Online calculator for Muskrat Falls raises questions for project critics

ST. JOHN’S, N.L. – Opposition leaders in Newfoundland and Labrador raised questions Wednesday about the credibility of an online calculator for the price of Muskrat Falls power as they called for clearer answers on rate hikes.

Premier Kathy Dunderdale all but sanctioned the proposed hydro megaproject in Labrador on Tuesday despite growing cost estimates that will see its construction top $7.4 billion.

The Progressive Conservative government is to officially decide in coming weeks whether to approve Crown corporation Nalcor Energy’s plan with private utility Emera (TSX:EMA) to harness power from the lower Churchill River and bring it to Newfoundland and Nova Scotia using subsea cables.

But Nalcor has repeatedly balked at confirming how much residential power rates, now typically about 11 cents per kilowatt hour as stated on utility bills, would rise.

The government instead posted Tuesday an online calculator allowing customers to input their monthly utility charges and forecast costs through to 2030. The results compare Muskrat Falls versus continued use of the oil-fired power plant at Holyrood, N.L.

For a monthly electricity bill of $200, the calculator concludes that a customer would save $3,811 from 2016 to 2030 using Muskrat Falls power.

NDP Leader Lorraine Michael said the calculator is a gimmick that reaches far into the future to offer misleading reassurances without breaking down the numbers.

“I’m really upset with the game that government is playing with the public right now,” she said Wednesday.

“You can’t predict that far into the future, and any economist who has been talking about these issues over the last couple of years is saying the same thing.”

Michael said the calculator also flies in the face of what Nalcor officials told opposition members in a technical briefing on Tuesday.

“What we were told yesterday … is that the cost per kilowatt hour to the consumer is going to involve not just the cost of the generation of the electricity but also paying off the debt.

“And they said they could not give us the figure and won’t be able to give a figure until 2017 when the power starts moving.”

Liberal Leader Dwight Ball said the calculator seems to offer up numbers that reflect lower Muskrat Falls rates than those ranging from about 14 to more than 16 cents per kilowatt hour that the government has mentioned in recent months.

Nova Scotia Liberal Leader Stephen McNeil has stressed that his province needs more detail on how consumers will be billed before it signs on to Muskrat Falls. Emera has until July 2014 to opt out of the deal that would give Nova Scotia 170 megawatts of energy a year or about 10 per cent of its total needs for 35 years.

At peak, the Muskrat Falls dam and power house would be capable of producing 824 megawatts.

Natural Resources Minister Jerome Kennedy said Wednesday that although the price tag for Muskrat Falls has risen $1.2 billion since 2010, that jump isn’t reflected in the calculator’s rates because costs to consumers will be offset by a promised federal loan guarantee.

Terms of that deal are not final, however, and no details have been released.

Nalcor president and CEO Ed Martin said breaking costs down per kilowatt hour only leads to confusion.

“When we compare the costs to the consumer … it has to be an all-in cost” that reflects various power sources and other expenses that add up to a blended rate, he told a news conference Wednesday after releasing a study on wind power.

“We’re not going to get into a conversation with three or four or five different rates, blending rates, escalating, de-escalating. I’m not doing that in public because that’s not what the ratepayers need to see.

“The ratepayers need to see what their monthly bill looks like,” he said. “The rate calculator is on and accessible, and I encourage people to go on 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.”

But late Wednesday, Nalcor released a chart indicating that Muskrat Falls power in 2020 will cost Newfoundland utility customers 16.1 cents per kilowatt hour compared to 16.6 cents for the Holyrood plant and other sources. That would translate into a monthly bill of $244 for Muskrat Falls, assuming average consumption of 1,517 kilowatts per month, versus $252 for the oil plant option.

By 2030, Nalcor says the Muskrat Falls rate will be 16.6 cents per kilowatt hour versus 19.5 cents, a difference that reflects projected oil prices should Newfoundland rely on its Holyrood site.

Nalcor and the government also released Wednesday a study by Manitoba Hydro International that says using wind and thermal power for Newfoundland and Labrador’s future energy needs would cost $3.5 billion more over 50 yearsthan Muskrat Falls.

The study also points to the need for backup power because wind generation is not as reliable.