Electricity users on the island of Newfoundland have started paying for Muskrat Falls
With their July electricity bill, Newfoundland Power customers have started paying for Muskrat Falls, although bills have yet to increase significantly.
In a July bulletin, Newfoundland Power said power bills are expected to fall 6.4% as part of the annual rate stabilization adjustment, which reflects the cost of generating electricity.
Instead, this decrease was offset by a 6.1 increase in electricity rates so that Newfoundland and Labrador Hydro could begin to recoup the cost of Muskrat Falls, the $13 billion hydroelectric megaproject that exceeds by several billions the budget and years of delay.
This means that for residential customers, electricity rates will decrease to 12.346 cents per kilowatt, although the base customer charge will increase slightly from $15.81 to $15.83. According to a spokesperson for NL Hydro, around 6% of electricity bills will now go to what it calls a “tariff mitigation fund”.
The spokesman said NL Hydro expects the rate increase to result in $43 million this year – a tiny fraction of the cost of the project.
NL Hydro applied to the Public Utilities Board to approve the rate increase in May. In a letter, Minister for Energy, Industry and Technology, Andrew Parsons, backed the increase, although he asked NL Hydro to keep electricity rates “as close as possible current levels”.
Province Amends Order-in-Council
Muskrat Falls is not yet fully online – largely due to software issues with the Labrador-Island Link transmission line – and an Order in Council has stated that ratepayers on the island of Newfoundland will not start to pay for the project until the project is fully commissioned.
The provincial government amended this order so that NL Hydro can begin collecting costs associated with Muskrat Falls once the project is “almost” in service.
In June, NL Hydro said the project should finally be completed by the end of the year.
In an interview with CBC News, interim Progressive Conservative Party leader David Brazil said the decision to start recovering the cost of Muskrat Falls from consumers should have been delayed.
“There was an opportunity here for people to get some relief from their electric bills and this administration chose not to do that, not to help people while they’re struggling,” he said. he declared.
In a statement, Parsons said the rate cut was not an option and would have resulted in higher borrowing costs for Muskrat Falls.
“Reducing the rate for one year only to increase it significantly the following year is not consistent with rate mitigation and also places an increased financial burden on taxpayers in one year,” Parsons said.
“Reasonable” decision: Consumer Advocate
Brazil said his party was unaware Muskrat Falls payments would begin in July and criticized the government for not being more transparent.
“Why would you do it now?” Why don’t you share it with the people of the province in advance? ” He asked.
Newfoundland and Labrador consumer advocate Dennis Browne said the decision to start collecting the costs from consumers was “reasonable.”
“We’re in a financial hole because of Muskrat Falls, and what’s happened is to stabilize rates, we’ve been doing rate stabilization efforts,” he said.
In February, the provincial and federal governments signed a complex agreement to mitigate the worst of Muskrat Falls’ financial impact. Browne noted that even with the deal, the provincial government will have to pay hundreds of millions to stabilize electricity rates.
“Muskrat Falls would cost us $0.23 per kilowatt, and that’s out of reach for most people, and that’s why we’re looking at easing rates,” he said. “It was part of a rate mitigation effort, and I accepted it as part of that.”
Learn more about CBC Newfoundland and Labrador