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Thursday, 7 November 2013


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?