A tale of two projects

The Telegram
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An interesting electronic document made the rounds on Monday from Hydro-Québec — it was the utility’s annual environmental performance report, a document that looks at everything the company has done, from demand management (finding ways to help customers reduce electrical consumption) to construction of new hydroelectric operations.

As with most things Hydro-Québec does, the publication is glossy, filled with colour pictures, and is more than a little, shall we say, self-promotional.

But two things stuck out and both had to do with new hydroelectric facilities and with numbers, as well.

The first was details about the company’s just-finished Eastmain-1-A/Sarcelle/Rupert project. That facility cost $4.7 billion, has an installed capacity of 918 megawatts, and will bring new power into the Quebec grid at a cost of 4.3 cents per kilowatt hour — including transmission costs. Oh, and for that facility, the report boasts, “The cost of construction totalled $4.7 billion, less than the $5 billion originally budgeted.” Interesting, given that Nalcor Energy has said it is finding “cost pressures” on this province’s Muskrat Falls project, and is no longer talking about just what the current budget numbers are.

The second was details about a different hydroelectric facility — Hydro-Québec’s Romaine development is preparing to bring its first generating station online, Romaine No. 2. The Romaine system involves four generating stations and is forecast to cost $6.5 billion with an installed capacity of 1,550 megawatts. The operation is scheduled to bring its power into the Quebec grid at 6.3 cents per kilowatt hour, once again, “including transmission costs.”

Both the projects make for an interesting comparison to Muskrat Falls.

Muskrat Falls is both smaller and more expensive than either Eastmain or Romaine, and the power it’s set to produce will cost, at a minimum, seven cents per kilowatt hour, with the final cost including transmission (because we have to build an entire transmission system to bring the power from Labrador to the Avalon) at a minimum of 21 cents per kilowatt hour, provided there are no cost overruns.

So why does that matter?

Well, perhaps another part of the Hydro-Québec report would help shine a light there.

“Electricity sales outside Quebec remain an important source of the company’s profitability. Quebec hydropower is an attractive energy option for the New England states, as it can contribute to achieving their (greenhouse gas) reduction objectives. Hydro-Québec is continuing talks regarding possible participation in transmission line projects between Quebec and New England, among other markets. These connections would allow for increased exports to those markets,” the report says.

Ah, New England. You might remember that as one of the places we’re planning to sell Muskrat Falls power.

Where we’re planning to sell more expensive power, that is — and more expensive power that we also have less to sell of than our competition seems to have. They have a track record on electrical sales. Right now, we do not have anything close. They have proven compliance with American open access tariff requirements; we have provincial legislation closing the door to that kind of open access.

Why is it that anyone is expecting this to end well?

Organizations: Hydro-Québec, Nalcor Energy

Geographic location: Quebec, Muskrat Falls, Eastmain New England Labrador

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  • Newfoundland and Labrador is receiving SHOCKING unequitable TREATMENT from Ottawa.
    May 15, 2014 - 12:11

    Henry Jefford, I agree with your post. Our treatment in Canada is deplorable with the latest assault coming for the inshore Shrimp fishers, THOSE WHO HAVE ADJACENCY TO THE RESOURCE, who had their quotas cut substantially and given to Prince Edward Island. I heard Senator Manning on today saying that Ottawa doesn`t recognize our province and he blames it on the ABC Campaign Danny Williams waged against Ottawa . In my opinion Ottawa has a contract with our province in Confederation and it has to abide by certain rules. If what Senator Manning said is so, and everything points to that being the case from the way we are treated, we need to send an all-party delegation to Ottawa to advise Ottawa it is not keeping up what is expected of it by our province . If they are not going to keep up their end of the bargain, we have no other choice but to ask to be let out of this Canadian Union and take back our fishery and whatever else becomes null and void because of the ill treatment we are getting from Ottawa. Ottawa seems to have avoided its contract obligations with our province over and over. What are our politicians and senators doing about this? I do NOT hear a peep out of them, except for MP Brian Cleary. We need our politicians and senators to address this problem. By the way I thought Canada was an equitable country, but it is not so for the province of Newfoundland and Labrador when you consider every natural resource that we have developed thus far was destined for other Canadian locations and our human resource had to follow to find work. How can a province grow and economy and provide work, infrastructure and services with that type of treatment?

  • Henry Jefford
    May 14, 2014 - 22:07

    The one sided Questionable contract now in place between NFLD & Quebec Expires in 2041 ! This so called legal contract has paid Quebec over $100 BILLION Dollars for the Quebec share of the power produced and sold, To Newfoundland only receiving $ 1 Billion ? All legal contracts are suppose to be fair and Binding to Both parties? WHAT WENT WRONG HERE ? NFLD SHOULD BUILD A TRANSMISSION LINE THAT WILL ALSO CARRY THE UPPER CHURCHILL POWER AFTER the year 2041 WHEN THIS ONE SIDED CONTRACT EXPIRES, ONLY THEN WILL NFLD GET ITS FAIR SHARE For the power that is Stolen NOW !

  • Musrat Falls will benefit others much more than Newfoundland and Labrador.
    May 14, 2014 - 16:04

    It is pretty corrupt though for the Newfoundland and Labrador government politicians, who should have been safe-guarding matters for us, would decide to construct the Muskrat Falls Project that will cost the electorate and the province many times more than the revenue it will generate for us over the next few years. Unless, of course, there is something we are not told about that will be added to benefit this contract. The Newfoundland and Labrador Hydro consumers will be paying off the Muskrat Falls project for years with no returns while their hydro bills will escalate exponentially to benefit others. The only ones, I see, who will benefit from this project will be the orchestrators of the project, the Nova Scotia Government, Emera and the hydro-consumers of Nova Scotia. Of course there will also be energy for the $32 Billion dollar Shipbuilding Project awarded Nova Scotia by the Federal Government. Newfoundlanders and Labradorians will be burdened for another 32 years. I wonder how much say did Nova Scotian MP PeterMcKay, who serviced our province for a while compliments of Prime Minister Stephen Harper, have into the Muskrat Falls Project? There is a lot more regarding this contract I am afraid we are not privy to.

  • GINN
    May 14, 2014 - 14:49

    Just another anti-Nalcor attack from a wholly owned Quebec newspaper. Comparing the two projects is an apple/orange comparison since the Muskrat Falls project and its higher costs was our only option since the Quebec government/Q. Hydro shut the door on viable cooperation via the land route.

  • Brad
    May 14, 2014 - 10:37

    New England will get our power but they won't pay for it, Newfoundlanders will be paying to subsidize their power.

  • Cashin Delaney
    May 13, 2014 - 21:25

    "achieving their (greenhouse gas) reduction objectives" The Romaine River is being developed by Hydro-Québec for hydro-electric generation to satisfy a demand for carbon offset trading programs based on green hydro-energy. Is this form of hydro-energy really green, considering the order of magnitude and the associated environmental damage? Since the Brazil Summit in 1998, the world has learned how to spin concrete dams until they turn green, and accredit all warming of the earth to CO2 ‘pollution’. “Newfoundland Premier Brian Tobin and Québec Premier Lucien Bouchard today announced that Newfoundland and Labrador Hydro and Hydro-Québec will commence formal negotiations toward an agreement to further develop the hydroelectric power potential of the Churchill River in Labrador, and related projects in Québec.” ~March 9, 1998 http://www.releases.gov.nl.ca/releases/1998/exec/0309n05.htm The Telegram does not attempt to explain these projects in terms of important carbon trading geopolitics, but only projected rates, cost and boilerplate capacity, thereby propagating an inflated level of carbon offset. Is it a hypocritical justification for damming the remaining decent flow of these rivers to prevent CO2 emission-induced climate change? Whether you are a climate denier, an alarmist, or whatever, this should seem equally insane. If it does not, someone please explain it to me without resorting to slight of pen. It seems we forget why we were so ceremoniously presented with a Federal loan guarantee in the first place. All these CARBON RUSHED projects are somewhat scandalous however, as the cost of production will likely be higher than the price at which the electricity will be sold, as shown in a 2010 Doc Film, "Chercher le courant" by Nicolas Boisclair and Alexis de Gheldère. The film argues that the Romaine project is unnecessary, unprofitable, and ecologically destructive, as the MF project still seems, no matter how hard Ken Marshall cheers, or how close to horse-like Mr. Ed Martin can hold his face. North America needs backup generators, and has kindly given its ruling elite mandate to build them with loans based on emissions reduction programs that dissolve into the environmental equivalent of church-purchased sin indulgences. This project may be driven by carbon trading. More saddening, it may be driven by the price of concrete more so than the price of electricity.

  • Premier Marshall why can Quebec Hydro build 2 projects with 3 times the capacity of Muskrat Falls at a lesser price? Would you lease explain!
    May 13, 2014 - 13:50

    Premier Marshall can you Please explain why the 2 Quebec Hydroelectric Projects talked about in the below excerpt taken from article above, with a combined capacity of 3 times the capacity of Muskrat Falls, cost less than Muskrat Falls? What are we to think other than something is not above board? I hope we aren't being shafted with this project. I am sure every Newfoundlander and Labradorian would like an explanation. ""1-A/Sarcelle/Rupert project. That facility cost $4.7 billion, has an installed capacity of 918 megawatts, and will bring new power into the Quebec grid at a cost of 4.3 cents per kilowatt hour — including transmission costs. Oh, and for that facility, the report boasts, “The cost of construction totalled $4.7 billion, less than the $5 billion originally budgeted.” . The second was details about a different hydroelectric facility — Hydro-Québec’s Romaine development is preparing to bring its first generating station online, Romaine No. 2. The Romaine system involves four generating stations and is forecast to cost $6.5 billion with an installed capacity of 1,550 megawatts. The operation is scheduled to bring its power into the Quebec grid at 6.3 cents per kilowatt hour, once again, “including transmission costs.”"""

  • lambo
    May 13, 2014 - 08:54

    Its the danny williams dynasty at its best. This man has the ability to choose candiadtes and premiers at will. The end game is the privatization of NALCOR. Mr. William s is also invested to the guilds in Emera. I wish more people were aware of this bc if the were we would be in the streets protesting

  • Roy
    May 13, 2014 - 07:30

    Of course they can compete in the export market. It's the Joe Blows trapped in the province that will be paying for this thing. And the people who will get it worse are those that can't afford to invest in alternatives or more efficient systems.

  • Ken Collis
    May 13, 2014 - 07:14

    Don't you be so foolish, my son. Muskrat power will cost $0.00 per kilowatt hour. The WHOLE project is to be paid for by the ratepayers of the province, and not the big business interests either. They get a very low preferred rate remember. WE will pay for the cost of the project and the sale of power to NS or New England will generate cost free funds to be used as Minister Martin wishes.