08 July 2015

Confidence Builder #nlpoli

The public utilities board asked Liberty Consulting to review Hydro’s decisions in 11 projects.

Hydro is looking for a rate increase.  The board wanted to make sure the increase was justified.

Of the 11 projects, the consultant found:

    • “Liberty found Hydro’s decisions and actions imprudent in seven of the eleven specific projects or programs set for examination by the Board. Liberty identified adverse cost consequences associated with six of these seven projects or programs, laying a foundation for consideration of the propriety of their recovery from customers. Liberty found planning and execution of the seventh project imprudent, but concluded that Hydro would have borne essentially the same costs even in the absence of such imprudence. 
    • Of the remaining four specific projects or programs, Liberty found that Hydro had acted prudently with respect to three. Liberty did observe significant weaknesses in the supply planning process related to one of these projects, the new combustion turbine, but not to a degree that would constitute imprudence. For the fourth, Liberty concluded that while Hydro acted prudently in making its decision, some of the costs incurred were influenced by imprudent prior actions.
    • The twelfth area of Liberty’s review consisted of an identification of 2014 actual capital costs and operating expenses that could be attributed to imprudence. This identification lays a foundation for later efforts that seek to identify any such expenses that may form part of Hydro’s estimation of a 2014 Revenue Deficiency of $45.9 million.”

“Liberty found that the costs that Hydro could have avoided in the absence of the instances of imprudence found by Liberty were:

  • Actual 2014 capital costs of $10.9 million (as reported by Hydro)
  • Actual 2014 operating expenses of $13.4 million.
  • Estimated 2015 operating expenses of $2.6 million.

With that sort of report, you just know that Nalcor has just gotten everything exactly right at Muskrat Falls.