Nfld. & Labrador

Consumer advocate applauds Muskrat Falls announcement, while critic calls it too little too late

Now that the dust from the announcement that the Public Utilities Board will review Muskrat Falls has all but settled, people keeping a close eye on the project are voicing their concerns.

Concerned Citizens' Coalition says Public Utilities Board review should have been announced two years ago

David Vardy says the provincial government's Muskrat Falls announcement is too little too late. (Mike Moore/CBC)

Now that the dust from the announcement that the Public Utilities Board will review Muskrat Falls has all but settled, people keeping a close eye on the project are voicing their concerns.

David Vardy of the Muskrat Falls Concerned Citizens' Coalition says the policy change is too little too late.

"Timing is everything. If this announcement had been made two years ago we would applaud it, because there had been a change in government and it was time to make change in policy," Vardy told CBC Radio's On The Go. 

"But it's almost three years that have gone by since the Liberals have come into power and they've really done very little to establish that there's any basis for the Muskrat Falls project to be self-supporting in any way, shape or form."

Vardy says the fundamental problem with the hydroelectric project is that there isn't enough demand in the province to sustain the operation.

"We have a financing mechanism based upon something called a take or pay power purchase agreement. Regardless of what the cost is the consumers have to pay," he said.

"People can only pay so much, and then they will resist."

Right move, consumer advocate

On the flip side of the electrical switch is provincial Consumer Advocate Dennis Browne. 

Browne says bringing in the PUB is the most important public policy change to date in determining how the project will be paid.

"A team of rate design experts and economists will be assembled to investigate ways of addressing the situation. Solutions will be multifaceted and will require research and innovation," Browne said in a news release.

"There is no easy fix and no other way to approach this problem. Ratepayers must be encouraged to remain with the system through affordable electricity."

The Muskrat Falls spillway shows two of its five gates open. (Twitter/Nalcor)

Browne added if the Muskrat project had gone according to plan it would have been extremely detrimental to the province. 

"If rates had increased to 23 cents per kilowatt, results would have been catastrophic," he said.

"The only available market for Muskrat Falls power — island ratepayers — would have been diminished completely. The results would have been staggering financially for the province."

Vardy wants to see a change to prevent monopolies on power within the province.

"The rest of the world is moving toward competition. We're moving to a different paradigm where people are forced to deal with a monopoly. In most parts of the world monopolies were ruled out of order a long time ago and public utilities boards were set up as as a substitute for competition in the marketplace," he said.

"It's a very imperfect surrogate but it does work because essentially the Public Utilities Board can ensure that rates are fair and that they're equitable, and they provide a fair rate of return but are also affordable to the people."      

Read more from CBC Newfoundland and Labrador

With files from On The Go