Electricity users on the island of Newfoundland have started paying for Muskrat Falls | UKTN News

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The Muskrat Falls hydropower project is years behind schedule and billions over budget. (UKTN)

With their electric bills in July, Newfoundland Power customers have started paying for Muskrat Falls, although bills haven’t risen significantly yet.

In a July newsletter, Newfoundland Power said electricity bills would drop 6.4 percent as part of its annual stabilization adjustment, which reflects the cost of electricity generation.

Instead, that drop was offset by a 6.1 hike in electricity rates, allowing Newfoundland and Labrador Hydro to recoup the cost of Muskrat Falls, the $13 billion hydroelectric megaproject that is billions over budget and years behind. scheme.

That means for residential customers, electricity rates will drop to 12.346 cents per kilowatt, although the base rate for customers will increase slightly from $15.81 to $15.83. According to a spokesperson for NL Hydro, about six percent of the electricity bill now goes to what it calls a ‘tariff reduction fund’.

The spokesman said NL Hydro expects the rate increase to bring in $43 million this year, a fraction of the cost of the project.

NL Hydro asked the Executive Board in May to approve the rate increase. In a letter, Energy, Industry and Technology Secretary Andrew Parsons supported the increase, although he asked NL Hydro to keep electricity rates “as close to current levels as possible.

Province changes order in council

Muskrat Falls isn’t fully online yet — largely due to software issues with the Labrador-Island Link transmission line — and an order in council dictated that taxpayers on the island of Newfoundland would not start paying for the project until the project was fully up and running. taken.

The provincial government has amended that Order in Council so that NL Hydro can begin collecting the costs associated with Muskrat Falls once the project is “near” commissioning.

In June, NL Hydro said the project was expected to be completed by the end of the year.

In an interview with UKTN News, progressive conservative interim leader David Brazil said the decision to reclaim the cost of Muskrat Falls from consumers should have been delayed.

“There was an opportunity here for people to get some respite when it came to their electricity bills and this government chose not to do that, not to help the people when they are going through a hard time,” he said.

A person wearing a blue shirt and blazer stands on the steps of the Confederation Building.
PC interim leader David Brazil said the government should have been more transparent about the decision to make taxpayers pay for the Muskrat Falls mega project. (Garrett Barry/UKTN)

In a statement, Parsons said lowering the rate was not an option and would have resulted in higher borrowing costs for Muskrat Falls.

“Reducing the rate for one year only to significantly increase it the next year is inconsistent with rate reduction and also puts a greater financial burden on taxpayers one year from now,” Parsons said.

Decision ‘reasonable’: consumer advocate

Brazil said its party was unaware that Muskrat Falls payments would begin in July, criticizing the government for not being more transparent.

“Why implement it now? Why not share it with the people of the province beforehand?” he asked.

A person wearing a blue shirt and black blazer is standing outside on a lawn.
Dutch consumer lawyer Dennis Browne says it makes sense to recoup the costs of Muskrat Falls. (Garrett Barry/UKTN)

Newfoundland and Labrador consumer attorney Dennis Browne said the decision to collect costs from consumers was “reasonable.”

“We are in a financial hole because of Muskrat Falls, and what has happened is to stabilize rates, we have made an effort to stabilize interest rates,” he said.

In February, the provincial and federal governments signed a complex agreement to mitigate the worst financial impact of Muskrat Falls. Browne noted that even with the agreement, the provincial government will have to pay hundreds of millions to stabilize electricity rates.

“Muskrat Falls would cost us $0.23 per kilowatt, which is out of the reach of affordability for most people, which is why we are in the process of reducing tariffs,” he said. “This was part of an effort to reduce speed, and I accepted it as part of that.”

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