the government is assuming rates will be 14 cents per kilowatt hour in 2017, 14.6 cents in 2018 and 14.8 cents in 2020.

 

Analysis shows cost may be cheaper

Premier Kathy Dunderdale’s government has maintained up until this week that Muskrat Falls power would be delivered to consumers for 14.3 cents per kilowatt hour, but if the Liberals’ analysis is correct, their current calculation for 2017 — the year Muskrat Falls is supposed to come online — is actually cheaper than that.

Ball said that doesn’t make much sense, since this week the government announced the project will cost $1.2 billion more than previously forecast.

“It didn’t really seem to reflect any of the increases that you were expecting to see from Muskrat Falls power,” Ball said.

Natural Resources Minister Jerome Kennedy said some of the confusion may be explained by the fact that in the most up-to-date numbers, the government has factored in anticipated savings from a federal loan guarantee, which will make financing the project cheaper.

“We are going to release charts showing where we project rates to go by 2030,” he said. “Generally, the costs between DG2 to the ratepayer and DG3 have not increased, because even though there’s an increase in the cost of the project, that will be offset by the loan guarantee.”

 

jmcleod@thetelegram.com

Twitter: TelegramJames

Organizations: Public Utilities Board, Newfoundland Power

Geographic location: Muskrat Falls, Holyrood, Bay D’Espoir Fermeuse

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Recent comments

  • NLgal
    November 12, 2012 - 19:07

    We know fake calculators work now don't we. Like when we were kid and played with make believe with Toys. The numbers all skewed. It's honestly Laughable at the flaws and inaccuracies. This gov should resign. A disgrace.

  • Tim Jamison
    November 01, 2012 - 23:54

    Liberals and dippers make false claims of scandal and number fudging every day. This is not news, just more desperation from those who are politically out in the wilderness (where they will remain for quite some time; crying wolf sure didn't work for the last provincial and federal elections, did it guys?)

  • Little Man Dan
    November 01, 2012 - 12:38

    If you can't trust Kathy and Jerome; who can you trust? Peter??

  • Cold Future
    November 01, 2012 - 12:15

    John boy, everybody's got a calculator. Just to follow the numbers DUPCE indicated below: Quebec is delivering to market for 9 cents per Kwh-that means that Nova scotia can deliver Muskrat power at 12 cents per Kwh and Newfoundland at 21 cents per Kwh. If the Muskrat comes in at 10 billion instead of $7.4 then the corresponding prices would be 17 cents for NS and 30 cents for NL (assuming equal escalation for both NS and NL). So anyone can see the problem with our cost of electricity with Muskrat. Its just too expensive a project.No politics. no naysayer no yaysayer just plain old common sense.

  • Watchdog
    November 01, 2012 - 12:10

    I wish the political parties would stop dicking around on this important issue. If the Consevatives say this is the best deal we can do - then fully back it up, put all the cards on the table and defend it. Putting up a heating bill calculator with no explanation of the number components is either irresponsible or deceitful - that door is wide open. Mr. Martin doesn't want to obcure the debate for average folk with complex numbers, but put them up anyway so that i can hear what the people in the know have to say, instead of asking me to decide based on only one side of the story. On the other hand, we have opposition like the NDPin particular, who will scream for a debate, then use any reason to oppose the debate! They did it in February, now they are threatening to do it again. So are you truly against this deal or are you trying to trip the government for political gain? From government we need transparent leadership, not dictatorship. From Liberals and NDP we need sound opposition, not just opposition. Both sides are falling down on the job.

  • Winston Adams
    November 01, 2012 - 10:35

    Little John, you again say this 38 percent increase- from june 2012 to 2018 is a SMALL increase. And you use history as your calculator as your bills have gone up . I too use history. My bills dropped 42 percent after installing efficient heating. And I helped lower the grid demand a little. Wouldn't any senior perfer my history and shouldn't our govn help them to do likewise? They can do with lower, not higher heating bills. It's interesting that you comment on everything MFs, but my analysis "Bringing efficiency to the Energy Equation" published Wed in the Telegram - you are silent. SILENT. Waiting on your experts ?

    • Abe G
      November 01, 2012 - 12:22

      How much did your heat pump cost to install?

  • David
    November 01, 2012 - 10:15

    No government cares about what consumers pay. They just care about the revenue it takes in. It's the same mindset that sees them not fix roads, and allow people to destroy their own cars driving over potholes and the craters they sign as 'bumps'. It's the same mindset as the creation of casinos when they know gambilng destroys some people's lives. It's the same mentality as when they increase property taxes while simulatnaeously cutting services. In my lifetime, government (in Canada, at least) has become an aggressive, malignant cancer on the tax-paying segment of society.

  • John Smith
    November 01, 2012 - 09:49

    I have a different kind of rate calculator....it's called history. My Electricity bill has increased by 70% since 1998, and will go up by 7% this march, and by a further 5% this coming August. So, that will be over 80% increase since 1998. When you get the naysaying naybobs on talking about the poor seniors freezing in theior homes because they can't pay their bills...why don't they ever talk about what has happened to our rates since the mid 90s??? Imagine if NL Hydro or Nalcor had come out in '98 and said those who pay for power will see their rates increase by nearly 90% by 2013. People would be going out of their minds...yet..that is exactly what has occurred. Yet the Maurices, and the rest don't seem to be at all concerned with that little fact...why I wonder? In response to these never ending rate increases, and the need for expanded supplioes of power the folks at Nalcor came up with Muskrat as the lowest cost alternative. It would see a small increase in rates, then they would stablize...for 50 -75 years!!! They are doing something to help the rate power...before our rates will have increased by 100% since '98.

    • Eli
      November 01, 2012 - 10:14

      I think it's called "inflation". My pension dollar is worth about .50 today whereas it was worth a dollar one time. So the light bill will increase regardless we have oil or hydro. Difference is if we stick with oil we're not stuck with a $7.2 billion dollar debt. Think about that John.

    • david
      November 01, 2012 - 10:17

      And I trust my hydro bill will be tied to my "historical" paycheques. You continue to be one amazing buffooon.

  • Scott Free
    November 01, 2012 - 09:20

    Whomever pays for the study, gets to determine the findings and the outcomes. If a draft set of figures come back unfavourable to suppport government's position; then they are rejected and it's back they go for recalculations. Resubmit until government hears what it wants to hear. Any number higher than 1, can be minipulated and twisted and interpreted to be whatever one wants it to be.Then the Tory spin and be put in motion.

  • dupce
    November 01, 2012 - 08:41

    Facts that may put the Muskrat Falls Hydro project into perspective. -Muskrat Falls (1 Dam) will produce 834 MW at a total cost of 7.2B$ (7,200,000,000$), opening date unknown (not started yet). -La Romaine Hydro Project in Quebec which started in 2009 (4 Dams) will cost a total of 6.5B$ (6,500,000,000$), to be finish in 2020. It will produce 1550MW of electricity. If we do a total comparative cost of the two projects per MW: - Muskrat Falls will cost 8,872,901$ (8.9million$) for each Mega Watts produced. - La Romaine will cost 4,174,694$ (4.2million$) for each Mega Watts produced. That is, the Muskrat Falls project will cost 112% more to build for each Mega Watts as compared with La Romaine. At the end of the line: Q. Who is going to pay? A. Newfoundlanders.

  • Gerry Goodman
    November 01, 2012 - 07:56

    I tried the calculator and was very pleased with the result. I entered $100 and from 2020 to 2030 my bill only went up $4.00 with Muscrat Falls. Nalcor said my rate would go up 2% each year from 2010. This seems to run true till 2020.

    • Gerry Goodman
      November 01, 2012 - 12:07

      When I got over the shock of seeing my light bill only going up $4.00 in ten years I decided to have another look. Nacor said that the cost of power would go up 2% per year for 50 years. Using the 2020 figure for the isolated island option of $133.00, I multiplied this by 1.02 ten times and got $162.12. The Muscrat Falls amount for 2030 is $161.00. No saving for an investment of $8 billion.

  • Cold Future
    November 01, 2012 - 07:54

    Liberals, NDP, PC or just plain old vunerable taxpapers: you should keep the proponents feet to the fire on this one. While this huge majority govenment is preparing to proceed with this very questionable white elephant, we should not let the wool be pulled over our eyes without a challenge. We will pay dearly for the kilowatts we subsidize and send at discounted rates into the mainland including QUEBEC.

  • The MATH
    November 01, 2012 - 07:53

    Lets not get too much absorbed in the cost per kwh from Muskrat falls. It is a key piece of the puzzle that Nlacor and Government are withholding of course but what is just as importnat is the cost to the taxpayers in 2017 through 2030. How much is Nalcor making or losing on the power at the rates they have assumed? This is as much important because if we the taxpayers are subsidizing losses or allowing undue profits to accrue than we are still paying more than we should. The only solution to resolve the issues of what ratepayers and taxpayers are going to have to pay is to subject this monopoly (NALCOR) to some process of public regulation. Normally that is the role and purpose of the PUB but it this case our Government has shut the door tight. They are all convinced that Muskrat Falls is great for thh ratepayers and taxpayers but yet they have covered the project in secrecy and took away the only protection we have as ratepayers and taxpayers. We will just have to wait and see how we are treated by the Monopoly _NALCOR when all the debt is on the books and we have to start paying it off. Do you really believe we live in a democracy?

    • Scott Free
      November 01, 2012 - 08:11

      No, democray is dead in NL! The Secret Society known as the Con Party of NL, a direct disciple of Prorougie Steve's Republican North Party, abolished democracy in NL under the watch of Little Man Dan, during the Danny Damage Era, the predecessor of the Dunderdale Dimwits.

  • Robb
    November 01, 2012 - 07:21

    Of course there is something wrong with it.......according to the liberals and ndp there is something wrong with everything......it is to the point now that they are crying wolf, and people are just sick of it...........even if they had one good word about something they may be half believable......thanks be to god these doomsday jokers are not running things, or there would be nothing done. This, of course is the liberal and ndp way, try to poke holes in everything in an effort to make the govt look bad.....well, fortunately, the intelligent ones just don't believe the lies and inuendo that you spew, so just give it a break....or.....continue it for my morning laugh.

    • Eli
      November 01, 2012 - 09:15

      Robb, there are those of us who don't believe the lies and inuendo your government is spewing. I'd bed dollars to donuts some PC MHA's are uncomfortable with this but have been read the riot act to keep quiet.

  • tom
    November 01, 2012 - 07:11

    I guess the govt. would have no issues giving us a 'rate guarantee' that the calculator will be accurate, right?

  • Maurice E. Adams
    November 01, 2012 - 07:02

    The loan guarantee was supposed to save several hundred million dollars, but costs have gone up by $1.2 billion. So how can it be said that the increase in costs have been offset by the loan guarantee and that "the costs between DG2 to the ratepayer and DG3 have not increased"?.... But then again, on VOCM with Paddy Daley yesterday, Ed Martin "confirmed" to a caller that Holyrood, on average burns 6,000 bbls of oil a day..... When firm written information from Nalcor itself shows that on average, over the last number of years, that figure is 50% TOO HIGH (on average Holyrood burns about 4,000 bbls a day). ...... Furthermore, EVERY YEAR it's UNUSED "FIRM" energy capacity equals more than the 40% (2 terawatts) of energy that we will pay $8.4 billion for to get from Muskrat Falls ---- Yes, "UNUSED"......... Holyrood's "FIRM" energy capacity is 2,995 GWh annually, and last year it was used to provide island ratepayers 875 GWh (12% of out total needs). ......... More than 2,100 GWh capacity (from Holyrood alone) went unused. Another 694 GWh were spilled from the island's hydro sites. --------- Yet, somehow it is supposed to make sense to spend $8.4 billion to bring 40% of Muskrat's 4,500 of firm GWh (or 1,800 GWh) of energy from Labrador to replace WHAT? ------ 2,100 GWh of Holyrood's already UNUSED capacity.

  • Cold Future
    November 01, 2012 - 06:42

    If the esalation of the electricity for NL is forecast to be higher than the Canadian average which should be in the range of 1 % per annum then the utility is not doing its job of providing infrastructure that will do just that. We have a large hydroelectric based infrastructure in place and we have kept within the natrional average parameters since the construction of the Baie Despoir facility in the late 1960's. Any comparison with savings related to ficticious option cost is pure propaganda. Like the supermarket doubling the price of an item and telling you that you have saved 70% off the usual price-this kind of strategy of selling the project like door to door vacuum cleaner salesmen insults the intelligence of the taxpayers.