Thursday, 21 November 2013

MARITIME LINK: THE UARB HEARS AN INCONSISTENT TRUTH

The Nova Scotia UARB has just completed hearings to review the Nalcor/Emera deal on the Maritime Link.  That Agency is determining whether NL has committed enough “surplus” or “market-priced” power to Nova Scotia on terms that will allow it to approve the Link as the lowest cost option. The UARB outlined its conditions in a July 22, 2013 Decision.

The Government and Nalcor need the UARB's approval; it is essential to obtaining the Federal Loan Guarantee. Some of the information given the UARB is different than the version told in NL. 
 
Nalcor and the Government are having a tough time keeping their story straight.

Let me give you three examples of serious inconsistencies that have arisen in testimony presented to the NS UARB: 

  1. A key plank in the Government’s argument as to why Muskrat Falls Project is needed is what it describes as 'uncertainty' relating to the Upper Churchill Contract in 2041.  Stated the Government:

"There is inherent uncertainty around guaranteeing the availability of supply from Churchill Falls in 2041 because it is difficult to determine the environmental and policy frameworks that will be in place 30+ years out.”  

The Province released two Papers for the purpose of bolstering its position, including Upper Churchill: Can We Wait Until 2041?  

“It is not feasible to defer Muskrat Falls under the assumption that the province will have cheap or free power in 2041,” the Telegram quoted Jerome Kennedy upon the Release. “Waiting for available Upper Churchill power in 2041 is not a practical, economical, or sensible alternative to Muskrat Falls” the Minister added.

In Nova Scotia, based upon testimony presented to the UARB, the Boards Advisors MPA Morrison Park states following its review of Emera’s Submission (which is prepared in consultation with Nalcor): “the Board concluded that it is reasonable to expect access to Market-priced Energy after 2041 (because of the substantial amount of power that will be available to Nalcor after the expiry of its Churchill Falls Contract with Hydro Quebec)….”
             (Reference: Page 1 Report to UARB MPA Morrison Park Advisors Inc.,
             Review and Consideration of Energy Access Agreement.....). 

The words “substantial amount of power that will be available…” contains none of the reservations about which we have been warned in this Province.

  1. The Minister of Natural Resources Derrick Dalley stated in the House of Assembly  on Wednesday Nov. 13, 2013: (Hansard)

We know we have excess power that we can recall at any time…”

That statement is at variance with how Nalcor’s commitments are viewed by UARB Advisors and by Nalcor.

MPA Morrison Park says that, based upon the representations of Nalcor VP Paul Humphries on how the company manages it renewable energy, even if Nalcor has to resort to fossil fuels to meet its obligations under the new Emera Deal “the commitment of 1.2 TWh per year on average will still apply”.  (Page 5-6 MPA Morrison Park)

Mr. Humphries’ own Presentation to the UARB Technical Hearings stated that “Even absent any surplus firm energy, Nalcor is confident that the average 1.2 TWh will be available and together with Emera has committed to do so.” 

So, in Nova Scotia it is a commitment; in Newfoundland and Labrador the Government says ‘we can recall it anytime’.  Which is the right answer? (More on this issue on Monday).

  1. Muskrat Falls is estimated to generate 824 MW of power.
         Nalcor states in its 2009 Water Management Agreement Application to the PUB Nalcor  
          states that without a working Water Management Agreement, Nalcor would be limited to
          approximately 170 MW of continuous delivery. Nalcor stated:  it would have to “chase the    
          flows”. Asked about water management in the Maritime Link Technical Conference in Nova
          Scotia,  Mr. Humphries of Nalcor, responded:

“Yes. Actually, water management will not materially impact the firm to average spread…”

The questioner, a Mr. Rathle pressed him again: “So the firm output of Muskrat Falls with and without water management is the same”. 

Mr. Humphries replies:

“Yes. From an energy perspective, yes.”

“From an energy perspective” is not exactly a technical answer to such a precise and important question.  But you don’t need to be an energy expect to figure out if the water is damned in the Smallwood reservoir (above Churchill Falls), in the months of January, February and March, when electricity demand in the Province (and in Nova Scotia) is highest, the electrons are certainly not running through the transmission lines on the Labrador Link.  170 MW of firm power is a far cry from 824 MW.  The amount will generate barely the capacity needed just for the Nova Scotia Block.

The Muskrat Falls Hydro Project will have little damn capacity.  If the water is flowing down river in July and August for example, when NL’s demand is low, it will either be spilled or the electricity it generates will be sold on the spot market for 3-5 cents per KWh.  

Hence, the “firm” capacity question which Mr. Rathle raised is very real.  Nalcor told the PUB how serious the problem was, in the absence of a Water Management Agreement, back in 2011.  It was evidence given under oath.

As anyone can see, they are all serious inconsistencies.  They demonstrate a divergent pattern of information and evidence over which we, in this Province, should be concerned.  Billions of our dollars are at stake.

What is fantasy and what is the truth?

These are the kind of issues which semi-judicial tribunals, like the PUB, are able dissect and ferret the truth from witnesses under oath and cross examination.  They speak to why independent review and analysis of projects, like Muskrat, are fundamental. 

The Nova Scotia Energy Minister Younger intervened, too.  He had eight new demands designed to ensure that any risks associated with the deal between Emera and Nalcor fell to these two companies and not on the Nova Scotia ratepayer.

The Premier will again permit Ed Martin to say, yes.  

The question is this:  If the Natural Resources Minister feels unfettered by the truth can say that the 'surplus' power can be recalled "...at any time..." knowing, as he does, that Nalcor has given Nova Scotia a legal undertaking to supply the power,  what inconsistent truth will be used next time to give the Government cover and assure us Mr. Younger's demands were denied?
 
  

10 comments:

  1. Here a question for the legal types that read this blog. When Nalcor and emera executives present to the UARB are they in effect testifying under oath? Are they committing perjury if they knowing say something untrue in their testimony. You can see where I am heading with this but I think we are owe some sort of accountability beyond the blanket statement of "this is the lowest cost option" nonsense. This whole thing makes Newfoundlanders look like a bunch of dumb asses out to spend the family inheritance as fast as possible.

    John D Pippy

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    1. I truly believe that the only possible way for the government to wake up and give some thought to CANCELLING this atrocious deal is for the Opposition and for ordinary people to let them know, in no uncertain terms, that they will be held accountable for "severe" damage to our economy. It will simply be not good enough, in my opinion, to just throw them out in 2015.

      Nothing else in the recent history of the province has such serious implications as those associated with this project and they need, along with NALCOR , to understand that. Only a fair and impartial review, with a complete and immediate halt to construction, will allay my concerns and satisfy me that they are at least open to revisiting their numbers.

      All of the recent developments point to a project that is completely off-base in terms of its projected costs, its revenue stream, its necessity, and the inability of the government and NALCOR to manage any construction project of this magnitude. Their utterly reckless behaviour is a sign of desperation...but for whom and for what?

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    2. John: To give added certainty to my comment regarding sworn testimony, I wrote the UARB and received the following reply:

      "To answer your question directly, all witnesses are sworn when giving oral testimony in hearings. That would include an intervenor where they are providing direct evidence or being cross-examined.
      We hope this information has been of some assistance.
      Yours very truly.
      Paul Allen
      Paul Allen, CA
      Executive Director

      Since I am not a lawyer, I cannot answer your question. However, one thing is clear matters like Muskrat Falls are best subjected to the scrutiny of a semi-judicial process.

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  2. Easy to address the power issues. Upgrade the cross island transmission to HVDC, a more efficient way of power transmission, would give us just as much usable power than what Muskrat Falls would for here on the island at a fraction of the cost of this mega project.

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  3. One day there will be a book written about the Muskrat Falls affair. Des, Ed and Cabot should do the introduction. It should simply be called "The Inconsistent Truth". For this phrase best decribes Nalcor's communication strategy for promoting the project, which with the lack of an unhindered public review is permitted to continue. From the 1) do we need the power , 2) lowest cost option the project was founded on spin. The 400 million a year which it will yeild Newfoundlanders was heralded, without telling them it was coming from their own pocket. The Labrador Mining, for which there is no ability to provide more than 100 MW of firm power due to other committments. Upper Churchill not being available to NL'ers, but it is available to Nova Scotia. Green but yet there is 9 thermal units to be added as part of Nalcor's plan. Gated management process, yet the decision was reach in November 2010. No issue with Water Management on energy, yet if HQ is successful there will only be 170 MW which can be garunteed at any given time and energy will be primarily available when we dont need it,. Nova Scotia is required for Market access, even though we currently have the ability to move 300 MW through Quebec. And finally my favorite, a demand in NL which will grow 50% in 50 yrs due to residential demand only, all the while the population will not grow. It is this demand which is carrying the freight in paying for the project, and underpinning the entire "lowest cost option" voodoo economics.

    Yes indeed... the Inconsistent Truth

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  4. There are little fibs and big whoppers when it comes to untruths. In the USA there are lawsuits proceeding, civil and criminal as to the wrong doings of the bank crashes in 2008. The legal problem is to prove that there was "material misrepresentation" This suggests the onus to to prove a whopper instead of a fib. The word "material" means significant.
    In the USA, the Securities Commission and other bodies are involved including the Justice dept. Who would do this here?
    On a technical side , here, in my opinion are whoppers
    1. Falsely claim that energy efficiency is approaching saturation for housing, to inflate the future demand for electricity.
    2. Falsely promote reliability of power enroute over the Northern Peninsula, by
    a) Compare it to our existing 230 kv reliability ( which are mostly located inland) instead of comparing it to the 69kv lines now operating on the Northern Peninsula ( which have serious problems with reliability due to its location, exposed to wind driven salt air , which cause outages much more frequently than on our 230 kv lines.
    b) Falsely claim that salt is not a contaminant.
    3. Ignore the risk of geomagnetic induced currents( which caused the big outage in Qurbec and the USA ,and resulted in a 1 billion cost to Hydro Quebec to upgrade to deal with this on long transmission lines. Of importance is the fact that Nfld has one of the highest GIC incidents in the world, and are cause problems at Solar Max every 11 year cycle
    4. Ignore the investigation necessary to properly assess the North Spur quick clay problem before sanction. Winston Adams

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    1. With technical questions of this nature, Winston, it would appear that proof will be easier to determine, once we are able to actually get the PUB or a Commission of Inquiry to look at the entire mess and gain unfettered access to all of the data.

      I truly believe the government and NALCOR are obfuscating, at best, and possibly lying to ensure the project goes ahead, despite the mountain of evidence indicating that this is a doomed project. Unfortunately, the people of the province will be the ones who have to jump off that fiscal cliff in the wake of their intransigence and utter incompetence.

      In my opinion, it is incumbent on any new administration, after the 2015 election, to allow a full and impartial review of the entire process. If the Liberals want transparency, let's start right there.....with the Muskrat Falls debacle. Billl 29 is just a symptom of a thoroughly rotten political system and it is high time some administration takes the high road. It is simply not good enough that people naturally want to be re-elected every 4 years. Somebody has to be principled enough to overcome party self-preservation and their own preservation and just do what must be done.

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  5. If most of the water for Muskrat originates from the Smallwood Reservoir and Quebec Hydro does not have a strong market demand in winter then would they have a strong environmental card to play in their court case for water rights? Consider that the drop (head) into the Upper Churchill turbines is about 7 times that of Muskrat and therefore produces 7 times more energy with the same water why lose all that potential emission free energy when there is no market for it. In addition if they wished to drain the stored water faster the better environmental way to do it is to add the extra 1,000 MW of turbines that are designed into the Upper Churchill system (as I understand it). The environmental arithmetic is that 6,500 MW can be extracted from this water flow or 824 MW. Which is more environmentally friendly.

    I think their plan is to build wind capacity and utilize primarily that in periods of lower demand (winter) and store the water when the wind is blowing. Quebec Hydro's largest market is the air conditioning load in the summer.

    If we lose that case and have to service a $10 Billion debt (and lucky to get it done for that) with 170 MW of power in winter which is the only time we have any need for it plus have to generate additional cheap energy to service Nova Scotia in winter what will it mean for this province. Is it really that risky or am I missing something that the Premier and Ed Martin are seeing. What is it. I would love to know aside from the rhetoric about lowest (unproven) cost.

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    1. The Water Management Agreement is not based on the Upper Churchill resevoir storing water for the Muskrat Falls plant. It is stored "energy". The UC will produce energy from all water, but under the terms of the WMA it is transferred to NL (as Energy) when it is required by us, and when not required by Quebec. The last part is what is not clear to most.

      Simply put MF is a run of the river plant. It has limited ability to control flow based on the market. When MF is producing more energy than is required for NL needs, it will be transferred by Nalcor MF Ltd. to Nalcor CFLCo to fulfill the requirements of CFLCo's contract with HQ. As this energy is available, the generation at the UC facility can be throttled back. There is more water in the resevoir, as the energy from MF will displace it.

      When NL needs more energy than MF can produce under the limited flow, then UC can produce more power (using this stored energy) and CFLCO will transfer this energy to MF under the terms of the WMA. Water will not bypass the UC plant without going through the turbines.

      The extra 100MW of turbines will only provide peak capacity (MW) as the amount of energy (MWH) is totally dependant upon the amount of water which flows. HQ pretty much have the right to all the energy from the natural amount of water which would be at the UC location. Thus additional turbines would not result in more output, only the ability to increase the peak delivery.

      The issue with the WMA is that this ability to take power from the UC when we need it is very much in doubt. HQ have rights to essentially all capacity from the UC, when they want it especially in Winter under the GWAC contract. The 1000 MW of additional turbines (if true) would alleviate my concern about the ability of MF to meet the peak winter demand.

      Without the WMA MF is ineffectual. Power is generated in months we dont need it. Nova Scotians are also not aware. But if the WMA is not upheld in the courts, they are getting their 1.6 TWhr of energy in the months of May to October....\

      We will be talking about Muskrat Falls for a long time in the future. We will also be talking about Holyrood for many more years as well Without a WMA, there is no way Holyrood can close.

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  6. Why do we want to give away the natural beauty of this province? Why are we willing to sell our connectedness to this beautiful land that our families have enjoyed for thousands of years, for what? to line the pockets of some greedy b*@$T@%D# who do not care about us or anything else except themselves! My land is not for sale, my heart is not for sale, my history is not for sale, my heritage is not for sale!!! Protect the land that we have because you can rest assured they are only out looking here because they have depleted their own, they don't care about us and they will deplete until we have nothing for our people and what then? We sold out fisheries, we sold out minerals, we sold out our water, we sold out our fur bearing animals, we have sold out everything for rock bottom dirt cheap prices! They fooled us once, they fooled us twice, they fooled us three times, this is no longer about them!

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