Guest Post by PlanetNL
– Atlantic Canada Energy Rates – the Deception of Parity
Muskrat Falls is concerned, the Government, regardless of party, has a clear
track record of getting the facts wrong. The trend continues as we transition
toward the operations and cost recovery phase of project. The latest misguided gem – being relied upon
by NL Hydro at the General Rate Application hearings last week – is Premier
Dwight Ball’s stated rate target of 18 c/KWh for residential rates. The Premier defends this as being comparable
to expected rates in the other Atlantic Canadian provinces. It doesn’t take much research and insight to
demonstrate that the Premier couldn’t be more wrong on this issue.
PEI market has developed over 25% on-island wind-generated supply (second only
to Denmark in this measure) to displace on-island thermal generation while the
balance of electricity is purchased from New Brunswick Power. Distributor, Maritime Electric (owned by
Fortis), uses a two-step rate design where the first 2000 KWh of a billing
month costs 14.37 c/KWh and anything in excess of that is 11.42 c/KWh.
just two weeks ago, the Province of PEI is providing residential rebates of 10%
on the first block of power, bringing the effective rate on that 2000 KWh block
down to 12.97 c/KWh. The new Clean
Energy Price Incentive is intended to promote electric usage (possibly to allow
more wind power development) but also applies to propane, firewood and wood
may infer that an electric heated home – the benchmark ratepayer most common
here in the Newfoundland Island Interconnected System – would likely experience
an average energy cost of about 12 c/KWh.
No evidence could be found to suggest long-term rates might increase
more rapidly than inflation.
installed smart meters on all homes, Nova Scotia Power (owned by Emera) has
adopted time-of-use rates of 8.4 c/KWh on weekends and weeknights (11pm-7am) and
15.3 c/KWh during weekdays (7am-11pm).
During December through February, most of the on-peak period is billed
at an even higher rate of 19.7 c/KWh. We
can reason that our benchmark electric heated residential customer might
average about 13 c/kwh annually.
Scotia’s high on-peak rates accurately reflect the use of fossil fuel when high
cost thermal plants must be added to the grid to meet load demands. Going forward, the import of Muskrat Falls
power will displace a large portion of NS thermal energy generation leading to
inevitable rate redesign for 2021 and beyond.
Recovery of the $1.7B capital cost of the Maritime Link and $0.8B in the
Labrador Island Link are likely to raise the off-peak rates but the on-peak
rates should come considerably down as fossil fuel usage gives way to very cheap
Muskrat power. We might reasonably expect
NS Power rates could step down about 10% overall post-2021. The example customer above could yield an
average 12 c/kwh annual rate.
to the expected rate decreases of 2021, the NS Power Rate Stability Program
indicates rate increases of only 1.7% in 2017, 2018 and 2019; this following a
rate decrease in 2016 and no change in 2015.
The pattern here is exceptionally stable with even brighter days ahead
thanks to the lucrative 35-year supply contract from Nalcor.
is the most directly comparable electricity market of the three, having a
single energy rate, no time-of-use metering, a similar proportion of thermal
energy production, and a similar reliance on domestic electric heating. In fact, one could consider neighbouring New
Brunswick a highly relevant control sample: Nalcor and the NL Government
insisted thermal energy from Holyrood was such a huge risk that we urgently
needed an alternate energy source but NB Power made no major changes to its
energy supply and would continue a reliance on fossil fuel.
NB Energy and Utilities Board just approved this month a 0.88% increase in the
domestic energy rate to 10.91 c/KWh.
Meanwhile NB Power touts a long-term rate stability plan that
anticipates 2% rate increases in each of the next 5 years and just 1% in each
of the following 5 years. Part of the
residential rate increase is not for overall increased utility cost but to
reallocate more fairly the distribution of costs between residential and
commercial customers, as the latter have been historically subsidizing the
former. Fundamental rate stability at or
below inflation is excellent.
Also related to this Post:
Busted – Lie Exposed
survey of Atlantic Canada electricity rates and projections for 2021 and beyond
clearly shows a pattern of very stable and consistent rates where dramatic
increases are improbable. Average
increases should be anticipated to be within the typical forecast consumer
price index for annual inflation of 1.7%.
A reliable expectation for the average energy rate among the 3 provinces
in 2021 should be about 12 c/KWh.
Clearly, Premier Ball could
not be more wrong in justifying our rate increase to 18 c/KWh on the basis of
expected parity with the other provinces of Atlantic Canada. Equally, for NL Hydro executives to hold out
this argument on his behalf in hearings before
the Public Utilities Board exposes the extent to which they are willing to play
rate of 11.39 c/kwh, there isn’t much room left for further rate increase over
the next three years to match the true average expected regional rate of 12
c/KWh. If the Premier genuinely intends
to desire rate parity within the region, then only small inflationary rate
increases of no more than 2% per year are allowable to maintain parity.
true rate parity target he was aiming for is 12 c/KWh. He should also direct Hydro to immediately
reduce their rate models before the PUB.
If he is not capable of that, then how about admitting he just hasn’t
got a single idea up his sleeve about how to deal with the coming Muskrat
cost-recovery crisis instead of promoting malicious deception.