Annual general meeting comes with promise of Lower Churchill update
By the end of June, according to Nalcor Energy president and CEO Ed Martin, the people of Newfoundland and Labrador will have an update to the estimated total cost of the Lower Churchill Project.
Ed Martin, president and CEO of Nalcor Energy, said at the company’s annual general meeting in St. John’s Wednesday it needs “to get the facts out there” to residents of Newfoundland and Labrador. — Photo by Rhonda Hayward/The telegram
Nalcor has been the target of criticism for not making the amount available before now, given the project’s importance to the province.
“There’s two or three more pieces I’d like to have, but I’m finding that it’s probably not material enough to wait on. We need to tell the people what’s happening. We need to get the facts out there,” Martin said, speaking to reporters during a break in Nalcor's annual general meeting at the Holiday Inn in St. John's Wednesday.
In addition to basic cost figures, information being prepared for release will include details of a power purchase agreement with Newfoundland and Labrador Hydro, Martin said, providing more information on the cost recovery.
Costs are set to start affecting provincial power bills as the new power plant at Muskrat Falls and associated transmission lines come online in 2017.
However, the project is not the only thing poised to drive up power rates.
As reported, Newfoundland and Labrador Hydro is spending $120 million on a new backup turbine for the island power system, there is a $300-million power line to be built from Bay d’Espoir to the Avalon Peninsula and another $300-million line to be built from the Churchill Falls power plant to Labrador West.
Hydro has also planned to significantly increase its yearly spending on the existing system, for maintenance and upgrades.
Nalcor CFO Derrick Sturge said Hydro’s spending is expected to run about $245 million in 2014. He said Hydro has not issued debt in the capital markets since 2006, but in the next five years costs will be covered through a mix of equity and debt financing.
The rising costs relating to the provision of power will be recovered from power bills.
Both Nalcor and the province have said higher power bills were coming with or without construction at Muskrat Falls, but little has been said so far about the anticipated effect of those rising costs on the people of the province.
Martin said any type of relief or subsidy introduced as relief to ratepayers, if required, would have to come from the government.
“We would have to be directed to do that. Legislatively, we don’t have the ability to make those types of decisions. We have to identify what’s right, and then we have to make sure that we get the recovery from the ratepayer for that and we would proceed on that basis,” he said.
Nalcor is looking at the big picture and that view includes the promise of significant returns ahead for the Newfoundland and Labrador government, as power exports and oil sector investments start to pay off. The Crown corporation is already in the process of staffing its own energy marketing company, providing an in-house team to handle power sales outside the province.
Ken Marshall, chair of the Crown corporation’s board of directors, said the plans are constantly being challenged.
“As the board of directors, our role is to provide guidance and direction as the business continues to grow. We have a great deal of respect and trust in the competency and the expertise at Nalcor and we work hand in hand with senior executives to plan for the company’s future, manage levels of risk and ensure our business operations benefit the economic security of current and future generations,” he said.
Notably, Nalcor’s overall revenues were up in 2013 over 2012, to $785 million from $726 million. Those numbers are up from the 2006 total of $548 million.
Net income was $96 million in 2013, up $3 million from the year prior and higher than the $70 million recorded in 2006.
Total assets in 2013 reached $9.5 billion, including $5 billion coming from the Lower Churchill Project debt issue. That’s up from $3.4 billion in 2012 and $2.2 billion in
The Q&A segment of Nalcor’s annual general meeting lasted about three hours. Questions from audience members touched on operations at the Bay d’Espoir hydroelectric plant, oil used at the Holyrood power plant, reliability of the island power system leading into the coming winter, the acquisition of seismic data to encourage offshore oil exploration and the ultimate cost of Muskrat Falls development to ratepayers — to name just a few topics.
Martin responded to every question. He also promised to see answers to questions submitted online posted to the Crown corporation’s website.