Order in council keeps central hydro out of Public Utilities Board reach
Under a new provincial government order, the Public Utilities Board (PUB) will not be granted oversight powers for anything to do with hydroelectric assets at four locations, including those associated with the former Abitibi paper mill in central Newfoundland.
The once privately held assets — at Grand Falls-Windsor, Bishop’s Falls, Star Lake and Buchans — had already been exempt from public review, being operated under private contracts to serve private companies.
The assets have since come into government hands but, according to statements made in response to questions from The Telegram, they will not be brought within reach of the PUB anytime soon.
“While the expropriation (of Abitibi assets in central) occurred in December 2008, there has followed a transition period where issues related to the electricity assets and the expropriation required resolution,” stated a Department of Natural Resources spokeswoman, in an emailed response.
“As this work has been concluding, including agreement earlier this year on compensation to affected parties, the provincial government can now consider the most appropriate long-term solution for these assets.
“As consideration of this issue is expected in 2014, the exemption order was necessary to continue through this transition period and ensure continued operation of assets by Nalcor.”
Nalcor was tasked with operating the hydro in central on behalf of the province. Newfoundland and Labrador Hydro, in turn, has been asked to operate the assets on behalf of Nalcor.
This means Hydro is regularly being challenged at the PUB for its spending on, and production from, plants like Holyrood, Bay d’Espoir or Cat Arm, because of the potential for effect on ratepayers, but it is operating other assets without PUB oversight.
“Hydro charges Nalcor and not ratepayers for any costs incurred for operating these assets. The only cost Hydro incurs in this arrangement is the power purchase agreement costs at 4 cents/kWh,” noted a spokeswoman for Hydro, when asked about the issue.
There is no opportunity for a PUB challenge on the exempted hydro stations, but there is also no information blackout on the part of Nalcor or the provincial government.
“While Hydro is not required to provide the information to the PUB due to the exemption, Hydro has been providing some information to the PUB in the course of information filings in the general rate application,” the spokeswoman noted.
The expropriated assets are now playing a role in power pricing — contributing significantly to the cost of power now being proposed by Hydro, by displacing Holyrood’s oil power.
The hydro asset regulatory exemption was put in place with little fanfare earlier this fall, by the cabinet of Premier Kathy Dunderdale.
The “Newfoundland and Labrador Hydro-Exploits Generation Exemption Order” of September 2013 states: “Newfoundland and Labrador Hydro is exempt from the application of the Electrical Power Act 1994, and the Public Utilities Act for all aspects of its activities pertaining to the purchase, from Nalcor, of electrical power and energy from the project.”
The exemption covers anything related to planning and engineering for new power generation at the four sites, and the negotiating and executing of contracts of any kind.
The exemption order also means Nalcor does not have to publicly reveal the amount of money taken in for the province from power sales from the sites.
According to the Department of Natural Resources, a decision on how the province’s negotiated and expropriated hydro assets will be dealt with in the long-term has yet to be made. There was no intention to hide the PUB exemption from the public, the province’s spokeswoman said, noting the exemption order is available online.