"We can't allow things that are inaccurate to stand." — The Word of Our Dan, February 19, 2008.

Thursday, August 04, 2011

The Forecast (II)

Continued from part (I), here.

OK, so the fun thing about Nalcor's raw numbers is that you can apply some simple arithmetic to them and make them dance.

Dividing the total forecast population (see part I for a cautionary note about population) by the total forecast number of domestic power customers on the Island system (not quite the same as the number of households, but close enough) you get the following projected population per domestic customer:

This, of course, is in line with the demographic forecasts of everybody and his dog: smaller family sizes, and, especially, an aging population, with plenty of older couples/no kids and single-senior households.

A province with a grey-shifted demographic pyramid is, of course, just the demographic you want when you have billions in old public debts to pay off, plus $6-billion in new Muskratty debt, plus the debt incurred from whatever the true, greater-than-six-billion cost will be once the sane cost estimates and their overruns are made public.

Nalcor's figures also helpfully provide projections both of total forecast domestic energy demand, and the share of which is expected to be demand for domestic heating. Applying the percentage to the projected total, one can separate the projected demand into the two categories.
Note that domestic demand for uses other than heating stays pretty much flat throughout the forecast period. Given that Nalcor projects a population decline, but at the same time, an increase in the overall number of domestic customers, it means that Nalcor is projecting those customers to be individually less energy-intensive as time goes on, for domestic electrical uses other than heating.

Or, translated into Nalcor-speak, "demand is growing".

On the other hand, note the steady projected increase in domestic demand for heating purposes.

Here's the same data, stacked this time, to show that the only thing driving the projected increase in domestic demand is heating:

Let's show those same figures, expressed in projected kwh per projected domestic customer:

Again, notice the slow but steady projected decline in domestic non-heat consumption, while domestic heating demand is projected to increase.

Once more, let's stack'em:

So this, at least in so far as domestic electrical demand is concerned, is the Muskrat Falls business model:

- get more senior couples and individual seniors heating their homes electrically.
- charge them more for the electricity than the going rate anywhere else in North America.
- protect the government monopoly in that expensive electricity, at all costs, including by showing the door to any potential investors in small-scale, alternative generation.
- expect this aging population, with their taxpayer hats on, to simultaneously service the debt incurred to embark on this adventure in autarky.
Is that about right?

Oh, and also hope that any of the alternatives, like the overpromised, underperforming wood pellets, or, heck, buddy who spray-paints aluminum cans, don't start looking real good in the meantime. Coz that might throw all the demand projections off.

Something else that would throw the projections off: assuming a ridonkulously high price for home heating oil well into the decades to come.

That same assumption has significant construction-cost-inflationary implications for the price of building the "cheap" Muskrat Falls project in the first place.

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