Projected budget concerns PUB, industry

Ashley Fitzpatrick
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Newfoundland and Labrador Hydro has been granted the go-ahead by the Board of Commissioners of Public Utilities (PUB) for the bulk of its proposed construction and maintenance work for 2012. The approved work, as outlined in N.L. Hydro's capital budget application and PUB decisions, is valued at $77 million.

N.L. Hydro filed its budget application with the PUB on Aug. 4, 2011, proposing $87.9 million in spending.

Detailed scheduling led to a revised total of $93 million, submitted in December. Following its review of the proposed work - along with submissions from Consumer Advocate Thomas Johnson and the province's major industrial customers - the PUB denied several proposed items relating to the Holyrood generation facility.

They include a $5.9-million upgrade to the Holyrood marine terminal.

In denying these expenditures, the predicted end-life of Holyrood came into play.

Yet if any proposed spending by N.L. Hydro has raised eyebrows, it is the spending predicted beyond 2012 to 2016.

The Consumer Advocate stated he is "very concerned" about the potential impact on customers from planned spending by both Newfoundland Power and N.L. Hydro over the next five years.

"Hydro's proposed 2012 capital budget is approximately $38 million higher than its approved 2011 capital budget and the projected 2013 capital budget is about $28 million higher again," stated the PUB's decision.

Even without considering a new transmission line from the Bay d'Espoir generating site to the Western Avalon, as proposed in N.L. Hydro's initial budget application and since put on the backburner, "the increases in Hydro's capital budget are significant and sustained," the board stated.

The PUB has refused to even consider, for now, approving that new transmission line - estimated at $2.6 million this year and over $200 million total project. It is something Nalcor has stated would be used in supplying a growing energy demand in the metro area, while easing some of the reliance on the Holyrood facility.

N.L. Hydro has stated it prioritized the Muskrat Falls review over the proposed transmission line. The PUB's review of that $6.2-billion megaproject is ongoing, with public hearings continuing this week.

In the meantime, according to the PUB decision on 2012 capital spending, "the board is concerned about the impacts of the proposed and forecast level of Hydro's capital spending on customers."

Newfoundland and Labrador Hydro is a Nalcor Energy subsidiary and, in October 2011, Nalcor CEO Ed Martin was asked about the projected budget numbers through 2016. He indicated the numbers were preliminary, rough estimates.

Stepping to a wipe board in a boardroom at Hydro Place, he wrote out budget numbers, grabbing a marker and circling the forementioned projections.

"I think these are a little high myself, but I said put them in," he said.

He pointed to the numbers again a short time later, saying he planned to "work with this" and "beat this down" as he went through the costings with engineers and executive.

However, Martin noted, the province is facing aging power infrastructure.

According to N.L. Hydro submissions to the PUB, the five- and even 20-year plans are taking into account the ability "to continue to provide safe, reliable, least cost power as well as the required additional capacity."

Plans have to take into account "key drivers," including "the current review of the Lower Churchill project, the shift in load centres, such as the closure of a paper mill, the expected start up of a nickel processing facility, and continued load growth on the Avalon Peninsula."

N.L. Hydro has stated its budgets are developed "to address identified needs or to leverage opportunity to reduce cost to its customers."


Organizations: Newfoundland and Labrador Hydro, Board of Commissioners of Public Utilities, Newfoundland Power Nalcor Energy Hydro Place

Geographic location: Holyrood

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Recent comments

  • Townie
    February 19, 2012 - 13:24

    More miss direction. Nalcor is spending $87 Million on the system this year alone so it will not deteriorate.

  • John Smith
    February 19, 2012 - 09:38

    @lonewolf...HUH? More psychobabble??? We have about 265,000 out of 500,000 people here on the NEA. We will need inhanced delivery of power. Or we could sit back and let the system deteriorate, which is what some would like to see.

    • lonenewfwolf
      February 19, 2012 - 18:19

      You seem to think you're the only one with our provinces best interest at heart. Sure bye. The hard sell on this project is really starting to smell, even Andy is getting wary. Not being able to discuss wind, small hydro, biomass co-generation and grid upgrades looks like those aspects are being kept aside for private operators to develop and sell to to us once this Labrador project is shifted to the mines up North and routed through Quebec to NY. We need more details of the side deals being struck while they push this white elephant dreamed up in the 50's around the room. Large scale projects with associated lengthy transmission systems hold considerable risk with the warming climate and associated more violent storms pushing north in the the future. From what MHI says, the 1 in 50 year line they have planned should be upgraded to 1 in 150, and we don't even have all the details from SNC Lavalin on the system they are looking at yet to determine whether the cost estimate put to us is reasonable or not. Why shouldn't we be asking questions? That is the question I put to you. Your continued attempts to stifle debate by silly name calling and making derogatory comments such as 'psychobabble' are making you look childish and inept. I'd recommend developing some new interjections if you plan on continuing with this line of commentary as most people on these forums are far too mature and open-minded for those types of comments to have an impact on.

  • lonenewfwolf
    February 18, 2012 - 10:26

    This is about subsidizing private power producers (EMERA/ALGONQUIN, ENEL, KRUGER etc) projects on the Island once the bigger pieces are in place for export of the bulk of our energy potential. There is huge slate of potential projects in wind, small hydro and biomass co-generation waiting to be let out of the cage. Martin says he will work with engineers and executives? More like he will continue to take direction and be kept out of board room discussions by the executives calling the shots. NALCOR is TOO BIG and needs to be brought under control fast before we lose complete control via privatization of what is left of our provinces energy resource base.