There are many factors that contribute to the cost to generate electricity, such as the type of generation used, investments in electricity infrastructure and ongoing operations costs. Depending on where people live and where their electricity comes from, rates may be different in different regions in the province.
For example, a homeowner in Happy Valley - Goose Bay, Labrador, who gets their power from the Churchill Falls Hydroelectric Generating Station, will pay a different rate than a homeowner in St. John's whose power comes from a combination of sources, including hydroelectric generation from various locations and oil-fired generation from the Holyrood plant. For customers living on one of the many islands and coastal remote communities of the province, they will also have a different electricity rate as their electricity is from diesel generators. Your electricity rate may also vary depending on how much electricity you use in your home each month.
Consumers are grouped into one of five distinct systems:
- Island Interconnected (e.g. St. Anthony)
This system is connected to the main transmission grid on the Island portion of the province.
- L'Anse au Loup (e.g. Labrador Straits)
This system is connected to a Hydro Quebec transmission line for purchasing power, as well as a full diesel system because the purchased power is not a "firm" supply, which means it's not committed to be available.
- Labrador Interconnected (e.g. Wabush and Happy Valley – Goose Bay)
This system is connected to the main transmission grid on the Labrador portion of the province.
- Island Isolated (e.g. Ramea and St. Brendan's)
The areas in this system are served by diesel generation on the island portion of the province.
- Labrador Isolated (e.g. Cartwright and Hopedale)
The areas in this system are served by diesel generation on the Labrador portion of the province.
For information on current electricity rates, please click here^top
According to the Canadian Electricity Association, electricity makes up about 2 per cent of average household expenditures in Canada, even though our lifestyles are highly dependent on electricity.
Electricity prices across Canada vary depending on the type of sources available to generation electricity. On average, Newfoundland and Labrador has the fifth lowest residential electricity rate in the country, based on island electricity rates. Click here to see a chart which shows the average electricity rates in the province for a home using about 18,000 kilowatt hours a year as of July 1, 2011 compared to averaged residential electricity rates in other Canadian provinces.^top
The factors that impact electricity rates
The cost of operating and maintaining the provincial electricity grid is included in consumers' electricity rates, which are approved by the Newfoundland and Labrador Board of Commissioners of Public Utilities. This includes the cost of generation, transmission and distribution, as well as the maintenance of Hydro's electricity assets such as power lines and generating units.
Electricity rates are impacted by a number of factors including oil costs, capital investments in the electricity system and overall cost of operations. Hydro works hard to ensure its operating its business in a way that's fair and reasonable for customers. Although significant investment is required in the day-to-day operations of generating and distributing electricity, Hydro ensures it's doing so at as reasonable a cost as possible.
Most of the province's electricity comes from clean hydroelectric power; however, between 15 and 25 per cent of the Island's annual electricity comes from the Holyrood Generating Plant. Since Hydro already uses as much hydroelectric generation as possible, increasing demand for electricity on the island means greater production demands from the Holyrood generating station.
In Newfoundland and Labrador, most of our electricity system was built in the 1960s and 70s at a time when the province was working to electrify most communities - from small rural outports to growing urban centres. To ensure the electricity system in Newfoundland and Labrador continues to operate in a safe and reliable manner, significant investments in generation and transmission infrastructure must be completed.
This situation is not unique to Newfoundland and Labrador as utilities across the country are recognizing this need. Hydro recognizes that the investment will be costly and will impact customer rates; however, the long-term cost of letting the system deteriorate would be much greater.
Overall cost of operations
In addition to increases in fuel costs and the need to reinvest in the electrical grid infrastructure, other costs continue to rise. Costs for supply of materials and labour and provision of service by various third parties continue to rise. Hydro strives to limit these cost increases and find ways to avoid incurring these costs. Nevertheless, the overall costs of operations are subject to the same types of cost influences that are affecting all businesses in Newfoundland and Labrador.
A solution, moving forward
The Muskrat Falls hydroelectric development and a Labrador-Island Transmission link is proposed as the least-cost, long-term option for meeting our growing provincial electricity demand, while also having the ability to stabilize electricity rates. With the displacement of oil-fired electricity from the Holyrood Generating Station, the province will be powered by 98%, clean renewable energy — meaning we dramatically decrease our dependence on oil and its fluctuating prices. For more information on the Muskrat Falls development, please visit nalcorenergy.ca.^top