Muskrat Falls will eventually be our only option

Russell Wangersky
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Has the train actually left the station? Is there a barn door somewhere, looking for its horse?

Or is it a case of, when you leave a decision for long enough, it simply makes itself, good or bad? Because while going ahead with the Muskrat Falls project might not be the best choice for ratepayers, it might be the only remaining choice for Newfoundland Hydro, the province’s major power generator.


Well, it’s in the fine print of Hydro’s Aug. 8 capital projects application to the province’s public utilities board — the utility wants to spend $66 million on capital projects in 2013, and argues the money needs to be spent to shore up huge portions of its equipment that are operating years past the dates when it should have been upgraded or shut down completely.

First, Holyrood.

“The three units of the Holyrood Thermal Generating Station have now reached or exceeded their generally expected service life of 30 years. Condition assessment and selective life extension will permit them to operate reliably until 2020.

“Holyrood remains critical to the reliable supply of power to the Island Interconnected System, as it serves the base load of the system and will be required to do so in the short to medium term.

“The long-term operational plan for this facility has been developed in the context of the proposed development of Muskrat Falls with a high voltage direct current (HVDC) transmission link to the island. Should that project be determined to be the least-cost option for consumers and be sanctioned, Holyrood will remain a critically important facility during construction.

“Following completion of Muskrat Falls and the Labrador Island Transmission Link, the Holyrood plant will continue to be an essential component of the provincial electrical grid as a synchronous condensing facility. Additionally, the plant will function as a standby facility during the early years of operation of the Muskrat Falls Generating Plant and the HVDC link between Labrador and Newfoundland, until 2020, when it will be converted to a synchronous condensing configuration.

“The challenges faced by Hydro are complex because circumstances require that Holyrood must operate in a manner quite different than the norm for thermal plants. Conventional practice is that a thermal plant is base loaded throughout its career until it reaches maturity and then the plant is operated as a peaking or standby facility in its final years, thus operating at a very low capacity factor, often less than 10 per cent.

“This thermal plant has passed the age at which other utilities have performed condition assessment and life extension studies and have either retired their facilities or have initiated major life extension projects. However, until the Muskrat Falls Generating Plant is sanctioned and completed and power is brought to the Island Interconnected System via a HVDC link, the Holyrood plant must continue to operate at, or near, its historical average capacity factor of 40 per cent to 50 per cent annually and higher through the critical winter period. …

“The Holyrood capital projects contained in this application are necessary to replace assets which are at the end of their useful lives, and which must be replaced to maintain reliability through to the completion of the Muskrat Falls development.”

To say the Holyrood units have “reached or exceeded” their 30-year operating life is being generous: the units are 42, 42 and 33 years old.

Hydro’s gas turbines, which run for emergency peak power needs?

“Hydro’s gas turbine plants at Stephenville, Hardwoods and

Holyrood are more than 30 years old. The generally accepted life expectancy for gas turbine plants is between 25 and 30 years.

“A complicating factor in Hydro’s case is that the manufacturer of the power turbines, one of the key components at the Stephenville and Hardwoods plants, is no longer in business, eliminating the availability of factory technical support and spare parts. Also, the manufacturer of the gas generators (jet engines) at the Stephenville and Hardwoods plants has declared them obsolete, and the supply of spare parts, technical support and repair facilities continues to diminish.”

Older than 30?

Stephenville is 36 and Hardwoods is 35.

How about the company’s transmission network?

“Many of Hydro’s transmission lines were constructed in the 1960s with expected useful lives in the 40 year range. Annual reconstruction and general upgrades are needed to ensure that Hydro can continue to provide customers with reliable electrical service.”

It leaves a question that many might well ask: how does a skilled and forward-looking utility end up with so many critical assets operating so far beyond their life expectancy?

Is it mostly because the assets date back to particular all-at-once investment by long-gone administrations?

And, without a Hail Mary Muskrat Falls pass attempt — bringing both new power sources and new transmission infrastructure by 2017 and allowing Holyrood to limp along as a generating plant in one form or another until 2020 — how would Hydro have time to solve the problem that much of its equipment is too old to be fully trusted?

With Muskrat Falls as the expected solution, is anyone looking at the options that would be needed if Muskrat didn’t go ahead, and doing the groundwork to replace the fading assets? It doesn’t look that way.

Are all our eggs firmly in the Muskrat Falls basket?

It certainly does look that way.

While our energy warehouse and provincial government may not want to admit they’ve painted themselves — and us — quite carefully into the Muskrat corner, an ungagged public utilities board might have a different view. We’re listening.


Russell Wangersky is The Telegram’s editorial page editor. He can be reached by email at


Organizations: Island Interconnected System, Muskrat Falls Generating Plant, Holyrood Thermal Generating Station Labrador Island Transmission Link

Geographic location: Muskrat, Holyrood, Newfoundland

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Recent comments

    September 04, 2012 - 19:45

    The Muskrat Falls is the cleanest, safest, most reliable and cheapest to operate source of power in the world,There is no other more reliable,cleaner or cheaper sorce of power in the world,that can be produced than the force of a water falling over a Falls. NFLD should build the Muskrat Falls with the transmission line to the island then a sub sea line to the mainland with extra lines to carry the upper Churchill power when the one sided contract with Quebec expires, in I think 2041 NFLD will then have the largest, cleanest,most reliable source of power in not only Canada but the world, With the transmission line to the island then on to the mainland of Canada , to markets in both Canada and the united States

  • Cold Future
    September 04, 2012 - 13:20

    It might be more correct to say that Muskrat will be our only resort. As soon as the PC government decided to take the risky and ambitious route of proposing an energy warehouse to send the GFY to Quebec and compete head on with Quebec for mainland energy sales the die was cast. There is a lot of money spent, the costs are escalating but we may be too far down the river without a paddle to turn back. Sadly the ratepayers will be on the hook with the take or pay to cover all of the losses on power sales to the mainland at discount prices. It would take a pretty strong group in government to admit to the mistakes, abort the project, scrap the warehouse and take any of the more ecomomically viable and less risky option to provide for our future energy needs.

  • Winston Adams
    September 04, 2012 - 08:04

    Maurice, about six months ago , after reading the Energy Efficiency Action Plan, I sent a request to Nfld power, Nalcor and the Energy Efficiency dept to ask what person has the responsibility to meet the planned efficiency goals. I could find no one who had such responsibility. Thsi document is a public relations document for the most part , in my opinion. It has no teeth. No 1 year targets, no 5 year targets. It alllows the next government to blame the prior one for no action, and the current government no real action. Just words- intents to do great things but no targets, so one to blame when nothing gets achieved. Lots of wiesel words to give a good impression. Oh , yes , a 20 percent reduction by 2020, |so that's 10 percent in 4 years? 2.5 percent a year? Well ,no. It's no reduction for 7 years and then announce that we are unable to achieve our plan and so we set a new plan all over again.Now 2.5 percent reduction per year with a 1 percent forecast increase, gives a net 1.5 percent reduction. And this is easily achievable, and will cancel any need for Muskrat falls. So if Dunderdale holds to her words in her Energy Action Plan, With 1 year and 5 year targets , then she will have solved our power needs problem by energy efficiency. She has the plan. She just needs to tweak it, with firm targets that are achieveable. Now I wonder what John Smith thinks of Dunderdale's Efficiency plan. It's not his description.

  • Maurice E. Adams
    September 02, 2012 - 12:21

    PLEASE NOTE:--- “Between 1990 and 2008, the number of homes in Newfoundland and Labrador increased by 19 per cent, while the total energy consumption has declined by approximately 17 per cent.” (excerpt from Energy Efficiency Action Plan 2011) See more

  • Maurice E. Adams
    September 02, 2012 - 07:46

    NL Energy Efficiency Action Plan 2011:----Section 2.1 Defining the Challenge. "Energy efficiency is frequently referred to as the 'fuel of first choice' for meeting future energy needs, as it is often regarded as the cheapest, cleanest and safest way of ensuring society has secure, affordable and clean power".:::::........" the Conference of New England Governors and Eastern Canadian Premiers (NEG-ECP) meeting in 2010, all jurisdictions committed to reduce energy consumption in, but not limited to, homes, buildings and industry by 20 per cent by 2020....the Provincial Government’s commitment to pursue these targets will help to stimulate a major shift in the uptake of energy efficiency, so that the province can realize the significant environmental and economic benefits that energy efficiency can offer.".......... Premier Dunderdale's cover letter to the 2011 Energy Efficient Plan ---- "Energy efficiency presents a tremendous opportunity for economic development and environmental progress in Newfoundland and Labrador. That is why the 2007 Energy Plan placed energy efficiency at the heart of our government's vision for a sustainable energy future. Energy efficiency can generate important economic benefits, such as decreased costs to consumers, stronger business competitiveness and greater energy security. At the same time, it can reduce air pollutants harmful to human health,and contribute to efforts to tackle climate change. In recognition of these benefits, jurisdictions throughout the world are stepping up their efforts to promote energy efficiency. The same is true of Newfoundland and Labrador. The release of Moving Forward:Energy Efficiency Action Plan 2011marks an important milestone. It is the province's first strategy wholly dedicated to energy efficiency. It underlines our government's commitment to build on existing policies and partnerships to increase energy efficiency. It also speaks to the recognition that, to be successful, our efforts need to be far- reaching, long-term and transformative. Globally, energy efficiency could result in savings of hundreds of billions of dollars for organizations and individuals. Here in our province, financial savings are already being realized. Homeowners who improved the energy efficiency of their homes with support from the EnerGuide and Residential Energy Efficiency Programs saved, on average,$800 per year on energy costs as a result. The purpose of this action plan is to generate momentum into our province's collective efforts to increase energy efficiency. Using every unit of energy as efficiently as possible is the ultimate target.This plan sets a clear vision and goals to guide us moving forward." ....... So we should spend $8 - $12 billion on Muskrat Falls before 2020 because Nalcor forecasts about a 10% increase in domestic demand by 2020, while the Province is targeting a 20% "reduction" in domestic demand (home, buildings, and industry) by 2020. ----- Which is it?

  • Maggy Carter
    September 01, 2012 - 12:27

    Winston's analysis is spot on. Muskrat can be obviated by a concerted effort to reduce demand through existing, off-the-shelf heating, lighting and appliance technologies. The converse is also true. If Muskrat proceeds, it will no longer be in NALCOR's or Newfoundland's interest to promote conservation or green energy alternatives for households on the island. NALCOR will need more, not less, demand than it has projected to avoid exponential rate increases. For every homeowner who seeks to avoid those rate increases by investing in energy saving technology, his/her neighbour will inevitably pay more per kwh. And for every megawatt of energy sold at bargain basement prices to fat cat mining companies, homeowners will again be required to make up the difference. Wangersky's assessment is that NALCOR has deliberately neglected upgrading its generation and distribution systems so as to preclude any option other than Muskrat. Perhaps, but I wouldn't read too much into it. Virtually every provincial or regional utility is still relying on assets that are well beyond their designed life expectancy. Hibernia was engineered with a 30 year life span but with upgrading, and assuming the availability of subsea feeds from remote fields, it will likely operate for 60 years or more. The condition of Newfoundland Hydro's generating and distribution systems is little more than a red herring - just another NALCOR gambit to help sell a horrendously overpriced solution that violates every tenet of engineering, economics, finance and risk management. If government were to act rationally this Fall and cancel or defer Muskrat (which won't happen because too much money and too many political careers are on the line), NALCOR could easily rise to the challenge. Indeed, in its submission to the PUB and others, it has made crystal clear that the province will not suffer any power shortage whether Muskrat is sanctioned or not.

    • Gerry
      September 02, 2012 - 08:28

      Russel, How do you ungag a PUB?

  • Maurice E. Adams
    September 01, 2012 - 11:58

    A consultant (Hatch) report done for Nalcor just a few year back concluded that because Holyrood operates for only parts of the year, infrequently operates at capacity (only 1.6% of the time, 5.5 days a year on average), generally operates at only between 20 and 40% capacity, then Holyrood is effectively (operationally) only about half the ages quoted by Nalcor....... Even in winter, over the last 8 years, Holyrood operated on average at only 50% capacity, and over the last 6 years that has gone down to 44% capacity (IN WINTER), and last year? --- NOT AT ALL......... Holyrood is a $1.5 billion ASSET that still has about half its usable life left. ..... Who else but Nalcor would discontinue the operation of a $1.5 billion asset without utilizing that fully paid for asset to its fullest, and who would do so at a cost of between $8 billion and $10-12 billion for an unneeded Muskrat Falls project? And why?

  • Cyril Rogers
    September 01, 2012 - 11:56

    There are quite a few interesting scenarios in Mr. Adams' proposal and I would like NALCOR or the government to refute his assertions if, indeed, he is off the mark. His arguments make a lot of sense if these heating units can perform as well as he claims. If they can, why would we not be engaging in a major conversion to such systems, at a tiny fraction of the cost of building Muskrat Falls, whose final cost is yet to be determined. We know it will cost more than EIGHT billion and I have little faith that these costs will remain at that level. We still have no final agreement on the loan guarantee from the federal government so, what if? How would a lack of a loan guarantee affect the final cost? Further, EMERA may yet opt out of this project and where would that leave us?

  • John Smith
    September 01, 2012 - 11:15

    Well, no revelations here. Most of us know that we have aging infrastructure when it comes to our thermal generating facilities. Intersting to note how Bay D'espoir, and Cat Arm, Grand falls, Deer lake are not mentioned...why? Because they are hydro generating plants, and last far longer than thermal plants. Yet another reason why we should go with muskrat, instead of some LNG, NG, or any other type of thermal generator. Nalcor has invested hundreds of millions of dollars in replacing and maintaining it's infrastructure over the years, that's why we can still turn on the lights. Time to invest in a long term renewable answer to our coming energy needs, and Muskrat is that answer. If anyone has a better alternative I would love to hear it. Oh and turning down the heat, and shutting off the lights won't work, so eliminate that pipe dream.

    • W McLean
      September 01, 2012 - 14:37

      "John Smith", is it official Nalcor policy that demand management consists of "turning down the heat and shutting off the lights"? Because if that's the best you guys can come up with, wow.

  • Winston Adams
    September 01, 2012 - 10:57

    Russell, they say the best defence is a good offence. Could the timing aid the government debate that expediitures on Holyrood will be significant and are already needed? 66 million is only about what Nalcor is currently spending on engineering work for MF over 4 months. They spend almost twice that per year on oil for Holyrood. But yes, any alternative to MF must address the Holyrood problem. 66 million would allow 13200 domestic conversions to efficient heating, which for a average house would cost 10,000.00 each with non ducted variable speed units, whereby 50 percent of the cost is rebated to the customer. For a average house( as defined by Nalcor's data) it would reduce the electricity demand for that house by 3kw. For 13,200 conversions that gives 39.6 Megawatts of reduction in 1 year. Repeat this for 8 years and we will shave about 317 Mw from our demand. That's more that the 300 MW planned for the Island. 39.6 Mw is about double the forecast demand growth rate. So each year Holyrood use and oil consumption goes down.Less oil use helps finance the energy efficiency plan. Where would oil consumption for Holyrood be now if we started this 10 years ago? And the longer we wait, the more it seems that MF will be necessary. And then with high energy prices , customers will convert to high efficiency even without rebates. It's already starting, but too little , too late, if a serious efficiency policy is not implemented by the government. This question needs a answer: What will a serious energy efficiency policy do curb oil use at holyrood, and use of Holyrood, and its affect on a isolated island option? Hasn't this approach been ruled out for no good reason? Any wonder our Premier and Minister Kennedy skipped the US Governors conference in Vermont, where their government and 44 other US states are very successful to reducing demand by this approach. And our climate and electric heat needs here enable us to exceed what Vermont and others are doing.

  • Pierre Neary
    September 01, 2012 - 09:10

    Some very good questions posed here.

  • George S
    September 01, 2012 - 08:50

    It may have been August 2011 when The Telegram gave Nalcor the front page after a panel of journalists and Nalcor executives met to discuss the project. The Telegram also afforded Nalcor the opportunity to respond to the online comments. One comment i made was that Holyrood would continue to operate as a synchronous condensor and would consume oil to operate. Mr. Bennett, a Cable Atlantic alum, corrected me by saying that was not the case. The condensor would in fact be new and use electricity. Fast forward 12 months and tadaa! Imagine there being individuals who actually know something about the energy industry that dont work at Nalcor. Craziness. Sadly, it appears the Project Director doesnt even know how $300million will be spent.

  • Maurice E. Adams
    September 01, 2012 - 08:00

    If you review a report done for Nalcor (by Hatch), it concluded that the Holyrood units are effectively only half their ages. Nevertheless, Nalcor uses the ages you use here. Hatch said (paraphrased) that that they are essentially equivalent to units half their ages because 1), they operate on average for only a portion of each year, and 2) they rarely operate at or near capacity. ..... To say that Holyrood operates historically at 40 or 50 % capacity is misleading (it is similar to Nalcor saying that a 0.8% go forward load growth forecast is 'conservative' because Nalcor chose to compare 0.8% to our '40-year (historical) 2.3% growth rate) --- when our more recent 20-year growth rate has been only 0.1%. .......... Over the last 9 year period, Holyrood operated at capacity for only 1.6 % of the time (5.5 days per year on average), and not at all in 2011. Even in the worst months of winter (Jan, Feb, March) over the last 8 years Holyrood's average use in winter was only at 50% capacity, and over the last 6 years in winter that was down to 44% capacity. If Holyrood, operationally, is only half the ages quoted by Nalcor, then it would seem feasible and perhaps prudent to refurbish what is an existing $1.5 billion asset ---- and valuable asset that has half its useful life still remaining