Canadian Manufacturing

Industrial operators in Labrador to be hit with major energy rate hike

Some industrial customers in region currently buying electricity at rates established in 1960s


ST. JOHN’S, N.L.—Industrial operators in Labrador are bracing themselves for a substantial spike in energy rates after amendments to legislation in the province.

According to the Newfoundland and Labrador Department of Natural Resources, there is currently no published electricity rate for Labrador, and some customers are buying electricity at rates established in the 1960s.

“In contrast to the rest of the country, there is currently no published industrial electricity rate for Labrador, which provides challenges for companies interested in development opportunities,” Minister of Natural Resources Jerome Kennedy said in a statement.

Kennedy said companies need a level of certainty when it comes to power rates and availability in order to determine whether to invest in the region.

With the potential for billions of dollars being invested in new iron ore developments in the coming years, the ministry said a Labrador industrial rate policy is necessary.

The timing of the legislative changes comes as longstanding power contracts with companies expire between January 2013 and 2015.

Estimated rates are expected to gradually rise from as low as $6 per megawatt-hour (MWh) now to $45 by 2020, plus a $20 per MWh transmission charge.

That $65 rate is comparable to projections for British Columbia and Quebec for that year.

According to Kennedy, his ministry is looking to keep rates competitive with those in Quebec.

The Department of Natural Resources said the industrial rate policy will not affect Labrador residential and commercial customers.