Nalcor’s capital works submission to the public utilities board for 2012 included a last-minute addition of an upgrade to the power lines that connect the Avalon peninsula to the rest of the island. The submission is dated September 22.
That’s really important because the Bay d’Espoir/Exploits generating complex has a large surplus of electricity. Nalcor can’t get that electricity to where it’s needed because the existing lines across the Isthmus of Avalon are at capacity.
The problem is actually a bit more complex than that. As Nalcor’s supplementary capital works submission puts it:
The heavy loading on the eastern portion of the system is coupled with the incentive to provide least‐cost power to customers by minimizing Holyrood production and maximizing production from hydroelectric resources located in Bay d’Espoir and west. Constant monitoring of the load on the eastern portion of the system is therefore required. Thermal load limits on the lines must be strictly enforced to avoid unacceptable line sag and/or potential conductor damage. Further loading pressures will be placed upon the Bay d’Espoir East system with the addition of the Vale processing plant at Long Harbour and has already occurred due to the loss of load and net hydroelectric generation increase attributed to the closure of the Abitibi Bowater paper mill in Grand Falls-Windsor. (pp. 1-2)
On top of that consider that the existing power lines are all part of the major island electrification projects completed between 1965 and 1968.
The estimated total cost of the new line would be $209 million. The PUB submission anticipates work starting in 2012 with completion in 2017.
As it turned out, Nalcor and the PUB have deferred consideration of the new transmission line. Both the Board and Nalcor are involved in extensive regulatory reviews, including Muskrat Falls. And, as a December 6 Nalcor letter to PUB lawyer Maureen Greene notes, it “is our understanding that the Muskrat Falls Review is of high priority to government.”
There are a few things to note about this:
- Shifting priorities: When discussion of this line came up a couple of years ago in questioning in a House of Assembly committee, Nalcor officials told the committee that it wasn’t thinking about upgrading the line because the Muskrat Falls project would take care of it. Evidently something has changed. That’s most likely…
- Muskrat Falls delays: The public utilities board hearings are taking way longer than Nalcor expected. Even if they finish by the end of the current fiscal year (March 31, 2012), anything beyond a complete blessing will cause further political problems for a project that can’t afford any more political problems. Or, it could be …
- Muskrat Falls will die: Nalcor could also be hedging its bets against the project being canned altogether. The capital works supplement includes this line in the rationale: “Given that the Lower Churchill Project has yet to receive final project sanction…”. Nalcor is apparently no longer willing to defer discussion of the line as they were a year or so ago.
- Muskrat Falls is a political project: Since it started, the Lower Churchill has been driven by political demands to meet political needs. Nalcor’s reference in its correspondence to government priorities pretty much confirms that point for anyone who still believes Muskrat Falls is about delivering consumers the power they need at the lowest price.
As for the overall question of priorities, the PUB took pains in its letter acknowledging deferment of the new line that the project will require significant attention including a possible hearing. The line is the most expensive single project Nalcor has brought forward since the company came fully under the PUB’s regulatory authority in 1996. The PUB letter states that – under the circumstances – the board couldn’t guarantee approval in 2012.
You might interpret that as a simple statement of fact. But you might also read it as a reminder to Nalcor that if it needs to get this project done, the company might need to sort through its priorities again.
Don’t be surprised if Nalcor does just that early in the New Year.
- srbp -