PUB probe is welcome news

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By Ron Penney and David Vardy

We are pleased that the Public Utilities Board (PUB) will conduct a full enquiry, including public hearings, into the failure of Newfoundland and Labrador Hydro (NLH) to meet its legal obligations to provide electricity to the province.

The proposal of the government to hold an “independent enquiry” under terms of reference it establishes and conducted by someone it appoints cannot inspire confidence and was obviously an attempt to foreclose a PUB inquiry and hearing.

The PUB has acted with courage and integrity and we are confident it will get to the bottom of why this has happened and what remedies must be put in place to prevent repetition of the threats to public safety and security posed by instability in our electrical system.

We trust this inquiry will also closely examine the reliability issues associated with the Muskrat Falls project, which may make last week’s problems seem minor in comparison, with possible outages up upwards of a month or more if there is a loss of power, according to Manitoba Hydro International, who recommended a higher construction standard be used in building the transmission lines from Muskrat Falls to customers on the island and on the mainland.

While the recent outages were driven principally by generation failures, during high wind conditions and low temperatures, there is also a high risk associated with the 1,100 km transmission line from Muskrat Falls to St. John’s.

Many power interruptions in the past have been caused by the icing of transmission lines and power poles combined with high winds, when the temperature has been just below the freezing point.

We are concerned that government has not given sufficient weight to the question of reliability and sufficiently compensated for the risks associated with this long distance transmission line, given the adverse maritime climate and the sub-sea crossing under the iceberg-scoured Strait of Belle Isle.

These risks are exacerbated by the high wind and icing conditions prevalent in alpine conditions, on high ground in southern Labrador, on top of the Long Range Mountains and across the Isthmus of Avalon.

Nalcor’s plan to remove the Holyrood plant from the island’s generation system after the interconnection of Muskrat Falls and to rely on hydro generation exclusively must be revisited.

For this reason we believe that it would be short sighted to limit the board’s inquiry to the system as it is currently configured. We have written to the PUB to frame a wider range of issues which should be included in the terms of reference of the board’s inquiry and hearing. A copy of this letter is posted on the PUB website.

The recently approved Energy Access Agreement with Nova Scotia commits from 44 per cent to 57 per cent of Muskrat Falls energy output to Nova Scotia. Yet there is no provision for emergency power to flow the other way, from Nova Scotia to Newfoundland.

Exhibit 106, submitted by Nalcor to the PUB as part of the Muskrat Falls hearings, reveals that emergency energy from Nova Scotia would be required in the event that the Labrador interconnected link were out of service for long periods.

Despite this requirement, there has been, to the knowledge of the undersigned, no firm contract between Emera and Nalcor for the provision of such emergency power.

What action has been taken to arrange for such emergency power supply from sources on the mainland?

There is a troubling aspect to the PUB process and that is the way in which the consumer advocate is appointed, particularly when the focus is upon a provincially-owned Crown corporation, such as Nalcor or NLH.

In Nova Scotia, the consumer advocate is appointed by the Utility and Review Board. In our case, the consumer advocate is appointed by government with a budget also approved by government.

That may not make much difference in matters involving privately owned utilities, such as Newfoundland Power, but it certainly does in the case of an inquiry into the actions of Newfoundland and Labrador Hydro, which is a corporation owned by the government. There is an inherent conflict of interest.

We are calling for the government to give the PUB the power to appoint an independent consumer advocate and allow the PUB to determine what financial resources must be made available, along with other terms and conditions of appointment.

We also recommend that the government show deference to the initiative of the PUB to undertake an independent inquiry with public hearings rather than to duplicate the work of the board or implicating the board and Newfoundland Power in causing the recent outages.

The board is a duly appointed quasi-judicial body which can restore confidence in the system if allowed to discharge its statutory duties by receiving all relevant information from the public, NLH and independent energy experts, through an open and transparent public hearing.

We ask that government reconsider its proposed investigation and allow the PUB to function in accordance with its mandate and in keeping with good governance practices throughout Canada and the United States.

Ron Penney is a former deputy minister of justice for the province and former St. John’s city manager. David Vardy, is a former clerk of the Executive Council and chairman of the Public Utilities Board.

Organizations: Public Utilities Board, Newfoundland Power, Utility and Review Board Newfoundland and Labrador Hydro Executive Council

Geographic location: Muskrat Falls, Nova Scotia, Belle Isle Southern Labrador Long Range Mountains Holyrood Newfoundland Canada United States

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Recent comments

  • Maggy Carter
    January 15, 2014 - 12:40

    Another strong case from Penny/Vardy which also, indirectly refutes arguments from Gordon Weil in Monday's paper. Following comment did not make it into that column: With all due respect to Mr. Weil and his knowledge of the industry, his analysis is flawed. All things being equal - that is to say a modern, efficient , properly maintained thermal generating station at Holyrood versus a new hydro-electric facility at Muskrat, Holyrood comes out ahead on reliability. Where Holyrood's reliability exceeds Muskrat is on transmission. Holyrood is on the doorstep of the province's most dense electrical market - the St. John's urban area, while Muskrat is 1200 topographically and climatically challenged kilometres away. Whether it is along the rough mainland wilderness, the Labrador Straits, or the Northern Peninsula's Long Range Mountains, the delivery of Labrador power to St. John's is no cake walk. An ice storm that fells transmission towers or, worse, an iceberg that scours a subsea cable can take weeks if not months to repair - especially in the dead of winter. Indeed, as Weil himself hints, while Muskrat and Holyrood were promoted by NALCOR as an either/or proposition, the reality is that Holyrood - or some other on-Island alternative - will always be needed as a back-up for Labrador power destined for the Island. Weil sees that redundancy coming in part at least from the Maritime Link - alluding to unspecified sources in the Maritimes and the New England states. To make that case, Weil would need to demonstrate that - for example - in the depths of our blackouts two weeks ago (and assuming a break in the Labrador-Island Link) there was surplus power in the Maritimes that could have been rerouted back to Newfoundland across the Maritime Link. Weil provides no evidence to that effect - nor logically would we expect it to be given that the Maritimes were suffering the same deep freeze as NL. We can expect that it will be even less likely a scenario once NS has become dependant on Muskrat power. But more astonishing still is Weil's assertion that NL should contribute even more to a Maritime 'power pool' by not committing excess Muskrat power longterm, for example, to industry in Labrador. Mr. Weil seems not to appreciate the extent to which NALCOR, by acquiescing to the UARB's latest demands, did in effect create such a power pool. NALCOR agreed not to sell excess Muskrat power under long term contract to markets, for example, in the U.S. in order to give priority to EMERA and NS Power. NALCOR and the Dunderdale government have given and given to solve NS's power dilemma until the NL ratepayer and taxpayer bled - profusely. Already Newfoundlanders and Labradorians are on the hook to subsidize NS power rates (BELOW OUR COST OF PRODUCTION) for the next 35 years. I am astonished that Weil is still asking for more.

  • Tony Rockel
    January 13, 2014 - 10:19

    Talk about adding insult to injury--- the Blunderdale government, having previously excluded the PUB from any effective input into electric power management in this province, now wants to investigate the PUB!

  • Anna
    January 13, 2014 - 08:51

    I agree. Why should the tax payers fund another independent review by the government when we all know the reviewers will not be qualifed to undertake such a review? The review by Nalcor and the PUB should be suffice.

  • Maurice E. Adams
    January 13, 2014 - 06:52

    If reliability is a problem now when Holyrood and the bulk of the applicable distribution system is in the midst of its Avalon customers, how reliable will the 1,400 kilometer extension cord from Labrador be and how reliable the available power when almost 2/3rds of Muskrat's rated power will legally be committed to Nova Scotia?