06 November 2009

Fire cost NALCOR $18 million in lost revenue

A fire at Churchill Falls last November cost the province’s energy corporation a total of $18 million in lost revenue in late 2008 and early 2009 under the Guaranteed Winter Availability Contract (GWAC) with Hydro-Quebec.

NALCOR Energy released updated information in response to a request from your humble e-scribbler.

The fire occurred November 3, 2008 in a cable shaft at the Churchill Falls generating station and caused what a NALCOR spokesperson described in an e-mail as “extensive damage”.  Damage knocked two of the plant’s 11 turbines out of action and reduced overall generating capacity by a reported 1,000 megawatts.

According to the spokesperson,

This contributed to the decrease in GWAC revenue to Nalcor Energy in 2008 of $8.4 million and year-to-date 2009 of $9.6 million. No penalties [for non-performance] apply under GWAC.

One of the turbine/generation units was back in action by February 2009.  Repairs to the second unit were completed over the summer.

Under the GWAC,  Churchill Falls Labrador Corporation [CFLCo] agrees to supply Hydro-Quebec with a set amount of power during HQ’s high demand winter season apparently in addition to that supplied under the 1969 contract.  The power is used in Quebec. 

GWAC is one of several elements of a 1998 deal that included the recall and resale of a block of 130 megawatts of power and a new shareholders agreement for CFLCo between majority shareholder Newfoundland and Labrador Hydro and minority shareholder Hydro-Quebec.  

In the recall component of the deal, NL Hydro recalled a block of power under the 1969 contract and then resold it to Hydro Quebec at new, higher rates.

The recall element of the agreement has now been replaced by a new deal to wheel upwards of 800 megawatts of Churchill Falls power to the United States through Quebec.  Newfoundland and Labrador Hydro pays Hydro Quebec’s transmission corporation $19 million annually in fees for wheeling the power under terms set down by Quebec’s provincial energy regulatory board.

NL Hydro gets  about the same net price for its power under the wheeling deal with Emera and Hydro Quebec as it did selling the power directly to Hydro Quebec. 

Note that some of the links on GWAC are no longer active. They seem to have disappeared in a series of routine redesigns of websites in the provincial government and in the development of the new NALCOR website.