Thursday, 21 November 2013


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 " 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?