Crown corp president says identified issues are being addressed
At Hydro Place in St. John’s there is a room, about the size of six phone booths parked together, with flow charts on the walls, housing a collection of white binders.
These binders, not overstuffed, have labels like “Holyrood binder,” “Gas turbine binder” and “Asset criticality and critical spares.”
They contain page after page of top-sheet scheduling and, collectively, the basis for oversight and maintenance of the province’s most important power assets for the next 20 years.
The room can be considered the end result of a significant effort, started in 2006, meant to both acknowledge the growing demands of the province’s aging power assets and to change the way those still-viable power plants, switchyards and lines are kept and serviced.
Being able to stand in the asset management room, pointing to a physical representation of the hours punched in, is part of why Hydro president and CEO Ed Martin is not prepared to concede any ground to anyone claiming the utility is not planning, not paying attention to the importance of power system reliability.
Those criticisms have been launched at Hydro since the release of a report Thursday, completed by Liberty Consulting Group and filed with the Board of Commissioners of Public Utilities (PUB). The report was ordered after a period of rolling blackouts and unplanned power outages in Newfoundland from Jan. 2-8.
Martin said it does not provide any evidence that an act or omission by Hydro caused the power problems.
He said Friday he does believe some “considered decisions,” including the scheduling of maintenance on the Hardwoods back-up turbine into late December, did ultimately contribute to the troubles.
The report “generally aligns” with the findings of Hydro’s internal review, he said, and contains useful recommendations for the utility going forward.
“I think it’s important for everyone to be looking at it from the perspective of what has been achieved. I think our people have done a tremendous job. I came in here seven plus years ago. The first thing I noticed was the people were fantastic, no question about that. But the second, third and fourth things I noticed at the time was somewhat troubling.
“The safety performance, to me, was unacceptable for an operation of this size. The age of the assets and the asset management processes and the work that was being poured into them for their age was not enough, not acceptable. The third thing was I could see a looming decision coming with respect to demand growing and more generation being required and I knew we had to get down to business and make some decisions.”
The major items have since been addressed, he said, pointing to an overwhelmingly positive change on key safety indicators, plans in the asset management room and the sanctioning of the Muskrat Falls hydroelectric project.
Yet these foundation items have also led to more work for the utility. And after the Liberty report, Martin said he believes that workload requires some consideration.
- Read more special articles:
- Alberta selling caribou habitat despite federal recovery plan
- 2013 a terrible year for big mining companies: PwC
- Putting at-risk species further at risk
- Liberals say Kami mine benefits not rich enough
“We’re doing two things possibly: increasing staff as well as forming relationships with outside contractors who may be able to come in on a short term basis,” he said.
That will come at a cost.
“I can’t tell you how much right now, because we have to get that plan together,” he said.
Hydro has already increased its annual capital spending, as part of its plans for power system renewal and expansion.
“Over the period 2009-12 the average annual capital expenditure was approximately $62 million while for the period 2013-18 the average annual capital expenditure is expected to be in the range of $154 million,” the PUB noted, when approving Hydro an estimated budget of $98 million for 2014.
These annual budgets are separate from the Muskrat Falls project budget and do not include the cost of other special projects also falling to Hydro: $119 million estimated for a new power generator to be placed beside the Holyrood power plant, $300 million for a new power line from Churchill Falls to Labrador West and $268 million, at last estimate, for a new power line from Bay d’Espoir to the Avalon Peninsula.
All of these special projects will be needed, Martin said, between now and when Muskrat Falls comes online.
“The investments we’re making are there to keep the reliability and as we go to Muskrat Falls and hook up both ways for the first time in our history, you’re talking the ability like the rest of the country has to pull power from other places to help us in times of need,” he said.
“So I see the reliability improving because of the investments we’re making on the existing system and as we move forward to Muskrat we’re getting extra benefits.”
The same investments are poised to hit ratepayers hard. The new combustion turbine to be placed beside the Holyrood plant alone has the expectation of increasing rates by 2.3 per cent.
Martin said there “absolutely has been” discussion at Hydro and with the provincial government about how the cost of these unprecedented investments will impact ratepayers. But as for if there will be some sort of relief offered?
“That’s certainly out of my bailiwick. Hydro’s responsibility is to do what we’re doing. Legislatively, that gets charged to the ratepayer,” he said.
Meanwhile the PUB has yet to make any orders in relation to immediate needs for the system, with consideration of the Liberty report. They are expected to do so in their own report, to be issued May 15.