Hydro not troubled by consultant’s report

Ashley Fitzpatrick
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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.

“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.

afitzpatrick@thetelegram.com

Organizations: Liberty Consulting Group, Board of Commissioners of Public Utilities

Geographic location: Holyrood, Muskrat, Newfoundland Labrador West

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Recent comments

  • streeter
    April 27, 2014 - 07:18

    Does no one get what's going on here.......... Ignore basic maintenance and basic capital replacement to the point an amature would know the difference, to the point in fact people are saying, there must be something much bigger we are missing here......why was someone notmchecking the lug nuts and tire pressure........ then you let the lights go out and voila....then go the PUB and ask for money.........and make it look like it has to do with lack of money.......and not woeful mismanagemeht.......

  • Tony Rockel
    April 26, 2014 - 12:09

    Where is "John Smith"?

    • Alice
      April 26, 2014 - 12:33

      His contract wasn't renewed. But don't spill any tears. Like Steve Kent, he was texting his BS from a beach in Florida. Withholding information from the public was only one part of the plan for the great Muskrat scam. The other was the spread of false information and a public attack on anyone who dared question its merits. As long as there are big dollars at stake, there will always be a job for the John Smiths of the world.

  • Maurice E. Adams
    April 26, 2014 - 10:50

    At that rate (2.3% rate increase for a $120 Million turbine), then a $10 Billion Muskrat Falls generation plant will drive rates up about 200%. ----- Back it up to a 100% (doubling) for us early year customers, and that means our children will have to pay between 200% - 300% more.---- Great long term plan for future generations no doubt. ---- Some "heritage" fund. ----- Add to that the operating costs alone in the 50 year is forecast to be 4 times that in the early years (from $50 Million to $200 Million), and the Independent Engineer's Report says that their Operating cost estimates are too low, and also, any potential added costs due to costs overruns and recommended additional geotechnical studies on the North Spur have not been factored in.......... Least cost? ---- Never was. Is not. And never will be. Time to "halt" and "review".

    • Tony Rockel
      April 26, 2014 - 12:26

      But Tom Marshall says we should just blunder on until we find out if MF is "too expensive". Well it is and always was too expensive. And Dwight Ball sees not reason to halt this monstrosity because he "likes Nalcor" (God only knows why anyone would like this bunch of bunglers except for the Danny Dynasty and its hangers on).

    • Joebennett
      April 26, 2014 - 18:31

      Is there anybody in this government got any sense ? This thing is really starting to bother me a lot. I'm having a struggle to pay my bills now. I guess it's going to be the welfare line for me.

  • Maurice E. Adams
    April 26, 2014 - 07:56

    A 2.3% increase in rates for a $120 million turbine. How much then will a $8B to $10B Billion unneeded Muskrat dam at increase our rates?

    • Joebennett
      April 26, 2014 - 10:58

      We will the most expensive province to live in once MF comes on stream. Time to re-think my retirement plan.

  • Corporate Psycho
    April 26, 2014 - 07:56

    It's going to be sad when people have to choose between cat food or dog food to eat or have no heat. Get your house off the grid if you can.

  • Concerned
    April 26, 2014 - 06:47

    120 million is 2.3% increase. 300 million for the line to avalon is a 5% increase. A 300 million line to lab west is another 3-4% increase. Another 300 million to kepp h'rood going, Then the grand daddy of them all... muskrat falls? Our rates will be increasing 65 to 85% before this is all done. Nalcor are conviently and typically throwing the government under the bus... we tell them everything. Government say nalcor are the experts. lets have a change in leadership at government, and at nalcor.

  • Tony Rockel
    April 26, 2014 - 06:28

    Why should Ed Martin be "troubled" by ANYTHING to do with Nalcor's blunders? After all, our equally incompetent government has given him a free hand to do as he pleases without any consequences for him. And judging by his bland, almost robotic pronouncements in the face of overwhelmingly negative evidence, I doubt that he would be "troubled" if his rear end was on fire.

  • Sick of the shills
    April 26, 2014 - 06:08

    More hot air from Ed Martin. It's a shame they can't harness it to produce electricity.

    • Dolf
      April 26, 2014 - 08:07

      What premier said; "he should be shot"? Please, don't remind me of the rat's name.

    • Joebennett
      April 26, 2014 - 09:00

      Well spoken.

  • Guy incognito
    April 26, 2014 - 05:55

    Dunderdale was never concerned by bad reports either.......

  • Oh my
    April 26, 2014 - 04:52

    Yeah, that $300M power line we are paying for is for Alderon. This is all repugnant. We could have used natural gas for our power source for billions of our dollars cheaper. If it was really all about that, as we were sold in the first place a few years ago. Bottom line here: woefully inadequate maintenance and management of our power infrastructure and Ed Martin should take the fall for it. Instead, here he is with his typically arrogant bafflegab, brazening it out.