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Since 2010, everyone behind the Muskrat Falls project starting with Danny Williams and NALCOR boss Ed Martin, through Kathy Dunderdale, to Dwight Ball and now Andrew Furey and NALCOR boss Jennifer Williams haven’t been able to figure out how to pay for their love-child except to force local taxpayers who are the same as ratepayers to foot the bill.
That’s been the only scheme from Day One in 2010.
Same scheme announced Thursday.
A guvmint news release and newser said that the rate mitigation plan is now “finalized”, which is like saying the project itself is “finished” when it still doesn’t work as planned.
The Liberals brought no change from the Pea Seas and both relied through the whole horror-show on NALCOR. The only difference is the Liberals promised rate mitigation, the moon, the stars and getting rid of NALCOR but they delivered precisely none of it. The official cabinet orders to go with Thursday’s announcement still tell NALCOR what to do because - as much as they have stopped calling the thing NALCOR publicly - the crowd currently running the place have not been able to get rid of the thing. If they cannot do something as simple as killing the demon NALCOR’s name, then they cannot lessen what terror the demon’s spawn will bring.
They can just lie about it, which is what they have done. Thursday’s announcement made it sound like your electricity bills won’t be going up by much and that they will not double as they originally would have.
Not true. They will go up by *at least* two and a quarter percent, every year guaranteed from now until 50 years hence And they will double what they were in 2021 and then go beyond double until the end. Electricity rates will just take *longer* to double than under the original version of the same old scam. People in Nova Scotia will get electricity rates of no more than 17 cents a kilowatt hour well into the next decade while yours will keep going up. Nova Scotians will get Muskrat Falls electricity for free.
*You* meanwhile are paying for *their* benefit, exactly to the letter of the original deal with 2010 thanks to Danny Williams and delivered by Andrew Furey with a bit of help from Justin.
At the newser on Thursday, they even started tossing out little graphics for social media with made-up numbers about how much an imaginary electricity bill will be with and without “mitigation.” The very most we can say is that your bill will go up by at least that much because there are other things NALCOR wants you to pay for. Like Holyrood and the extra turbine at Bay d’Espoir. There’ll be routine maintenance and other costs.
And then there’ll be hydrogen. The hydrogen development action plan - released two years after hydrogen development action started - admits officially what was clear from the outset. There’ll be subsidies and lots of them because hydrogen cannot produce anything the market will buy without taxpayers in Newfoundland and Labrador lowering the price so others can benefit. There’s a mention of federal cash in the “plan” but there will be provincial cash as well. NALCOR, for example, will power the new Holyrood plant with hydrogen, which is literally the most costly fuel there is. 100% subsidy. There’ll be other subsidies too, like for transmission towers needed to move the electricity from the windmills to the hydrogen plants or from the electricity grid to the plants. And since it will all be connected up, it will be easy to adjust electricity rates to cover some of it. Subsidy again.
Just like Muskrat Falls, no one has done the math to show how a couple of hundred thousand households - average income $70,000 - will pay the $800 million for Muskrat Falls alone and on top of that pay other taxes and pay for all the other stuff in their electricity rates and on top of all that subsidize projects that in just John Risley’s one alone needs as much electricity as the entire generating capacity on Newfoundland right now.
NALCOR needs a lot of money just for Muskrat. It used to be $800 million a year to cover all the costs and the interest and the profits for everyone involved, including the provincial government. The guvmint crowd claimed they’d got that down to $631 million, according to the announcement in 2021 of a rate mitigation miracle, the details of which are in the chart at the top of this column.
On Thursday, they were back up to $740 million, which is as good as saying $800 million with numbers this big. There was supposedly a couple of hundred million from the feds in there from Hibernia, originally. Not clear if that’s ever been shifted over to NALCOR or will ever be just like we don’t know what happened to the 2019 Hibernia money the feds gave Dwight Ball for mitigation or something. No sign of it except being spent already every year it comes in on other stuff.
The scheme Furey announced a couple of years was supposed to see the province give up its hidden tax but only for a few years. That’s part of Thursday’s announcement. The orders-in-council tell NALCOR to pay most of the costs starting this July first and keep doing it until 2030. But since we are back up to $800 million there’s no clue where NALCOR will find all the cash it needs. Nary a sign. Not so much as a rabbit button let alone the moose plop needed.
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You can find hidden cash if you cast your mind back to 2021 when Andrew Furey proudly told you your rates wouldn’t double right away but they would have to climb almost three cents in the meantime before the not-doubling-yet thing happened. “No coincidence, then,” as last year’s column explained, “that in the subsequent two years, your rates have gone up by enough (a couple of cents) to get you to almost almost exactly that initial amount” Furey’s scheme needed. It’s just been in smaller jumps so that you don’t notice it but that rate increase of more than 10% for Muskrat Falls is not something the Andrews talk about.
And it’s been hidden besides being unspoken of. Last summer, you were supposed to get a six percent *drop* in your bill but instead, NALCOR kept your refund and left rates where they were. Your bill never changed one way or the other, which is likely why you either never noticed or forgot about it. That was the plan.
Under the Andrew Furey-Justin Trudeau scheme - which is the same as the Danny Williams-Ed Martin scheme - rates will keep going up and up and up from here by the guaranteed 2.25% every year. At least. From now until 2030. And after that no one has any idea. No crystal ball, said energy minister Andrew Parsons.
Where is all this money coming from? In case you didn’t know, just look in the mirror. Look at your children. And their children whether they have them now or not. People born in the 1990s will be in their 70s before they pay the last of the Muskrat Falls bills. The rest of us born before that will die without seeing the end of it. And the ones born after 2013 will be pensioners or almost pensioned off before the thing is paid off.
And since all of this - Muskrat, subsidies to hydrogen and so on - will be tied to electricity rates, it will come from consumers. What doesn’t come from electricity rates will come from government borrowing. There is literally no other source of cash. You’ll pay for that too through your taxes. One way or another you and your offspring and theirs are on the hook for more and more and more.
Now you understand why it’s so important that the crowd running this place keep spending wildly more than we can afford. Started under Danny Williams in 2006 and kept going under the Liberals. Muskrat Falls and God forbid Churchill and Gull are extra. Just paying the intetest on that debt is now the second or third largest thing that government pays for. Ahead of education with only health care - already costing all of government’s tax haul and roughly half of the whole budget - so far out in front of the spending room no one can ever catch it. Your pockets are the only ones the guvmint will dig into for the cash to cover it. Left pocket or rates or right pocket of taxes doesn’t matter. The Muskrat will burrow through from either side at the same time, the claws sinking deeply into the flesh of everyone in the province. They are the only people paying for this, whether from electricity rates or from money the government borrows to give NALCOR.
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The orders in council announced on Thursday - 062 and 063 for 2024 - tell NALCOR to take the money they need beyond the two and a quarter percent “through Nalcor Energy's own sources.” Thing is we do not know what those resources are. There was supposed to be cash from the federal government, filtered through the provincial treasury to help pay for stuff up the front end. There’s never been any sign in the budget the cash was going to cover rates. There hasn’t even been a fund put aside to collect interest for a couple of years that we could say would eventually go to NALCOR. Exports? Not enough. Oil? Not near enough
We might try to figure out how much NALCOR has to keep rates down at least up the front end except that NALCOR’s financial statements are far from clear or easy to read even if you are familiar with financial statements. Plus, these companies must all stay profitable in order to keep their own financial reputations intact. So, there’s always been a limit to how much NALCOR could take to pay for Muskrat Falls without adding to rates or borrowing more.
That remains the stupidity of Muskrat Falls obvious from the beginning to anyone with eyes to see and a brain to think: making people with an average income of $70,000 per house cover a $15 billion project so people in Nova Scotia could get free or heavily subsidized ‘lecky. More recent expert evidence given to the Public Utilities Board - lovely new logo and all - for this current rate application from Newfoundland Power says that the rates should go down to reflect the lower cost of marginal extra electricity now that there isn’t all that expensive fuel oil to pay for. Buddy never got the memo. Should but won’t because Hydro needs all that cash to pay for Muskrat Falls. That break you should have gotten but won’t was always part of the scheme.
Caught in the middle between NALCOR and Andrew Furey on the one hand and the outrage of consumers over the ever-rising cost of living they will cause with this moronic scheme is a company that literally had nothing to do with the Muskrat Falls scam. Newfoundland Power delivers electricity to consumers on the island and, thanks to laws changed in 2012, cannot buy the cheaper electricity available anywhere else and bring it to the island along the Nova Scotia link or the one to Labrador in order to serve its customers lowest cost power consistent with reliable service as the provincial law actually demands. There is a metric scitte-ton of electricity outside Newfoundland and Labrador that is cheaper than Muskrat Falls but Newfoundland Power legally cannot do it, thanks to the NALCOR crowd and politicians.
Yet Newfoundland Power will face the fury of people paying too much for everything and now paying way too much for electricity. NP delivers the electricity to your house so they send out the bills so they get the grief. Now the company will also be faced with anger when people misunderstand that the 2.25 percent cap on the cost for Muskrat Falls is not the cap on *any* increase by anyone.
Lots of people will make that mistake if only because the government crowd cannot explain what they are doing even for the bits that affect NALCOR. The news release says that the 2.25% cap is for “cost recovery associated with the Muskrat Falls project,” which has been the plan all along and what this column is based on.
OC2024-062, that is the legal order to NALCOR, says that the corporation “shall structure any application for utility rate increases such that retail rate increases to domestic rate class customers attributable to Newfoundland and Labrador Hydro [not just for MF. (Ed)] shall be targeted at 2.25 per cent per year.” Anything else, NALCOR has to pay for, which means inevitably government will pay for it with more money it doesn’t have.
Those two things are not the same. CBC sort of reported what the OC says, likely because someone at the newser told them that but didn’t notice the news release said something else. The CBC wording makes it worse, though because it makes it sound like all rate increases are capped, not just the one that comes from Hydro. The Ceeb story says incorrectly that the “proposed plan is to cap the residential domestic rate increases on the island of Newfoundland at 2.25 per cent annually — called rate mitigation — until 2030.”
They add that it “will cover Muskrat Falls and Newfoundland and Labrador Hydro costs” but people think Hydro and Newfoundland Power are the same now, like the medical board and the medical association.
Not so.
And this is where Newfoundland Power can get royally screwed. The company will need money for its distribution system and all the things that go to keep the lights on from their end. Legit expenses. But the public won’t care who is responsible for the rate increase NP legitimately needd. People will only hear cap and believe it is one small cap always for everyone on everything related to electricity. And the one that wants *more* than the cap - in this case inevitably Newfoundland Power - will always be the one to take the political hammering for supposedly being greedy it screwing consumers.
Don’t think that people behind this Muskrat Falls scam didn’t think of that already. Thursday’s announcement was political in the sense that the folks at the news conference knew full well they were putting the screws to not just Newfoundlanders but to Newfoundland Power as well, one way or the other. What the crowd at NP and Fortis will do is another question but make no mistake, we are just at the start of a very hard journey down a long dark road for everyone in this province.
Good analysis, Ed, but Nfld Power is no angel in this boondoggle of Muskrat Falls. They were mostly silent on the known poor reliability risks. Silent on a full analysis of alternatives to Muskrat.They were silent as to the impacts of insufficient transmission capacity of island generation to the Avalon. They have a very poor Conservation Plan, and promote small measures for energy savings to customers, and which is seen as gifts with discounts for efficient lights, but no gift, as all is paid from the customers power bill. They spent large sums on studies tailored to promote minimum savings on conservation measures. They work hand in glove with Nfld Hyydro to do this, for decades. Even high salaries for their efficiency engineers are a burden on the ratepayer, when promoting poor efficiency measures. I have never seen them promote the high wind resource we have for our power grid. Never promote the more efficient substations and power lines when , going forward, efficient heat pump systems become more frequently used. They generally prefer high cost generation and transmission where the costs are passed along and generates more profits . Nfld always has the worst or second worst efficiency programs in all of Canada, as rated yearly by Carlton University.
Smoke and mirrors Ed. I still am looking for the Book Cost on the whole Muskrat Project.
The Public and Taxpayer needs to know