Pledge to shelter electricity users from Muskrat Falls debt achievable: Dumaresque

It won't be easy, but a pledge by the provincial government to shelter Newfoundland and Labrador Hydro customersfrom the massive Muskrat Falls debt is achievable, says a former Liberal MHA who studies energy policy.

• Taxes, not electricity bills, should pay for Muskrat Falls: economist

But Danny Dumaresquesays help from the federal government is essential if Premier Dwight Ball hopes to deliver on that promise.

"We can get through this," said Dumaresque, who once represented southern Labrador in the legislature. He was also a member of the Hydro board of directors when debate was raging about whetherto sanction Muskrat Falls.

Today, hedescribes himself as a critic of the project from Day 1.

• Doubling electricity rates no way to pay for Muskrat Falls: MUN economist

Electricity users have been bracing for a dramatic increase in rates as theover-budget and behind-schedule Muskrat Falls projectgets closer to completion.

Repayment begins in 2021 on the roughly $8 billionborrowed by Nalcor, the province's energy corporation, to finance construction. The provinceitself has also invested more than $3 billion.

Hydro will have to come up with more than $800 million annually to cover Muskrat Falls, andno clear plan has been articulatedas to where that money will come from without a steep spike in power rates.

Ball surprised the province earlier this month by promising that ratepayerswill not shoulderthe burden of Muskrat Falls, and that rates will remain affordable and predictable. He also said no tax increases are planned.

The premier has refused to offer any details on how he will deliver on that promise first made at the launch of Liberal candidate Paul Antle'sbyelection campaignto represent Windsor Lake. Ball says a variety of options are being explored.

But Dumaresque says the premier is being coy because there are so many options on the table.

"I believe there is a realistic scenario that deserves time to be fully exhausted that can meet the objectives of the government and put people'sfears at ease," he said.

Oil money and loan guarantees

The federal government has provided a loan guarantee for the money borrowed by Nalcor, under the condition that revenue from electricity ratepayersin the province is used to service that debt.

Dumaresquesaid that has to change to allow other sources of money, most notably revenue from offshore oil production, to be used.

"One energy project should contribute to the financing of the other energy project," he said.

• Use oil and gas money to keep power rates in check, says Danny Williams

That's a scenario promoted by others, including former PC premier and Muskrat Falls champion Danny Williams, who reached a deal on the project before leaving politics in 2010.

That would, however,leave a serious gap in the province's finances, but Dumaresque says there's no other choice.

"If we have to take the oil money and put it into making sure that all of our most vulnerable people don't have to make the choice between food on the table and the thermostat, then I think we're spending money wisely," he said.

If we have to take the oil money and put it into making sure that all of our most vulnerable people don't have to make the choice between food on the table and the thermostat, then I think we're spending money wisely.- Danny Dumaresque

Dumaresque said the province must also forgo its return on equity and investment for Muskrat Falls, which would save millions in debt financing.

But that's just some of the suite of measures Dumaresqueenvisions.

The federal government, he says, holds the key to success.

For example, he said it's time for Ottawa to hand over its 8.5 per cent ownership stake in the Hibernia oil field to Newfoundland and Labrador.

Ottawa got involved with Hibernia in the early 1990s, when the project ran into financial trouble and was near collapse. It's an investment that has paid off handsomely, with the feds raking in $75 million in profits last year alone.

"The people of Canada,I think, would accept that the government of Canada would now at a time of such dire need financially in this province that that would be one place they could look to see if they could return that equity to (us)and help out with a revenue stream that we don't have right now," he said.

Dumaresquesays the federal government should also be lobbied to purchase an equity stake in Muskrat Falls, much like it did with Hibernia, and finance a new transmission line through Quebec to allow Labrador hydroelectricity to reach new markets.

"If you combine those various revenue streams, along with flexibility, hopefully, from Ottawa to fine-tune some things, I think we do have a feasible possibility of meetingthe very desirable objective of the premier."

And further down the road, Dumaresquesaid, there's the much-hyped prospect of a new contract with Hydro Quebec for the sale of massive quantities of power from the iconic Upper Churchill generating station.

A grand plan

That existing contract, which sees power soldatrock-bottom pricesand Hydro Quebec reaping massive profits,expires in 2041.

Dumaresquesaid we don't have to wait that long to negotiate a new deal.

Hesees a realistic scenario whereby a new contract is reached that sees power from the Upper Churchill, Muskrat Falls and the as-yet-undevelopedGull Island project wheeled through Quebec and returning a hefty and steady stream of revenue to the province.

"Let do it as a grand plan," Dumaresque said.

Whether options like that are on the table in Confederation Building are unknown atthe moment, since Premier Dwight Ball is keeping his cards close to his chest.

"I'm not going to get into the details," Ball said last week when pressed on his promise.

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