21 October 2015

Scary words #nlpoli

From Newfoundland Power’s rate application to the Public Utilities Board.


The interconnection to the North American grid is a transformative event for the electrical system that currently serves the island of Newfoundland. It also creates significant uncertainties for Newfoundland Power and the customers it serves.

How the costs of the Muskrat Falls development and the transmission systems necessary to create the interconnection will be recovered from Newfoundland Power’s customers is part of that uncertainty. The reliability of wholesale supply for the Company and, indirectly, Newfoundland Power’s customers after interconnection, is another part of that uncertainty. These matters will likely be considered by the Board over the next 2 to 4 years. It is already clear, however, that the interconnection as currently proposed will have significant potential consequences for the future cost and reliability of electrical service for Newfoundland Power’s customers. (pp. 1-6 to 1-7)

Triple :

The current total estimated cost of the Muskrat Falls and Labrador-Island transmission link is approximately $9.05 billion.This is approximately 3 times the total book value of current utility investment of Hydro and Newfoundland Power combined.

Caution  (from Moody’s):

“…..a cautionary note related to our concern that the utility’s future ability to fully recover costs and earn returns may be compromised as the Province of Newfoundland and Labrador undertakes development of the Muskrat Falls hydroelectric project on the lower Churchill river and the related transmission infrastructure. This politically charged project is large relative to the provincial economy and is expected to place considerable upward pressure on future electricity rates.”