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Letter: PUB defers to N.L. Hydro, allows evidence to be ignored

Published on January 31, 2017

Muskrat Falls

©Telegram file photo

On Jan. 20, the Public Utilities Board issued a ruling granting a motion by Newfoundland and Labrador Hydro asking that expert evidence provided by the Grand Riverkeeper Labrador (GRK) be removed from consideration in the board’s investigation of supply shortages and power outages known as “DarkNL,” arguing that these matters were beyond the scope of the hearing.

The expert evidence relates to the amount of capacity actually available to N.L. Hydro from Muskrat Falls and the risks associated with sensitive clays underlying the North Spur. The PUB’s order has the effect of exacerbating the financial and environmental disaster that the Muskrat Falls “strategic investment” has become.

I take strong exception to the PUB’s decision. It removes two of the greatest areas of risk from further consideration during the board’s investigation into supply issues and power outages. These risks are just as important and palpable as the risk of the high voltage direct current (HVDC) power lines being disabled by icing and high winds. If these two risks are not part of the board’s investigation then we will not know whether the power system is sufficiently resilient to provide an adequate and reliable power supply.

Unless the August 2016 decision of the Quebec Superior Court is overturned on appeal, the Water Management Agreement put in place by the PUB cannot function as designed. This means that, absent an agreement with Hydro-Québec, the capacity available to Hydro from Muskrat Falls will be far less than its installed capacity of 824 megawatts. The GRK’s expert evidence, presented by Philip Raphals of the Helios Centre, demonstrates that the amount of energy available to consumers on the island will be less than 400 MW: “Taking into account line losses, this translates to about 385 MW at Soldiers Pond, of which 167 MW is committed to Emera in the Nova Scotia Block, leaving just 218 MW of firm capacity from (Muskrat Falls).”

This is a little more than the capacity of one of the three units at Holyrood. Without a water management agreement, Muskrat Falls would not even replace the 465 MW capacity of the Holyrood plant.

The North Spur poses a potential risk to the stability of the dam site and to the whole project. The GRK has argued that the remediation of the stability problems at the North Spur may be inadequate and that further evaluation by geo-technical experts is necessary. Unless adequate measures are undertaken in advance, any failure of the Muskrat Falls dam would likely have catastrophic consequences for island electricity supply.

The board has no choice but to respect the constraints of the Muskrat Falls Exemption Order, which removes its jurisdiction to regulate the project. Although the two issues raised by GRK are indeed associated with the Muskrat Falls project, accepting the expert evidence would not have amounted to applying the Public Utilities Act to the Muskrat Falls project and would not be in conflict to the exemption order. The GRK simply sought to inform the board as to the project’s actual firm capacity and its risk of failure, so the board’s investigation concerning reliability and adequacy of supply of the island interconnected system would be fully informed. The same could be said of the evidence filed on the HVDC transmission lines, to which the board’s consultants, the Liberty Group, has focused much of its efforts, as have experts engaged by Newfoundland Power and the Consumer Advocate.

Two remedial actions are required. One is an action by the Consumer Advocate and the other is a decision by the Executive Council of the Government of Newfoundland and Labrador.

First, the board’s decision should be appealed to the Court of Appeal. The Consumer Advocate should offer to support the GRK in an appeal to ensure that these two enormous risks are given full attention, by overturning the board’s ruling to strike GRK’s expert evidence.

Second, government should reinstate the powers of the PUB which were removed by the previous government, by rescinding the Muskrat Falls Exemption Order, letting the board provide the necessary independent assessment and oversight which has been denied up to now. This would empower the PUB to fulfil its statutory role to protect consumers and to ensure that power is “delivered to consumers in the province at the lowest possible cost consistent with reliable service.”