A new energy-efficiency program is designed to help people save money, but an industry consultant is warning that it could make the problem of high power rates even worse.

Tom Adams says when Muskrat Falls comes online, new conservation measures could make sky-high power rates even higher.

Tom Adams, energy analyst and blogger

Tom Adams says when Muskrat Falls comes online, new conservation measures could make send already-costly power rates even higher. (Courtesy Tom Adams)

That's because even though the province is only expected to use about 30 per cent of the power from Muskrat Falls, ratepayers have to pay 100 per cent of the cost; right now, that cost is expected to be more than $700 million a year.

If overall consumption drops because people find ways to save energy, that will cause the price for electricity to rise so Nalcor can still recoup its costs.

Right now the overall price of power is expected to be 23.3 cents per kilowatt hour in 2022.

"There's a fixed amount of money that has to be collected," said Adams.

"If consumption goes down, the rate per kilowatt hour goes up by a corresponding amount to be able to make up that loss."

Loan program offers up to $10,000

The new loan program offers up to $10,000 for homeowners to install heat pumps or add insulation, to reduce their bills.

'What conservation does it has the effect of shifting the cost from one customer to another. It doesn't change the total amount of money that has to be collected.' - Tom Adams

In the short term it will save ratepayers money because lower consumption means less fuel burned at Holyrood, but that will change when Holyrood is shut down and Muskrat Falls power replaces it.

"What conservation does is it has the effect of shifting the cost from one customer to another. It doesn't change the total amount of money that has to be collected," said Adams.

Ball says province will subsidize high power rates

Premier Dwight Ball has promised not to let hydro rates double when Muskrat Falls comes online and has already promised to subsidize the cost using money from elsewhere.

'I don't think we should ever waste electricity.' - Dwight Ball

Ball isn't worried about the effect this new power-saving program could have on his fight to keep costs down.

"I don't think we should ever waste electricity. It's based on that priority, that premise for us, we should never waste electricity," he said.

Adams said the best option to reduce the cost would be to find new customers in Newfoundland and Labrador, especially big industrial customers that can use the 40 per cent of Muskrat Falls power that will be for sale.

He said selling it to the Maritimes or New England won't be very profitable because rates in the power-on-the-spot market are much, much lower than what customers in Newfoundland and Labrador are paying.