On May 16, 2024, the Government of Newfoundland and Labrador, with Newfoundland and Labrador Hydro, announced the finalization of the rate mitigation plan for the Muskrat Falls project. The agreement in principle to restructure financing for the Lower Churchill Projects (Muskrat Falls and the Labrador Transmission Assets) was announced in July, 2021, with the federal government.

Under the final rate mitigation plan, domestic residential rates relating to cost recovery for the Muskrat Falls project are capped at 2.25 per cent annually until (and including) 2030. This includes related rates for the NL Hydro and Newfoundland Power customers.

The provincial government estimates this stage of the rate mitigation plan will cost NL Hydro more than $2 billion, including deferred costs from 2023. In 2021, the province estimated residential rates could balloon to 23.6 cents per kWh (residential rates are roughly 14.3 cents per kWh in May 2024).

To support the rate mitigation, the provincial government is forgoing “hundreds of millions of dollars” in revenues otherwise collected from NL Hydro.

“Hydro has worked hard to cut costs and do our part to support government’s rate mitigation efforts. We know our customers expect that of us. Under this plan, Hydro will fund rate mitigation through its own revenue and are pleased to be in position to do our part to support customers.”

– Jennifer Williams, President and CEO, Newfoundland and Labrador Hydro

This plan must still be approved by the province’s Public Utilities Board.

The 2.25 per cent rate cap does not necessarily limit Newfoundland Power for apply for additional increases through the province’s Public Utilities Board.

The 2021 agreement with the federal government includes three funding arrangements to support the province and project:

  • the federal government would invest $1 billion in the province’s portion of the Projects’ Labrador-Island Link;
  • the federal government would provide a loan guarantee of $1 billion for the Projects’ Muskrat Falls and Labrador Transmission Assets; and,
  • the federal government would make annual transfers to the province equivalent to Canada’s yearly net revenue from the Hibernia offshore oil project Net Profit Interest (NPI) and Incidental Net Profit Interest (INPI), which estimated a total of $3.2 billion between 2021 and the end of the Hibernia project’s life.

Watch the full announcement: https://www.youtube.com/watch?v=gsSNJJOBzEk.

To learn more about the Lower Churchill Projects, visit: https://www.gov.nl.ca/lowerchurchillproject/