NEWFOUNDLAND AND LABRADOR
The mayor of Holyrood is suggesting the provincial government should weigh the pros and cons of purchasing Newfoundland Power from Fortis as a means to address rising electricity bills.
At the Tuesday, Sept. 11 council meeting, Mayor Gary Goobie addressed his colleague with a prepared statement. Council later agreed it would send a letter to Natural Resources Minister Siobhán Coady and Premier Dwight Ball asking them whether such a proposal would be given further consideration.
Goobie said he’d been giving the matter a lot of thought in light of the anticipated increase in electricity rates tied to the massive $12.7 billion Muskrat Falls hydroelectric project.
“Unquestionably, this issue has created a ruckus within political circles,” he noted. “However, as of late, nobody has come forward with a definitive plan on how ratepayers will avoid a significant increase in their electricity bills, which some predict could double.”
As Goobie sees it, the arrangement of Newfoundland and Labrador Hydro delivering electricity to Newfoundland Power, who then sells it to consumers, places ratepayers at a disadvantage.
“Simply put, the shareholders and executives of this company are making big profits, while at the same time, the ratepayers of this province will be expected to pay more,” he said. “Clearly, there’s something wrong with this picture.”
By creating a new Crown corporation and removing the middleman from the equation, power from Muskrat Falls could be sold directly to the ratepayer, he said, adding he did not consider this to be a new concept.
According to the mayor’s own calculations, rate mitigation to limit residential customer rates to 18 cents per kilowatt hour would require funding in the range of $280 million to $350 million dollars per year. With Newfoundland Power hold assets of approximately $1.4 billion, Goobie believes it would be fiscally prudent to consider the option of purchasing the electric utility instead of spending $7-$9 billion over a 25-year period on rate mitigation.
Goobie went on to note British Columbia, Manitoba and Saskatchewan all have similar arrangements, with residents in those provinces paying some of the lowest electricity rates in Canada. The mayor also suggested Ottawa could have a role to play in helping with this.
Councillor Kim Ghaney shared the mayor’s concerns.
“I honestly don’t know what the answer is,” she said. “Maybe (government) needs an all-party committee. I don’t know. But something certainly needs to be done, because nobody is going to survive those rates … Our population is going to go down the tubes.”
Last week, Premier Ball and Minister Coady announced the Public Utilities Board would be tasked with taking a look at electricity rates and how to keep them manageable as the province begins to wrestle with the full cost of Muskrat Falls.
The Compass contacted the offices for both the Natural Resources minister and the premier Wednesday seeking comment on the Holyrood mayor’s proposal. A written response from Coady did not directly address the concept of purchasing Newfoundland Power, though she did state all options will be considered to address the issue of rate mitigation.
“The challenges of the Muskrat Falls Project have always been a priority of this government,” the minister wrote. “A commitment has been made to mitigate potential increases in costs due to Muskrat Falls. Step one was to better manage the Muskrat Falls project – to get costs and budget under control, to ensure the project was finally on track. Step two has been to manage the cost of the project. All options are being considered to save money, generate revenue and address funding and operations.
“As step three in the process, the Public Utilities Board has been asked to examine options to mitigate Muskrat Falls. Government has committed to releasing the reports publicly and will use this information to fully inform the final approach to the cost of Muskrat Falls.”
Karen McCarthy, vice-president of communications and corporate affairs for Fortis, told The Compass in an email the company has no plans to sell Newfoundland Power, noting its roots in the province stretch back over 130 years.
“In fact, we stand on our record of being a reliable utility which has always kept customer costs as low as possible,” she wrote. “Today, Fortis has grown across North America with utility operations in 17 locations in Canada, the United States and the Caribbean. Newfoundland Power, like all our utilities, enjoys the benefits of being part of such a group where best practices are shared in the interest of always ensuring our energy is delivered reliably, safely and at the lowest cost.”