Newfoundland Power president Peter Alteen thinks the decisions resulting in the Muskrat Falls hydroelectric project, including the decision to limit a related review by the utilities regulator, were driven by politics and not concern for ratepayers.
“The politics shut us out of the process,” he told reporters, following testimony Monday at the Muskrat Falls Inquiry in St. John’s, repeating a point he also made on the stand.
Alteen said Newfoundland Power had serious concerns relating to cost and reliability before Nalcor Energy’s hydroelectric project on the Churchill River was sanctioned at the end of 2012. But he said Newfoundland Power was never meaningfully consulted by the provincial government. He acknowledged Newfoundland Power never wrote the premier or otherwise flagged objections it had to the restricted PUB process reviewing the Muskrat Falls plans, suggesting the company didn’t believed there would be much point to the gesture due to lack of concern to their position to that point.
“The politics shut us out of the process."
— Peter Alteen, President of Newfoundland Power
Alteen said the company did raised concerns with the provincial Public Utilities Board (PUB) at first opportunity - after the rolling blackouts and power outages on the island in January 2014, now commonly known as DarkNL.
“There wasn’t a lot of information available to Newfoundland Power (before) and, because of that, Newfoundland Power had real problems just getting an informed opinion as to what was going on around it,” he said of the Muskrat Falls hydro development. “In retrospect, absent information, Newfoundland Power is going to be reluctant to express an opinion because we like to think that our reputation is such that we speak factually. So no, we don’t regret what we’ve done in the past and we’re content with how we handled the situation.”
Cost, reliability not settled yet
Newfoundland Power remains concerned with costs it will be passed down, now with the added strain from overruns on the megaproject. And he noted there are unresolved issues of reliability under investigation by the PUB.
Alteen specifically testified the Maritime Link is – by current understanding – technically capable to provide a 300 megawatt (MW) back-up to the island system power imports, if it comes to that, but commercial arrangements for power are still being worked on by Nalcor Energy. The bigger issue right now, he said, is the challenge of transmission into the Avalon Peninsula, to the bulk of the energy demand, if the Labrador-Island Link goes down without the Holyrood plant still in operation. The plan was to decommission Holyrood once the Muskrat Falls hydroelectric plant comes online.
“Even if you get it, the 300MW of support (from the Maritime Link), we’re still going to have problems on the Avalon Peninsula, because there are transfer capabilities associated with the AC transmission system if the DC link, the Labrador-Island Link, is down,” he said, pointing to limits on what the lines can carry.
“The ability to get enough power across those lines, maintaining voltage, is very hard in winter peak conditions,” he said, adding Hydro has been filing on the issue to the PUB within the last two weeks and discussions are ongoing.
Alteen said transmission could be beefed up, new generation added, or a combination of the two. On an important note for ratepayers, any new transmission or new generation would mean additional costs above and beyond the existing Muskrat Falls project costs.
“Even if you get it, the 300MW of support (from the Maritime Link), we’re still going to have problems on the Avalon Peninsula, because there are transfer capabilities associated with the AC transmission system if the DC link, the Labrador-Island Link, is down."
The reliability issue was not well understood by Newfoundland Power before the project’s sanctioning, Alteen said, based on limited documentation and opportunity to test assumptions. “We were not fully aware of all of this. I don’t think it had been fully modeled at that time, but I don’t know,” he said.
Alteen said the PUB review in 2011-2012 including the Muskrat Falls project option for new power for Newfoundland was unusual in its limitation to two alternatives, and timeline for the review, among other things.
Newfoundland Power, a Fortis subsidiary, is the main electricity distributor for customers in Newfoundland and Labrador. The company has some of its own generation capability, but relies on Newfoundland and Labrador Hydro (and Nalcor Energy) for the majority of the power delivered to customers.
Alteen said Newfoundland Power is expecting new documents from the Public Utilities Board January that will provide information as a jumping off point for more in-depth discussions around customer rate mitigation. A review process specific to rates, including handling Muskrat Falls costs, has been referred to the PUB by the Liberal government. An interim report is due to government in February 15, 2019, with a final report due in January 2020.
He said Newfoundland Power wants to be involved in the review process.
“I think there’s a big presumption that all of the Muskrat Falls costs can or should be recovered from electricity customers. I’m not a believer that that course will be a reasonable course in the end. But it’s going to take some time before we get to a solution I think that is more customer-friendly or affordable for our customers. We’re committed to help seek that,” he said.
Alteen was followed on the stand by former Newfoundland and Labrador premier Kathy Dunderdale.