Thursday, 7 November 2013

TROUBLED WATERS: NALCOR SPILLS $MILLIONS

When you consider the Muskrat Falls Project will produce 824 megawatts of electricity, 176 MW (almost 22%) is not a trifling sum.  It is a huge block of power. Measured against current cost estimates for Muskrat it represents a $1.3 billion asset.

176 megawatts of “stranded non-thermal power capacity” is a lot of power.  It is now being wasted, “spilled” is the acronym, in Central Newfoundland while we continue to pay for the fuel burned at the Holyrood Generating Plant. 

Where is the power and why would Nalcor waste 176 MW capacity even for a single day?
Firstly, Nalcor has acknowledged, in emails obtained by this Blog, the existence of 176MW of surplus non-thermal generation.

The power is being “spilled” in Central Newfoundland.  The other facts are also straightforward. 

The transmission line from Bay d’Espoir to the Western Avalon has a capacity of 319 MWs and according to Nalcor is “terminally constrained and unable to transfer the increased power”.   The construction of a new transmission line, says a Nalcor Submission to the PUB, “will permit deliveries of 495 MW of hydroelectric generation to the Avalon Peninsula prior to the start of the first oil-fired unit at Holyrood.”

It stated on page 37 of its PUB Submission that the new line will provide for “improved efficiency of the generators at Holyrood...reduced fuel consumption and in turn may reduce the potential for spill at hydroelectric facilities." 

If the capacity is available and the need on the Avalon proven by Nalcor’s own forecasts, you may well ask, why isn’t the TL Upgrade approved and construction underway?  Why does such a huge waste of power continue? Why will the problem not be dealt with until 2017? Why can’t Premier Dunderdale’s ‘international experts at Nalcor’ deal with the issue?

It is not clear how long ago Nalcor knew it needed the upgrade.  The closure of the Stephenville Paper Mill, in 2005, is a likely starting point.  The fact that “east of the Isthmus” consumes nearly 70% of the Province’s power and “the growth area” is also old news. 

In particular, the closure of the Grand Falls Paper Mill, in 2009, was a pivotal event.  Undoubtedly, Nalcor consulted with the Government over the expropriation of the Mill’s power assets.  What is certain is that by 2011 Nalcor and the Government knew that the Mill would never re-open. 

The only sensible business case available to Nalcor was to get that power to the Avalon in the fastest possible time.

For reasons I will describe, Nalcor delayed the Application to the PUB for approval of the line on several occasions.  Formally, an Application arrived in the Offices of the PUB, in 2011, just prior to its Submission of the Muskrat Falls Project.  Preferring that the PUB hear the Muskrat Application first, Nalcor withdrew the request for approval of the Bay d’Espoir TL upgrade. 

Why it did not re-apply, following the PUB’s Decision on Muskrat Falls is a mystery.

Muskrat caused no technical issue to advancing the Upgrade.  On its technical merits, Nalcor assured the PUB that the proposed upgrade “…meets all of the technical requirements for the Labrador Infeed Scenario.” 

The Bay d’Espoir Upgrade was expected to do more than save money on fuelling Holyrood.  It was expected to ensure security of supply in the event of contingencies involving the loss of the Labrador Infeed via import from the Maritimes.  Nalcor also informed the PUB in a “worst‐case scenario….if a unit at Holyrood were to be damaged (sound familiar?) or otherwise out of service” (page 17) it “would put a significant strain on the Bay d’Espoir East transmission system.”

The closure of Holyrood was the centerpiece of the Government’s argument for sanctioning Muskrat Falls. It spoke of the need to displace greenhouse gases as well as stop the use of #6 Fuel. Nalcor’s Submission to the PUB contained this claim:

By 2015, electricity demand on the island is expected to reach the same level as 2004 when we hit an historical peak in electricity use, and it will continue to grow from residential, commercial and industrial electricity usage.

Almost all extra load growth on the island from today, including the addition of Vale Inco’s large industrial load at Long Harbour commencing late in 2011, will cause Holyrood output to once again increase. The Long Harbour hydromet plant at full load in 2016 will require the burning of an additional 1.1 million barrels of heavy fuel oil at the Holyrood thermal plant every year under normal hydroelectric production conditions.

In an Information Sheet released by Nalcor, ostensibly to highlight the evils of the place, it stated: “In peak production, the Holyrood plant burns approximately 18,000 barrels of oil a day to meet the electricity needs of the island.”
Even as it warned us about Holyrood, what did Nalcor do?  It withdrew the Application it had placed before the PUB without waiting for its almost automatic approval.  Nalcor still hasn’t returned.

“In order for this transmission line to be in service prior to the proposed HVdc interconnection in 2017, line, adds the Nalcor Submission, “construction must begin in 2012…” (Note the word “prior” which I have bolded.)  

When Newfoundland Hydro (Nalcor) was asked, why the Bay d’Espoir TL upgrade has been delayed since the Sept 2011 submission to PUB, it stated in an email dated Oct 14, 2013:

“In light of project sanction (for the first phase of the Lower Churchill Project), analysis was undertaken within Hydro to reaffirm the requirement to construct the new 230 kV transmission line between Bay d'Espoir and Western Avalon and prepare a revised capital cost estimate for the project.  Given a required in-service date of the end of 2017, the project need not be submitted to the Public Utilities Board for approval until the fall of 2013.”

The response is quite incredible.  Given the huge block of power capacity being “spilled”, the forecast quantity of fuel demanded by Holyrood and the inability of the current transmission line to carry more current, what was left to “reaffirm”?  How much time does it take to update a relatively small ($209 million) project? 

Given that the transmission line could have been brought into service in 2015, how do you make the case for delaying saving money until 2017? 

There is no doubt that the availability of 176 megawatts would have delayed the then predicted energy shortage on the island by several more years.  It also would have made the case for Muskrat Falls appear much weaker.

But starting the Transmission Upgrade as soon as it was confirmed that the Grand Falls Mill would not re-open would have saved the Newfoundland ratepayer millions and continue to do so.

Why did Nalcor not seek approval of the Upgrade?

Today's Post "Firm and Unfirm" in Ed Hollett's Blog "The Sir Robert Bond Papers" tells a goodly part of the reason.

You are going to hear a lot more about the importance of the Bay d'Espoir Hydro Plant to the deal on the Maritime Link with Nova Scotia.

In the meantime, I don't suppose Nalcor and Premier Dunderdale would like to come clean with the people of the Province?

5 comments:

  1. Ah yes the hypocrisy of NNLPCs knows no bounds --> we HAVE to build the most costly $MW for ratepayers to SAVE them from the pollution that is Holyrood - our commitment to the environment makes David Suzuki look lie an oil lobbyist in comparison.

    What's that update already existing ISLAND transmission infrastructure for a fraction of the cost of new generation AND lower fuel costs at Holyrood? Please takes economics 101 our WORLD CL(ASS) EXPERTS have cast their anti fact field (not that many NNLPCs would know what a fact was if it bit them in their asses) and everyone against MF is an ignorant partisan hack with vendettas V US.

    CBPP and Come By Chance represent 2 industries on palliative care that are costing an arm and leg to 'maintain' the good Dr. King doesn't have the heart to tell the families (NL tax/ratepayers) the GRIM reality that their industries are not half way out rather 90% out.

    Why indeed was the submission for the new Bay d'Espior transmission upgrades taken back by Nalcor? Was there political malfeasance at play (again), Gil and Ed must have answers.

    Just for the LOLs resubmit this plan and get it costed by accredited companies.

    Remap the justification of MF without the ML, is this still the least cost option if we(NL ratepayers) are our only customers?

    Demand forecast for NL power consumption needs to be remapped. How many GWhs does CBPP and CbC each represent individually, is there a residential demand chart for absurd rate increases being forced on ratepayers.

    One politically involved NL MUN Economist once infamously said 'sure we can increase the cost of power so there won't be any demand' choosing to go the preschool V academic route on concerns raised by a fellow MUN economist. Somehow this economist had a slide saying for each 20% energy cost increase there is a subsequent 5% demand decrease, yet absolutely failed to include this in his own annalist of MF.

    Some media personalities (NOT journalists) like the mercenary approach to NLs resources - sell to the highest bidder. 'Bay d'Espior power can supplement ML needs if MF can't'

    The only GIANT flaw with that line of thinking is Island hydro can be sold to NL ratepayers 4-5 cents higher V ML export prices. Using already payed off hydro assets to sell power at a cheaper rate to another Province is typical of the backward logic MF proponents use.

    510MW 'firm' MF power is too close to a brand new natural gas plant rated capacity of 505MW to be a coincidence. 'oil companies won't allow NL to buy Grand Banks natural gas' thanks for painting Husky in a uncooperative light and putting words into their mouths well informed talking head. Imported LNG 'nah bye's can't be done, why ever bother to look into this option when our crown monopoly Nalcor has stated MF is STILL the least cost option'

    Whatever happened to the day of apolitical, straight shooting, take no BS from anyone top civil servants that you used to work with Des?

    175MW is a HUGE amount of power for NL: basically 2 Long Harbor's worth of energy and 1/2 MFs 330MW Avalon power block.

    Nalcor CAN'T find a lower cost option compared to upgrading island transmission when the generation capacity is already running. In the long term 2041-2067 23,000 GWH of UC power WILL be available to NL (unless Nalcor re-re extends the 65 year contract to build MF..) what needs to be focused on with far greater detail is current - 2041 demand (short medium).

    175MW of existing generation via updated transmission infrastructure and demand side management could be enough until the 2030s for NLs own power needs.

    Cost overruns, residential kWh prices, WMA, nurturing PUB, necessity and need, NS getting power at 50%+ less V NL ratepayers, least popular leader since Confederation, no financing in place, no FLG. None of these give reason for pause for continuing with MF, don't let the rate bugs bite!

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  2. And what about the power plant on the Exploits River at Bishops Falls? Is it connected to the grid and supplying power to the Avalon? If you want to talk about the lowest cost option, the state of Vermont recently signed a contract with HQ to receive power at 6 cents a kilowatt for 25 YEARS!!!
    Why not go that route.

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  3. It has been my argument that with the closure of the Stephenville Paper Mill and the Grand Falls Paper Mill and the shutting down of many of the Corner Brook Paper processing machines, there should be an abundance of power for the island. Couple this with the many possible upgrades to the present smaller hydro plants, all along our island, and we should have surplus power to sell with just our present plants. Power down the Holyrood plant and we should still be swimming in Hydro power. Add to that the advancement in electronics such as lighting, televisions, and other entertainment devices, along with the small saving from less used kitchen ovens and the use of other smart power appliances such as fridges, deep fridges, washers and dryers. Hydro Newfoundland is scamming us all with their gloomy predictions about all the power that we will require and how there will be shortages. If the day comes that there will be shortages, we have our own shale gas, we could have purchase gas from present oil fields or buy New England gas. We could purchase power cheaper from Hydro Quebec that what this M.F. operation will cost us. We will still have the wind for power and that is a viable solution - ask Ontario or Nova Scotia. Also, remember that it isn't too far in the future when we will own all of the power from Upper Churchill. I fail to understand why our media is not jumping on this and reporting this scam to our people. There is enough skullduggery to report here here for a weekly T.V. series and I feel sure that the viewer ratings would be sky high.

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  4. Here's an idea. Get the head of Nalcor and the premier to present the Muskrat Falls Hydro Development and the deal with Nova Scotia to the members on "Dragon's Den." They'd be laughed out of the studio.

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  5. Was this stranded hydro part of the "isolated island" analysis when considering the low cost option? I don't recall it being a part of it.
    I worked at Nfld Hydro in the 70s designing high voltage terminal stations when the second lines came to the Avalon. That was 40 years ago and it was obvious that a third line would been needed as the Avalon demand grew. The question of stranded hydro power has been raised by a few over the past year, but I saw no data on how much power was stranded. I am amazed that it is this much. Amazed because it is a logical engineering and economic approach to have had this in construction phase before now, as a tremendous asset to offset the cost of oil consumption at Holyrood and to reduce pollution there.
    Consider this for islsnd options:
    1. 176 MW at a cost of 209 million, with say 3 years to complete.
    2. 79 MW of new island hydro at a cost say 500 million and 3 years to complete
    3 island wind additions at 25 MW per year at 60 million
    4 aggressive customer efficiency measures to reduce demand at 20 MW per year, self financed by energy savings ( a potential of 600MW reduction over 30 years)
    Yet, without any of these, Holyrood production has declined over the last 10 years from 30 percent our total to 10.5 percent last year.
    Opting to use the stranded hydro with a third line was the logical first choice to most rapidly offset oil consumption, on a path toward zero .The other options could be added and phased to give us continued low cost power for decades into the future. It is obvious the third line was to proceed but got sidetracked in favour of MF. Yet this line is needed even with MF. What is also obvious is that MF is not needed if the third line was built as had been planned. I commend you Des for digging out the facts on this stranded hydro. This needs to be questioned in the House. Why have we postponed this line and wasted hundreds of millions yearly on oil consumption? Winston Adams

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