Hydro applies for $292-M power line project

PUB still considering requested $119-million combustion turbine

Published on May 1, 2014
Power lines. — Photo by Joe Gibbons/The Telegram

The Board of Commissioners of Public Utilities (PUB) is reviewing a proposal for another major expenditure on the part of Newfoundland and Labrador Hydro.
The latest request, submitted to the regulator Wednesday, is for an OK on construction of a third power line between the Bay d’Espoir area and the power-hungry Avalon Peninsula.

Hydro has suggested, if approved, it would be in service in 2018. The estimated cost of the new line is $292 million. The PUB is already in the midst of considering a proposal for a $119-million, 100-MW generator — to be placed beside the Holyrood power plant before the winter.

Neither expenditure is part of the financing for the Muskrat Falls hydroelectric project, with its currently unknown total price tag. Yet Hydro did say, as the Muskrat Falls project was under discussion, both a new backup generator and additional power line would be needed.

In the case of both these items, the expected cost is notable when compared to Hydro’s annual capital spending, even at its increased level in recent years. Hydro’s already-approved spending on major maintenance and construction for 2014, for example, is $98 million in total.

All costs are expected to be recovered from ratepayers, through their power bills.

The new generator, on its own, is predicted to cost individuals and businesses a 2.3 per cent increase in rates as it comes into service. There has been no prediction issued for the ultimate impact on rates of the new line between Bay d’Espoir and the Western Avalon.

And more construction is on the way. No formal proposal has yet been seen for a new power line between Churchill Falls and Labrador West, but the provincial government has ordered that project move ahead.

The new power line between Bay d’Espoir and the Avalon was previously before the PUB, but taken off the table, with Hydro stating the focus at the time would have to be getting the proposed Muskrat Falls hydroelectric project through final approvals.

Hydro representatives have said the utility will need the new line as Muskrat Falls power comes. It is suggested the line could be used to funnel power from Nova Scotia to the Avalon Peninsula, should there be a failure in the power line from Muskrat Falls in Labrador to the eastern half of the island.

“Upgrading this vital corridor between the Bay d’Espoir and Western Avalon terminal stations is essential in terms of providing additional capacity, relieving congestion and enhancing the resiliency of the current transmission network,” said Rob Henderson, vice-president of Newfoundland and Labrador Hydro, in a statement issued on filing the new application for the line.

“We are moving forward with strategic and major capital investments to modernize our assets, build a robust electricity grid and to ensure Hydro provides the best possible service to our customers over the long term.”  

Meanwhile, the PUB has asked for feedback on the idea of a quick decision, an abandoning of the normal review process, on Hydro’s planned purchase of a new generator, to be in operation by December.

Hydro’s application was submitted on April 11 and, the PUB has stated, the utility is looking for approval next week.

“The normal regulatory process for reviewing such applications would include requests for information, evidence, submissions and possibly a public hearing. In the context of the timeframe set out by Hydro, it appears that the only option may be to grant approval for Hydro to proceed with the project as proposed and subsequently establish a separate process to allow the parties the full opportunity to review the issues of cost and cost recovery,” states a notice issued Tuesday by the PUB to interested parties.

“I believe that Hydro has the necessary generation to meet peak demand this winter through its own assets, power purchase arrangements and NL Power assets. It must be noted that rolling blackouts (in January 2014) were caused by the loss of 100 MW of generation from Unit 3 at Holyrood and this would have been restored if a spare motor was in the province as recommended for several years,” stated former MHA Danny Dumaresque in an early letter to the regulator, objecting to the purchase.

He also questioned if the unit identified would work as promised, when called upon during peak power demand.

The consumer advocate, Sierra Club, Newfoundland Power, Vale and, collectively, the “island industrial customers” — including North Atlantic Refining, Teck Resources, Corner Brook Pulp and Paper — had expressed an intention to act as interveners in the PUB’s consideration of the proposed turbine purchase.

Comments for a speedy decision are due from everyone by May 2.