Don’t worry. Be happy.
The plan to hold electrical rates steady despite Muskrat Falls will turn up, the government says.
So, how much are we looking at here?
“Hydro would be required to pay the actual costs billed to it in accordance with the Muskrat Falls Power Purchase Agreement and Transmission Funding Agreement,” Newfoundland and Labrador Hydro told the PUB.
Here’s where it gets interesting: neither Premier Dwight Ball nor Windsor Lake byelection candidate Paul Antle are talking about mitigating rates and holding them at an Atlantic average. That’s what was on the table before — but now, both have upped the ante, saying there will be no rate increases and no increases in taxes as a result of Muskrat Falls.
Not a moderate increase in power rates to the levels expected in the other Atlantic provinces — no increase.
They ordered the PUB to review the project and report later. That’s not a solution — that’s just hot air.
Here’s another piece of evidence from Hydro: “It is estimated that each one cent per (kilowatt hour) in rate mitigation provided to customers will require approximately $70 million per year in funding. Therefore, rate mitigation to limit residential customer rates to 18 cents per kWh will require funding in the range of $280 million to $350 million per year.”
But remember: we’re not talking about 18 cents anymore. We’re talking about 13 cents, if government politicians can be taken at their word.
And that means finding $700 million a year somewhere.
This year, the provincial budget was $7.7 billion — meaning that finding the necessary $700 million per year is close to nine per cent of the province’s entire annual spending.
It’s equal to almost half of every single dollar the province collects in income tax — it’s the lion’s share of the $974 million the province is expecting to make this year in oil royalties.
Can you cut 10 per cent of the province’s costs to make up the money? That’s far-fetched, because of the huge blow that would be to the economy as a whole.
It’s especially difficult because the province has agreed with its public-sector unions to no major layoffs, and a huge portion of provincial spending is on labour costs.
Can you find the money, as some have suggested, by transferring oil revenues from the projects the government owns shares in to fund the shortfall?
Maybe. But that’s really just robbing Petro to pay Power. Moving money around is only a shell game; those oil revenues are already part of the overall budgetary picture.
Wednesday, the provincial government said it was going to announce a plan — it turned out the plan was not to solve the problem, but to pass the buck. They ordered the PUB to review the project and report later. That’s not a solution — that’s just hot air. The PUB can’t make legislation, can’t direct spending, can’t really do anything but review the mess.
If there is a solution, if anything like one even exists, it’s time to explain it.