Noranda Income Fund Unit T.NIF.UN

RE:RE:RE:Electricity savings

[Bigbird9999]

That's not the way it works.  PLAIN AND SIMPLE, the rebate is a subsidy funded by the taxpayer. 

In this case it lowers the cost of approved projects by 40%.  Imagine there a project costing $10 million that would reduce power consumption and save $600K per year.  Would they do it?  No because the ROI on the $10 million investment is only 6%. and there are better projects with a higher ROI competing for the scarce capital resources.  The typical hurdle rate in mining/mettalurgy business is >>10% ROI.  This imaginary project would sit on the back burner until power costs increased to a point (say double) where the ROI was >10%.

So the government comes along and says "Hey NIF if you do that $10 million project we will take $4 million out of the taxpayers pockets and give it to you.  This reduces the CAPEX to $6 million and the project will save you $600 k per year and produce a ROI of 10% on the net $6 million investment..

Everybody wins and gets to feel good about saving the planet, right?  Oh but I just remembered that it was my pocket that the government took the subsidy money from .  Hmmmm, so now I don't feel so good about paying taxes to help Glencore reduce their costs and keep the profits.

Ontario does the same thing only there are now no large power consumers left in the province because they have been chased away by high power costs.  So instead of giving a rebate to large consunmers they fund investment in wind farms, solar farms and unicorn fart power owned by the likes of Samsung.  They pay  these companies 10 -20 times the value of the power generated and everybody gets to feel good about saving the planet until they realize the subsidy is coming out of their pocket.

Subsidizing power generation or power savings is a scam dressed up in altruism that takes money out of your pocket and mine and gives it to the likes of Glencore. 


BB