Electrical rates target Labrador mining companies

The Government of Newfoundland and Labrador has revealed details of new rates for power sold to mining companies, including two large companies that have enjoyed cheap electricity for decades.

Natural Resources Minister Jerome Kennedy revealed details of the Labrador industrial plan on Tuesday, while confirming prior statements that the Public Utilities Board will have no role in the rates.

"[The new rates] will ensure transparent and fair rates for all industrial customers in the region, and will help to keep rates competitive for other jurisdictions," said Kennedy, who presented Bill 53 later in the house of assembly.

The rates are specifically for industrial customers, and do not affect residential or other commercial customers.

The rates will also be applied to power supplied to the Iron Ore Company of Canada and Wabush Mines, which have had a 40-year deal that has provided fairly inexpensive power.

Under the deal, both mines took power from Churchill Falls in return for shutting down their own hydro plant at Twin Falls. The deal, which involves what is called the TwinCo block of power, expires in 2015.

The new power rates will apply to all industrial users who are connected to the grid.

Kennedy said a clear formula for setting electricity prices is needed, especially with other mines gearing up to operate in Labrador.

"There were consultations with the companies involved. I've met with most of the companies myself," Kennedy said. "They want to know. They need an element of certainty, 'what's it going to cost us to develop these mines?' " he said.

The legislation will also enable industrial rates to be set once the dam and generating station at Muskrat Falls is built.

The government's goal is to increase the price that industrial users will pay, while staying competitive with neighbouring Quebec so that customers are not driven away.

Opposition suspicious

However, the new system will exclude the PUB. The government said a PUB-set rate would be lower than what it wants to charge, but the Opposition is suspicious.

"Why is this government so obsessed with keeping the Public Utilities Board out of the Muskrat Falls project?" said NDP Leader Lorraine Michael.

In the legislature, Liberal MHA Yvonne Jones echoed Michael's concerns about government's relationship with the PUB.

"There is a role for the PUB to play. The PUB will still play the role in terms of the residential and commercial customers in Labrador," Kennedy replied.