Hydro plans to buy new generator

Costly purchase will help handle any periods of unexpected, high power demand

Ashley Fitzpatrick afitzpatrick@thetelegram.com
Published on January 6, 2014
Newfoundland and Labrador Premier Kathy Dunderdale and Nalcor CEO Ed Martin speak to the media at the Nalcor Headquarters at Hydro Place on Monday afternoon as they provided an update Sunday night’s power outage. — Photo by Joe Gibbons/The Telegram

Newfoundland and Labrador Hydro needs a new unit for power production.
As The Telegram reported Monday, Hydro has been relying in recent years on power generators — at Holyrood, Stephenville and Hardwoods in Mount Pearl — that are in service well beyond their expected lifespans.

According to documents on file with the Public Utilities Board (PUB), Newfoundland and Labrador Hydro has been planning to buy a new gas turbine generator to act as a secure backup for the island’s power system.

The spending would be spread over years, with a total cost estimated at $99.4 million.

To place that number in perspective, Newfoundland and Labrador Hydro’s entire capital budget in 2012 — spending on new equipment, construction and maintenance — was $77.3 million.

Newfoundland and Labrador Hydro has not bought the unit yet. It has not even applied to the PUB for approval of the purchase.

Ed Martin — president and CEO of Nalcor Energy, the parent company of Newfoundland and Labrador Hydro — said more information is expected to be seen by the regulator in short order.

The purchase of the generator will help “bridge the gap” and assure a solid backup power supply until the province’s $7.7-billion Muskrat Falls hydroelectric development comes online in 2017.

The PUB has been expecting to see the application for some time now. It was to be part of Newfoundland and Labrador Hydro’s capital budget filing for this year, but the utility pushed back the proposal related to the generator. It stated the unit will be applied for separately, within the next year.

“We are under a lot of regulatory scrutiny, public scrutiny, but so we should be,” Martin told reporters Monday afternoon at Hydro Place in St. John’s. “So when we go forward with an application (to the PUB), regardless what we’ve said before, we need to make sure all the facts and figures (are) current and lined up, and that’s what we’re working on.

“It’s on schedule to be in place at the right time to cover us off as we go forward.”

The PUB reviews all purchases by the province’s power utilities, and annual spending on the system, because increases in capital costs can lead to increases in power rates.

Attempts are made to control utility spending, limiting it to only what is considered necessary, to help keep power rates in check.

“You have to manage costs and reliability as well. So we have to be careful that we don’t overemphasize one over the other,” Martin said.

It is, he has said, about the right purchases at the right time.

Premier Kathy Dunderdale stood beside Martin and reiterated his comments, saying many of the criticisms currently being levelled towards the power utilities and the government are failing to note the regular public review of the system by the PUB and the documented long-term planning that evaluates reliability while keeping costs in check.

“You can build redundancy. I mean, you can go on and on and on with redundancy, but the ratepayers have to pay for that,” Dunderdale said.

afitzpatrick@thetelegram.com