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Thursday, 21 April 2022


“The Provincial Government, through NLH (Hydro), has investigated the long-term options to address Holyrood emissions and decided to replace Holyrood generation with electricity from the Lower Churchill through a transmission link to the Island”.

Thus ran the 2007 energy plan of the Danny Williams Administration.

The die was cast for energy policy in NL. It meant Gull Island, Muskrat Falls or bust!

In that pursuit for more than a decade, deception, half-truths, outright lies and delusion all played a role in the sanction and construction of Muskrat Falls. Integral to the decision, was the disparagement of the Holyrood Thermal Generating Station (HTGS).

Maligned as the industry equivalent of a ‘dirty bag of bolts’, it recently achieved the human status of Lazarus, raised from the dead. The conclusion of Hatch Consultants and NL Hydro’s "Condition and Life Extension Study" is this: “the Holyrood TGS is generally in good operating condition.” Hatch informs: “…there are also some power plants in North America with units which are still in service, primarily on a standby intermittent operation basis, after close to 70 years in service.” Who knew!

It is hard to think of another example that so forcefully reminds us that an alert, informed, and objective public is the only safeguard against short-sighted, costly, self-aggrandizing, and politically inspired public policy.

Hatch, of course, was not expected to recount Nalcor’s false narrative; nor would a consultant in the pay of Nalcor be expected to remind them of their deception over the power plant. Yet, NL has well over $13 billion sunk into the Muskrat Falls fiasco and nothing to show for the financial misery it represents.

So far, the public has been spared the worse effects of the fallout. Like the public debt, ruinous decisions are deemed inconsequential; rather than resolved, the pain is deferred.

The fear is that the deferral gives bad public policy decisions a degree of impunity; the leadership is not held to account in a timely fashion.

While that is a subject for another blog post, it is worth thinking about the extreme level of deceit to which the NL public was subjected and for which, from a public policy perspective, no change has occurred. Politics, assisted by legacy driven politicians, compliant consultants and weak public servants, has the capacity to put ‘lipstick on a pig’ (Muskrat Falls) or malign the imperfect and less gratifying (Holyrood TGS), as the case may be.

In the case of the latter, this was done by ‘talking up’ the “aging” – meaning unreliable and needing replacement - thermal (“dirty”) peaking plant. Cited as the 42nd worst polluter in Canada because it used a low-grade bunker “C” oil, the problem was substantially remedied when NL Hydro saw fit. How? It simply used a higher-grade oil!

Nalcor was fond of exaggerating the Plant’s GHG emissions, frequently reporting  how much “Bunker “C” fuel it used in full operating mode, though few people understood that this occurred for 2-3 days or less each winter, some years not at all.


Dispelling Lies and Half-Truths about Holyrood Power and Raising Questions about the next Black-Out by PlanetNL


Fuel substitution also eliminated the need for expensive “scrubbers and precipitators”, though a perceived concern for the environment manifested even as Nalcor openly dismissed using conservation and demand management (CDM) strategies to resolve the Island’s winter peaking problem that gave rise to the Plant's construction. 

Scaling up the deception, Nalcor added the capital cost estimate of $602 million for the pollution control equipment plus “resulting energy losses of three to five percent” to boost the difference in the “Cumulative Present Worth” used to give advantage to the “Interconnected” option – Muskrat Falls - over the "Isolated Island" option.

The quest for legacy not only inspired the disparagement of the Holyrood plant, but it also killed the opportunity to outfit the facility with new kit - more efficient, low carbon emitting turbines using variable fuel types and a faster start-up time frame, where the time of operation could be offset with conservation programs and renewables, like wind and small-scale hydro projects.

 Muskrat Falls was more politically grand; even the environmental zealots couldn’t see through the smog of deceit, as if good economics was incompatible with good public policy, including that related to the environment.

Problem was, if people began to buy into less capital intensive and other environmentally friendly ideas, as Muskrat was perceived, the justification for the megaproject dissipated. Absent the main source of revenue (fuel savings) to pay the (understated) project cost estimate, Muskrat had no prospect of being developed. Therefore, Holyrood had to be demonized as an “aging, polluting and unreliable” Plant, an easy image for an uninformed public to buy into.

The deceit imposed on Holyrood began early. Soon after the 2007 Energy Plan was announced, Nalcor began to physically downgrade the Holyrood Thermal Plant. It did this by deferring maintenance, and treating other thermal assets, like Hardwoods, with the same incompetence and neglect.  The result, as some may remember, was the week-long event in 2014 known as #DARKNL.

The PUB employed the Liberty Consulting Group to assess the reason for the outages. This is what Liberty investigation turned up in 2014: failures in the “operation of key transmission equipment”, including a failure to replace transformers and maintain major circuit breakers. “Liberty found that Hydro’s shortage of generation capacity was exacerbated by a failure to complete planned outage work needed to ensure the availability of its full range of generating facilities as the winter season began.” 

Continued the Liberty Group, the situation “raises questions about Hydro’s operation” that it “did not complete recommended maintenance activities on the equipment that failed…”

The PUB later conducted a “prudence” review of their antics, and refused them the right to levy some of the deferred maintenance cost onto ratepayers.

Of course, the importance of the Holyrood Generating Station goes beyond its symbolism for a public made out to be fools. More than ever, it has a fundamental place in NL's energy paradigm.

Faced with persistent uncertainty that the LIL will fully function any time soon, it is worth reminding of the loss of the transmission line for a period of seven weeks last winter and of the warnings of the Haldar Report that an extended blackout could occur on average once every six years. Then there is the knowledge that the LIL was not built to minimum Canadian utility standards. Still, Nalcor wanted to shut Holyrood down. 

What is left to understand, except for the that Hydro was administered by fools who were appointed and anointed by elected politicians? 

Unless, of course, you want to add the mere fact that "back-up" power is still a matter of debate in spite of those circumstances. You do have to wonder how this place can be so benignly indifferent to catastrophic risk. 

The Hatch Report brings us full circle. The PUB kept a watchful eye on Hydro since #DarkNL; Liberty audited every improvement that the PUB ordered.  Likely as a direct result, “Hatch concluded that the Holyrood TGS is generally in good operating condition....that the Holyrood TGS presents a technically viable option in full generation mode or as a standby generating resource under various recall scenarios in the near term and with the significant investments estimated.” (pp.2 and 4)

The "significant" investments to which Hatch refers includes capital and operating costs to run the Holyrood Plant on a net annualized basis of roughly $65M per year, the cost dependent on how quickly residents of the Avalon Peninsula want their light and heat to return after the LIL fails: 4 vs 24-30 hours. (P.11) 

Hatch's acceptance of a 4 hour duration for a blackout, let alone 24-30 hours, confirms that NL Hydro still in the grip of those “offshore oil “engineers, the same ones advising Hatch. They ought to have been replaced with “real” utility professionals of the kind that CEO Ed Martin sent packing. The Liberty Consulting Group would not have trucked with such nonsense.

NL Hydro, like its embodiment Nalcor, has been paying ‘footsie’ with the public and with the PUB on the issue of "backup" power for Muskrat Falls for a long time. The Crown Corporation has delayed reports, influenced the conclusions of consultants, and helped write their scripts, in pursuit of either toning them down or making sure that they conform to the requirements of their political agenda. 

Turnover in the executive ranks, and at the political level, brings no change to either the agenda or to the values that guide this Crown Corporation.

The Government has even given impunity to Vice-President Gilbert Bennett who has presided over the operations of Hydro as well as the conception and execution of the Muskrat Falls project. 

That CEO Jennifer Wiiliams puts up with this arrangement is a worrisome commentary on her leadership, especially when the public - and Hydro personnel - need evidence that Hydro has returned to a singular electricity security and supply mandate. 

Of course, the Premier and the Minister of Energy are ultimately responsible. 

Deference aside, the viability of Holyrood as a valuable and viable component in our energy supply and security strategy has been re-established whether GNL wants to recognize the fact.

If the PUB has any fangs, it will use them and hold Hydro accountable; otherwise, the PUB, too, becomes a part of the public policy failure that has set this province back decades.

There is one other inescapable fact that underlies the Hatch Report. 

It is that that we didn’t need the Muskrat Falls project in the first place.