New legislation coming on Muskrat Falls

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Ashley Fitzpatrick
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Government looking to change Electrical Power Control Act, PUB’s project dealings

The government is looking to re-write the laws dealing with electricity and power rates in the province.

The legislative changes will detail how the Public Utilities Board (PUB) will have to deal with Muskrat Falls power.

These changes will be introduced at the same time the province brings in a new policy governing industrial power rates.

Changes will affect the Elect-rical Power Control Act and other

related acts according to Natural Resources Minister Jerome Kenn-edy. A first draft is in progress.

The public normally gets a first look at proposed legislation as it is tabled in the House of Assembly.

“In this particular case ... if there’s anything there that’s unusual, or affects Muskrat Falls, we’ll ensure that people know prior to the debate in the House of Assembly,” Kennedy said.

The design and construction of the hydroelectric development in Labrador, expected to cost about $7.4 billion, is not subject to PUB scrutiny.

The immunity is a result of stipulations in the Nalcor-creating Energy Corporation Act (2007) and the Labrador Hydro Project Exemption order (2000) — an exemption under the Electrical Power Control Act and the Public Utilities Act.

Now, the province is looking to enshrine what happens with the project post-construction.

When it comes to power rates for regulated utilities, the PUB investigates the availability of supply as well as the cost. The rate of a return — how much a utility earns from the sale of its power — is another consideration. Kennedy said the provincial government will set a rate of return for Muskrat Falls power, providing a firm, long-term number that will help in financing the project.

The rate of return will affect Newfoundland and Labrador Hydro, a Nalcor subsidiary, as it purchases the power from the Lower Churchill. In turn, Newfoundland Power purchases the bulk of its power from Hydro.

The planned legislative changes were mentioned by Kennedy in a meeting with a panel of reporters and editors at The Telegram Monday afternoon. Video of the Q&A session, running about 90 minutes, and focused mainly on the Lower Churchill project, will be made available at www.thetelegram.com as stories on the topics covered are published.

Questions on the PUB led off the session, as the minister was asked about recent comments about the PUB and how the regulator can be expected to continue to do its job, when it is without the confidence of the government.

“I think my comments (on the PUB) have to be placed in the context of Muskrat Falls,” he said.

“We had spent ... nine months waiting for a decision (on whether or not the Lower Churchill plan was the least-cost option for power). There was an initial six-month time frame from the time that the reference question was provided them, and then they were given another three-month extension. It cost more than $2 million and then the result was not very helpful, to say the least.

“I went on to state that we had no intention of sending any of this material back to the PUB and that I didn’t have confidence in them in relation to Muskrat Falls,” he said.

“They still have issues they have to deal with, with rates and transmission and things like that. 

“So they can continue to do their job there, but we’re not going to be sending Muskrat Falls back to them.”

Meanwhile, the government continues to offer up documentation on various aspects of the project.

Along with final, pre-construction cost estimates, reports were released this past week on the potential for wind and natural gas to feed provincial power demands, concluding neither option was as cost-effective as the Lower Churchill project.

Reports were also released on the need for power in Labrador for industrial development, specifically new and growing mines, ultimately showing a need for new generation.

Looking ahead, reports on the proposed dam at Gull Island and legal opinions on issues around the Upper Churchill are on the way.

Rates are to be the main topic today, as a report is released discussing how the project will affect power rates and power bills.

The premier has said the federal government’s loan guarantee is expected to be settled within the next week or so.

While saying he believed a debate is a good idea, Kennedy said the loan guarantee is the final piece before the province can move the project forward with a sanction decision.

 

afitzpatrick@thetelegram.com

Organizations: Public Utilities Board, Energy Corporation, Newfoundland and Labrador Hydro Newfoundland Power The Telegram

Geographic location: Muskrat Falls, Labrador, Gull Island

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