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Concentrate on the transmission line

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When ratepayers on the island will be forced through provincial legislation to pay in the 20 to 30 cent per kilowatt hour range for Muskrat Falls-generated power (and also forced to pay for two to three times as much Muskrat Falls energy as actually needed), who in their right mind would sell hundreds of megawatts (or more) of excess Upper Churchill recall power to or through Quebec for crumbs (at two to three cents per kilowatt hour)?

Who?

Nalcor — working for us.

At the company’s recent annual general meeting in St. John’s, Nalcor’s CEO Ed Martin made it clear that even though costs associated with the dams and powerhouse are recovered from our children and grandchildren at an increasing rate, the power purchase agreement between Nalcor and Newfoundland and Labrador Hydro keeps electricity rate increases relatively stable (increasing at about 1.5 to two per cent annually) because the transmission line cost recovery keeps going down starting on Day 1 and keeps going down every year thereafter, and that averages down the overall blended power purchase agreement rate.

It is this blending in the power purchase agreement, Martin explained, of the continually lower transmission line cost recovery with the continually increasing dams and powerhouse cost recovery that allows total rate increases to stay relatively stable.

It is clear then, from the above, that the continued upward pressure on rates is caused by the dams and powerhouse cost recovery.

Putting a hold then on an unneeded and unaffordable Muskrat Falls dams/powerhouse will not only decrease the initial Muskrat Falls rate shock, but year after year (and every year thereafter) rates can go down — not up.

When the transmission line is completed (in 2017) the Upper Churchill’s recall power, instead of being sold at two to three cents per kilowatt hour through Quebec (and potentially all or a portion of the former 225 MW Twinco Block) can flow to the island and can meet our commitments to Nova Scotia as well as most (if not all) of our Holyrood energy replacement requirements. (Holyrood provides, on average, less than 22 per cent of what we will be forced to buy from Muskrat).

Furthermore, if Nalcor wins the court case that is now before the Quebec courts (decision expected around June), the current 300 MW of recall power is expected to increase and will also be available for distribution to the island.

And if we lose?

Critics claim that Muskrat Falls will only be able to generate about 160 MW of power.

In either case, it is clear that the most expensive, the most problematic Muskrat Falls dams/generation facility is not needed and makes no sense.

Given the province’s fiscal situation, putting a hold on the Muskrat Falls dams/powerhouse/spillway while freeing up funds to complete the transmission line, to address the province’s fiscal crisis and to meet the province’s essential program requirements is (to quote former premier Danny Williams)  a “no-brainer.”

Maurice E. Adams

Paradise

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