14 September 2007

But will Hydro charge itself a handling fee?

Remember the bit of Dunderdale confunderdaling everyone on Hydro purchasing power from itself on the Lower Churchill?

Turns out natural resources minister Kathy Dunderdale said exactly what is planned:
Once the transmission link is constructed, Hydro will enter into a Power Purchase Agreement with the Lower Churchill Project for the purchase of power to offset thermal generation at the Holyrood Generating Station, which will assist in financing the project.
Hydro - which should be the owner (if we really are going it alone) or controlling partner in the Lower Churchill development company - will actually purchase power from itself in order to replace the Holyrood generating plant.

This raises some interesting questions about the organization and structure of whatever company will develop the Lower Churchill on a go-it-alone basis. It also raises questions about the financing arrangements, since one impact of this approach would be to have the people of the province shoulder the financial burden of developing almost 20% of this project instead of using export power - and other people's money - to cover the construction cost and still deliver a real profit.