Price tag, timeline for N.L. Hydro expansion questioned in new report
CBC
A new independent report calls into question the price tag, timelines and demand forecasts underlying nearly $2 billion in construction projects proposed by Newfoundland and Labrador Hydro.
In the 89-page document, consultants Bates White say they're convinced N.L. Hydro has proven it needs to increase power generation on the island, but they're concerned the Crown utility may be building too much, too fast — statements roundly rejected by the corporation on Wednesday.
In a March application to the Public Utilities Build, N.L. Hydro proposed to build:
N.L. Hydro has repeatedly said the projects will help meet the growing demand for power, given the province's continuing transition to electric cars and heating, and that its plans are based on the most "conservative" projections, which allow it to keep construction costs low.
However, the Bates White report questions whether the load-growth projections are in fact as cautious as advertised.
"The slow decarbonization forecast, while a reasonable scenario for consideration in the build application, is not the lowest plausible load scenario over the planning horizon; lower population growth, lower EV adoption rates and lower industrial load growth are possible and could coincide", reads the 89-document.
Bates White worries of "excess" generation on the grid given that island ratepayers, along with a government rate mitigation program costing billions, are already sponging up cost overruns at the Muskrat Falls hydroelectric project in Labrador.
"Hydro is confident that these projects remain the least cost, reliable, environmentally responsible supply solutions for customers, and stands by these projects and their budgets as they are based on sound estimates, appropriate consideration of risk, and standard industry practices," wrote N.L. Hydro spokesperson Mark King in a statement Wednesday.
The statement added that the Crown utility will submit additional information to the PUB "to clarify some of the assumptions made and analysis completed by Bates White, to ensure fulsome consideration of the electricity system and its hydrological resources."
Hydro's building plan is predicated on growing demand but also the need to retire aging assets, including the 490-megawatt Holyrood Thermal Generating Station — a heavy oil-burning plant meant to close years ago once Muskrat Falls came online.
While the 824-megawatt Muskrat Falls dam has been in service for years, doubts remain as to the reliability of the project's 1100-kilometre transmission system, the Labrador Island Link (LIL).
Until new generation is built, the Holyrood plant, the province's second-worst industrial emitter, can't be retired, although maintenance and operation costs beyond 2030 could cost on average $138 million per year, according to the report.
While the report concludes that Hydro has made the case for new generation, it questions why both the new Avalon combustion turbine and eighth Bay d'Espoir unit must enter into service at the same time.
"There is not a demonstrable need for both projects in 2031," reads the report. "Hydro's capacity expansion modelling also demonstrates that the optimal timing of the firm capacity additions is 2031 (for one resource) and 2035 (for the other)."
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