27 November 2012

Controlling Our Own Resources #nlpoli

A chance re-read of the Labrador Hydro Project Exemption Order last week led your humble e-scribbler to a surprising discovery.

The powers granted under the Electrical Power Control Act, 1994 to the public utilities board to manage electricity production in the province are intact.

That means that the lowest cost source of electricity for the province is readily available at Churchill Falls.

A Different Exemption

A series of regulations issued in 2000 and 2002 granted exemption to aspects of specified projects from the EPCA and the Public Utilities Act.

Most are like an order covering Corner Brook Pulp and Paper Limited.  They cover everything associated with the development, construction and operation of an electricity generation project.  In this case it was for a 15 megawatt co-generation facility.

Your humble e-scribbler first read the Labrador Hydro Project exemption in 2011 and mistakenly thought it was the same as the others. 

But it isn’t.

The exemption only relates to the

“planning for, … the environmental, economic and engineering study of and, where approved, the design and construction of some or all of”

generating facilities on the Churchill River including Churchill Falls.

The order exempts the Muskrat Falls project from PUB review before its built and operating.  That’s how the current provincial government has been able to avoid the regulatory review that a majority of Newfoundlanders and Labradorians apparently favour.

What Change is Kennedy Planning?

So unless the current provincial government changes the regulation or the EPCA itself,  the PUB will be able to look at Muskrat Falls if the thing is ever built.

Natural resources minister Jerome Kennedy has already told everyone he plans to introduce changes to the EPCA and the Public Utilities Act.  We should keep a close eye on those changes to see what they turn out to look like.  That’s because, as the Telegram described it, “the province is looking to enshrine what happens with the project post-construction.”

“first and foremost… the needs of the people of this province…”

The Electrical Power Control Act 1994 sets the provincial government’s electricity policy in addition to giving instructions on how to implement the policy. The policy is set in section 3.  The policy balances the needs of electricity generators, distributors, and consumers. 

In Part II, the EPCA establishes “the principle that the Public Utilities Board has to supervise the management of all hydroelectric power generated in the Province in such a manner as to meet first and foremost the needs of the people of this Province, and it sets guidelines as to what are the principles under which they can do it.”

That’s the way then-Premier Clyde Wells described the EPCA in the House of Assembly in April 1994.  Wells was answering questions of opposition leader Len Simms.  Wells described the whole Act when he introduced it at second reading in March, 1994.

But let’s focus for a bit on Part II.

Under section 7 (1), “Where a producer or a retailer believes that it may not be able to supply power sufficient to satisfy the current or anticipated power demands of its customers and prospective customers in accordance with the power policy set out in section 3, it may request the public utilities board to conduct an inquiry into the matter.”

The Lieutenant Governor in Council – the cabinet – could also trigger an inquiry.

If the PUB concludes that there is or will be a shortage as described in section 7, the PUB can reallocate power produced anywhere in the province to meet the need.

No one has ever tested the powers.  No producer or distributor has ever requested an inquiry.

But they could.

An Answer From a Process the People Support

Coupled with a transmission line to Labrador,  Part II of the EPCA would allow the public utilities board to address any shortfalls in electricity production in the province potentially by redirecting power from Churchill Falls.  The EPCA includes a mechanism to compensate any producer subject to an order made under the EPCA.

Given that one of the principles is ensuring that consumers get the lowest cost electricity that can be efficiently produced, the PUB might well decide that even Muskrat Falls – at $250 per megawatt hour and more – simply doesn’t meet the existing electricity policy as set down in the EPCA since 1994.  It probably isn’t the lowest cost option when all options are fairly considered according to established principles.

But that’s a question that would be best settled by the public utilities board during an open, detailed hearing under the EPCA 1994.

None of the papers prepared by or for the provincial government as part of its Muskrat Falls marketing plan addresses the Electrical Power Control Act, 1994 option.

A 20 year old law and a fair and equitable policy established decades ago could provide a simple answer to a current political problem using an open process the people of Newfoundland and Labrador support.

They certainly don’t support the provincial government’s current approach.