New laws ensure Muskrat viability, Nalcor power monopoly12/18/2012
New Muskrat Falls legislation ensures the project will generate the cash flow to cover all borrowing costs, removing PUB oversight of rates and enshrining Nalcor as a monopoly for wholesale power.
The legislation forces the Public Utilities Board to accept all Muskrat Falls-related costs when setting final power rates.
And the new laws also ensure that Nalcor will maintain its monopoly as the wholesale electricity generator on the island.
There will be no new entrants permitted.
"Newfoundland Power has certain assets, and they will remain the same," Natural Resources Minister Jerome Kennedy said.
"However, there will be no new generation allowed under the act."
Restricting competition ensures a revenue stream to Nalcor at a rate required to cover Muskrat Falls-related financing costs.
"It will be necessary to show lenders — and it has been necessary to show lenders and rating agencies — that the rates charged to the ratepayers will be sufficient to cover the costs of the generation and the transmission of Muskrat Falls power, and that the revenue obtained from the rates will flow unfettered," Kennedy said.
Kennedy acknowledged that ratepayers will bear the risk of cost overruns.
The minister says the house of assembly will sit through Christmas if necessary to pass Bill 60 and Bill 61, and the Tory government will not invoke closure to shut down debate.
The amendments will allow Nalcor to approach markets in early 2013 to begin raising the necessary cash. The overall project carries a $7.7-billion price tag.
Muskrat Falls was sanctioned on Monday. That gave the project the official green light.
Kennedy also noted that the government will look at the PUB after Christmas, re-examining the structure and effectiveness of the board.
The PUB declined to endorse Muskrat Falls as the best choice for Newfoundland power needs earlier this year.
The board concluded it did not have enough information to decide whether the project was the least-cost option of the two it was directed to examine by the government.