The latest “deal” called the “Maritime Link Compliance Filing” , between Nalcor and Emera, to satisfy The
Nova Scotia Utility and Rates Board (UARB) did not get
much coverage in the media. Understandably,
it is tough to compete with topics like the disintegration of the NDP.
for this Province. That would look too
much like openness and transparency. We could not possibly expect that, could
the Liberal Party and our Bibles replaced with copies of Lewis’
Carroll’s Alice in Wonderland. To paraphrase the Author: ‘You would have to be
half mad to dream this stuff up’.
The latest Submission to the UARB, compliments of Nalcor, is
a strange brew of rewards for Nova Scotia and more uncertainties, costs and
risks for us.
savings to help make the Maritime Link the lowest cost option. The deal may still not be enough to satisfy
offered EMERA the equivalent of up to 60% of Muskrat Falls power (incl. the
Nova Scotia Block). NL ratepayers will
still assume all the risk of constructing the Project including 80% of the cost
overruns on the Maritime Link.
England “market” prices (4-5 cents per KWh) for Nova Scotia.
agreement in terms of how Nalcor and Emera were to relate as two utilities. Now Emera a) gains control over the largest
block of Muskrat power, b) NL backstops Nova Scotia wind power with 100
megawatts of “firm” energy (remember that Nalcor said more wind power on our
grid was not feasible but it’s OK to back up Nova Scotia’s) and c) provides for
a Nalcor Balancing Service Agreement with
Emera, which for all practical purposes, places Newfoundland Hydro at the ready
if Nova Scotia suffers a power drop.
Newfoundland and Labrador’s resources in the history of the Province worse even
than the Upper Churchill Contract because, unlike that Project, billions of NL’s money is being placed at risk to build Muskrat Falls.
into without either public discussion or the authority of the House of
access to the surplus or “market-priced power” from Muskrat Falls as a key condition for supporting the
Maritime Link (ML).
million to $1.422 billion more expensive than the alternative lowest cost
option (even though it receives 20% of Muskrat output at zero cost).
the real concern…… the concern is that the advantageous opportunity to
purchase cannot take place, if there is no Market-priced Energy to buy.”
market access to the surplus Muskrat power, not price, was at issue; it had
assumed that electricity prices would stay depressed, likely in the 4-5 cents
per KWh range, for many years.
acknowledged that the New England electricity market had fundamentally
changed. The UARB had recognized that
the shale gas revolution, Canadian (Ontario and Quebec) over- production of
electricity and new efficiency efforts were all part of the new energy
never have gotten off the drawing board in the first place. But, I will stick with the issue at hand.
order to repair what it perceives as too high a cost of the Nova Scotia Block
the UARB stated on page
73 of its Decision: “(t)he Board will
impose a condition relative to the availability of Market-priced Energy …..”
power. Of that amount 40% (1.79TWh) is reserved for island needs, 20% (.895 TWh)
for the Nova Scotia Block, a condition of building the Maritime Link, and the
balance 40% (1.79 TWh) is defined as “market-priced” power.
average of 1.2 TWh. (The 1.8 TWh figure
is almost identical to the amount of so-called surplus power from
Muskrat). A terawatt (TWh) is a billion
kilowatts. The deal places no obligation on Emera to take the power though it requires Nalcor to make it available on
short notice, except for a 300 GWh ‘variance’.
35 years demanded by the UARB).
us to MF, you might suggest if the power is surplus, it may as well be sold to
- Nalcor advanced the
proposition that 3TWh of power will be needed on the island by 2030. (As noted above NFLD. takes 2 TWh from
Muskrat initially.) That means, by 2025, the commitment of up to 1.8 or
even the average 1.2 TWh, to Nova Scotia, could cut into the amount of
electricity in-feed needed for the island. It is unclear whether this
additional 1TWh requirement becomes what the deal calls “Native Load”. Indeed, if another full TWh is taken by
Nfld. by 2030, under “Native Load”, the question must be asked where
Nalcor intends to find the additional power to satisfy the UARB demand and
comply with the intent of its Agreement with Emera. Is this where the case for retaining Holyrood begins? Figure 23 below indicates Nalcor’s own forecast demand on the Island. Note the steady increase to 2030 and beyond.
- The forecast in-feed, into
the island system, is integral to Nalcor’s version of the economics of the
Project. Nalcor’s revenue
projections, for amortising the cost of Muskrat, are tied to an increasing
demand profile. It assumes NL
ratepayers will be paying the higher Newfoundland rate per KWh, for
more of the power. If this
power has to come from another source it will simply mean higher costs for
- The deal requires that NL
bid its surplus power into the “Mass Hub” pricing mechanism which
establishes electricity pricing in the New England states. NS receives the lowest possible “market
price” for a very large block of power to meet its long term needs.
- The commitment of up to
1.8 TWh (1.2 TWh average annually) makes it impossible for Nalcor to
commit the energy as “FIRM” power to NL mining or to new NL users (remember
when Alderon was supposed to be the first customer for surplus Muskrat
power). While the “market-priced” or surplus power is not offered to Nova
Scotia as “firm” power the Agreement contemplates that the electricity
will be available to NS. The upshot
of the deal is that Nalcor will be able to engage only in short-term or ‘spot-market’
sales of the surplus power. Yet,
the deal gives Emera the flexibility to “…not accept Nalcor’s bid if
taking the energy is not in the best interests of NS Power customers.“
- If the UARB deems this
deal to make the cut, Nova Scotians will know their electricity costs
after 2017 right away; Nflders will have to wait until all the bills come
in and be ready to pay 80% of the cost overruns on the Maritime Link, too.
in the real world, Nalcor having now committed
all the surplus power as well, has essentially cut the last legs out from its
own rationale for the Project.
Nova Scotia electrical systems, at NL’s cost and risk. It amalgamates them! This is where the
proposed “Nalcor Balancing Agreement” comes in.
to inform the UARB of Nova Scotia how Newfoundland’s power system will be
changed to accommodate that Province. THE
IDEA DOES NOT EVEN GET MENTIONED IN THIS PROVINCE LET ALONE EXAMINED BY THE
PUB!!!!!! NL’s “firm” energy will, if
the UARB allows the deal, become the ‘battery back up’ for Emera’s proposed
wind power project. The PUB was never
advised of this plan nor was it contemplated at Sanction.
project, even a reckless one. It needs
to be dealt with in the House of Assembly. It needs an independent analysis of
an NL Agency like the PUB.
the issues outlined lies the risk that Nalcor will lose Hydro Quebec’s challenge
in the Superior Court of Quebec of the Water Management Agreement. There is the issue of cost overruns and the
complete lack of oversight on the Project by our own Department of Finance.
I have added the contractual commitment found on page 132 of Emera’s initial
Application to the UARB. This one should
keep your mind off the problems of the NDP.
437) “NSMPL (Emera) confirmed that there were no risks to ratepayers from the
non-delivery of energy by reason of any legal claim respecting the flow of
water, or arising from the reduction of water flow itself on the Churchill
do not allow for non-delivery of energy.
If energy is not delivered, Nalcor is liable to pay compensation damages
to Emera. If the non-delivery is as a
result of Government Action, the Government of Newfoundland and Labrador has
guaranteed payment by Nalcor the compensation damages. Risks relating to Muskrat Falls are borne by
don’t think that clause requires any further interpretation. Do you?
politicians are all busy.