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I have heard a lot of foolish talk about the need to raise our rates because the users who were covering fixed costs have evaporated. If this were a regular business which had lost its biggest customers, and not a monopoly, a sales force would be sent out on the road to drum up new business. Since there is no new business here, NSPI needs to go to New England and sell their excess capacity into that market.
As for Muskrat Falls power, nobody is talking about what the rate will be for ordinary consumers. If Muskrat Falls comes in at something like 20 cents per kWh, I suggest the following exercise: Take a sheet of graph paper, make the vertical axis the price per kWh and make the horizontal axis the years between now and when Muskrat Falls comes on line. Draw a line from the current user price and that price and that should be a pretty good forecast of what future rate increases we can expect. Looks like it will be something like 30% in the next few years.
The chairman of Emera should go on bended knees to Hydro Quebec and get suitable rates from them. Then NSPI should build a transmission line from Nova Scotia to Quebec. That solves the problem of future supply and we can retire all the coal fired plants as their number is up.
Right now, Emera is salivating about spending the $1.2-billion on Muskrat Falls because they are guaranteed a 9% return on that investment. This foolish setup is like the old cost plus 10% contracts which were let out during World War II. I know for a fact that in Greenwood, a trench was dug next to hangers that were built and millions of dollars worth of supplies were dumped there to increase the costs and increase profits. That’s the game which NSPI is playing right now. With a guaranteed rate of return on equity, the only imperative NSPI wants to obey is to increase costs so they can increase their profits.
Jon Coates – Halifax
Jon Coates | October 3, 2012 | Reply
We NEED to recognize that N.S. is at a crossroads; not unlike when in the evolution of power when it provided for earlier industrial expansion of steel, pulp, etc. Just as hydro and steam, on site, yielded to electricity’s distribution grid, bigness (unsustainably, non competitive) factors have crept into our base. We WILL have to INVEST if progress is in our culture. Whether we NEED to be topping up Boston’s future power requirements as a long term investment, or to invest elsewhere as the power-road forks onto its next evolution, is perhaps the question. I can understand Emera’s need to grow (export, business as usual), but trust that they don’t miss the next fork in the monopoly road.
gordon a.... | June 28, 2012 | Reply
Bill, agreed 100%.
Ben | June 27, 2012 | Reply
Bill Black has made his best argument to date regarding the proposed massive investment in Muskrat Falls but does not discuss the right that NSP/Emera has to the energy (10% plus another portion equal or greater than 10%) for two reasons. Their ability to resell the that power to the New England market and since no one knows what the power will actually cost therefore, the $1.2 billion dollar investment means that perhaps Emera should make this investment on its own and leave NS Power and therefore energy consumers free from the risk.
Next, set your sights on the Hydro Quebec alternative and what it would mean for consumers as neither NSP or the provincial government seems loath to look at that alternative. NSP does not want to look at it because HQ would want to takeover all customers, aka the failed New Brunswick deal, and that goes against the mandate NSP carries everyday.
Wayne Fiander | June 27, 2012 | Reply
This blog post is bang on with the exception of one major consideration. Decentralized energy is going to far outweigh any other influencer. We are a mere 5 years away from mainstream homeowners in Nova Scotia creating their own power using high quality and inexpensive photo-voltaic solar panels. Forget wind, Quebec, Lepreau and gas. This is not the way the world is going and if one were to re-read these predictions in just 10 years from today we would laugh.
Coming soon to a retailer near you:
Ben this is also true of some institutional users. Both reinforce the point that we don’t need a large long term commitment to imports.
Bill | June 27, 2012 | Reply
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