Guest Post by PlanetNL
PlanetNL43: Assessing the Holyrood Life Extension Report
Dispelling Lies and Half Truths
On March 31, NL Hydro provided the Public Utilities Board with a consultant report assessing the Holyrood plant with a focus on continuing to use it for potentially decades more as a backup facility in the event of a major loss of power to the Island grid. The report considers just one of several options being considered in a major Reliability Assessment hearing before the PUB started in 2018 and seems as though it may never conclude.
The new report provides a favorable review of the suitability of the plant, maintained as a backup facility. To what should be no one’s surprise, the plant is not in an awful and unreliable condition and way past its prime. It just needs what should be considered ordinary upkeep for any industrial facility.
What we don’t know, however, is what exactly Hydro asked the consultant to study or if the report accurately describes the way the Holyrood plant must be used to provide an acceptable level of utility reliability. It appears Hydro has guided their consultant to the wrong scenario.
Proof of Fraud and Irresponsible Planning
The consultant report is expert evidence that we should wish was available prior to the conclusion of the Inquiry into Muskrat Falls. It would have shown that the stories spread by unscrupulous politicians and Nalcor executives around a decade ago were grossly exaggerated misrepresentations regarding the plant’s condition and potential to be used in the future. Those would be leaders got off much too lightly for their abuse of the facts and this report could have more fully exposed their fraudulent scheme.
It’s now ironic to the extreme that Hydro in 2022 finds itself seriously considering the life extension strategy of Holyrood as the possible best solution to make up for the unreliability of the Labrador Island Link (LIL) transmission line. Don’t expect them to say those words anytime soon but understand that this is exactly what is happening.
Compare that to ten plus years ago when the public was told that the LIL would ensure that power generation at Holyrood would end forever. We were told the LIL was going to be a more reliable replacement. It simply wasn’t true, and it has nothing to do with how the LIL has been plagued by seemingly unsolvable problems and delays in its completion. The fact of the matter is, a decade ago just as now, no long-distance transmission line can ever be considered adequately reliable.
Outage events will happen on all transmission lines or within terminal stations that can deprive major load centres of electricity. Every line, based on its length and complexity can be estimated to have a probability of failure. A line as long and complex as the 1100km LIL, traversing several long stretches very isolated and weather-prone terrain, a subsea crossing, complex AC to DC and DC to AC converter stations, and other critical points of possible failure, always posed significant risk of failure and always should have had local generation backup. Nalcor/Hydro/Government lied.
Will Hydro Finally Take the High Road?
Taking away the Holyrood plant and not budgeting to replace it with other backup generation on the Avalon Peninsula was a major omission from reasonable utility planning strategy. Hydro is now as quietly as possible attempting to undo the lie and revive good utility practice without shining a spotlight on its past behaviour.
The key question today is whether the current administration at Hydro is now fully committed to proper utility practice or might still inflict unacceptable risk and compromise.
A few years back, Stan Marshall opened that darkened door when he stated that the public needs to ask itself how much it wants to pay for reliability. Saying such a thing was irresponsible in at least two key ways.
First, the utility is supposed to have standards to follow and have enough expertise to do the job. They should not abdicate that responsibility and ask the public to do the calculations for them. Hydro in 2022 needs to be thorough and forthcoming in presenting what is the acceptable standard of service and what options meet those criteria.
Second, was the public given all the proper facts when a decision had to be made on Muskrat Falls and was the public fully and properly invited to weigh in? Those answers are no and no. The utility actively engaged to mislead and defraud the public. Why should anyone believe the public is getting the whole truth this time? If their repeated underplaying of the troubles with the LIL is any indication, Hydro has yet to fully change its stripes.
There is a third related issue that cannot be as directly attributed to Stan Marshall as it happened just last year. Involved are Premier Andrew Furey, ex-Hydro Chair Brendan Paddick who led Government’s rate mitigation team for Furey, and the current Hydro administration who surely provided input on the long-term utility strategy and cost projections. The issue is that all the publicly available utility operating cost estimates and strategic documents available leading up to the conclusion of the July 2021 rate mitigation scheme completely lack any allowance for long-term backup generation. There was no Holyrood or a suitable replacement in the post-Muskrat rate proposal presented to the public.
Sadly, there is considerable room for doubt that Hydro truly understands or is willing to fulfill its professional responsibilities. Alternatively, but no more acceptable, we must wonder if Hydro continues to be ordered by Government to conceal and lowball costs for devious political purposes. The truth with this crowd is always unclear.
The Holyrood Standby Option As Described in the Report
There is no good news. Just bad news and really bad news.
The report described relatively ordinary capital upkeep, relatively low fuel consumption, and other operating costs seem reasonably reduced compared to historic costs. The net annualized costs total roughly $65M per year. The bad news is it appears this cost was not included in the Premier’s rate mitigation plan and presumably it will be fully allocated to ratepayers as a future unforeseen rate increase of at least 1.0 c/KWh.
The really bad news is that the concept throughout the report is for non-generating standby usage of the plant. It will take at least four hours to bring the plant from warm idle to full power on the grid after an unscheduled outage. Four hours in a nasty winter weather event, the most likely cause for needing the backup power let’s not forget, will seem like an eternity for most customers. It will also result in cold homes and businesses demanding even more power than normal upon reenergizing. If there is not enough standby power to meet that extra loading, rotating blackouts and intermittent service will result.
Four hour waits and possible rotating outages would be a massive step backward from the current system which includes Holyrood as a full-time running baseload generator. Normally, Holyrood operates at considerably less than its full 470 MW total power and therefore has reserve capacity that can be exploited by increasing the fuel burn rate. Small to medium scale outages can usually be restored within minutes if not seconds.
For additional capacity, the 123 MW combustion turbine at Holyrood and the 50MW unit at Hardwoods (this one is slated to also be decommissioned upon completion of the LIL) can be started and at full power in under than 30 minutes. Without getting into all the technicalities, utility standard thresholds for spinning power reserve and non-spinning off-line backup are all in the 10–30-minute range and the existing system operates within the standard. The minimum four hour wait of the proposed Holyrood standby concept comes nowhere near any acceptable utility standard. If implemented, the first time such an outage happens, public fury would be sure to rise.
What the Report Lacked
There is a compromise middle ground solution that would meet 10-30 reliability criteria. Hydro could bring Holyrood onto the grid in anticipation of high-load high-risk events so that it could quickly respond to a possible transmission failure. Expecting really cold weather or a high-risk storm? Run the plant until the event has fully passed by. In addition, Holyrood would also be brought onto the grid anytime the LIL is working at a reduced capacity.
Seems simple and obvious right? Sure is. In fact, it’s pretty much the operating strategy Hydro has had for the past three years during which the LIL has trickled some power onto the Island grid. Despite the blinding obviousness of the situation, Hydro did not ask the consultant to look at this scenario. More than a year and an unspecified amount of money was spent on this very important report and did not properly specify what the utility truly needed.
When the PUB Reliability hearing picks up pace in the coming months, Hydro will not have obtained the right assessment for the operating conditions they need to employ. The hearing will foreseeably evolve into partial usage strategies, to which Hydro will offer their own unsubstantiated opinion of how the plant will perform and what the costs will be. Those costs will be higher for sure, somewhere far closer to the current operating situation than to the impractical warm idle concept employed in the consultant report.
Based on the experience of the last three winters, we may only reasonably count upon the LIL to operate some of the time and at reduced transmission levels power levels. In this scenario, Holyrood must run full-time as baseload generation to ensure system reliability. Being unable to fully shutdown the plant and put it into standby results in very low savings opportunities. In the past three winters, LIL power deliveries have put only a minor dent in Holyrood production requirements. The inability to take Holyrood generation fully off-line has resulted in the majority of LIL energy being delivered to Nova Scotia instead of being used on the Island.
Costs in this scenario will be way beyond that shown in the consultant report. For example, rather than reduce staffing from 101 to 58, all personnel will be required. The expected rate impact in this scenario is likely to be at least 2 c/KWh. If the LIL ever consistently operates at full design capacity, increased periods of proper off-line standby time interspersed with operations during high-load high-risk events, the best-case rate impact might be 1.5 c/KWh.
The 701- page consultant report provides a mere one paragraph of less than 100 words on what might be an alternative: a set of new diesel-fired combustion turbines. Clearly it was not their mandate to explore any alternatives in detail. The brief mention of it within the report is effectively useless except to possibly confuse or mislead readers about its validity.
The question must be asked, is there a thorough and detailed report in the works elsewhere describing a valid operating strategy and annualized cost estimate for standby combustion turbines? As additional combustion turbines placed on the Avalon Peninsula represent the only robust standby power solution that meets utility reliability standards, it’s reasonable to expect a lengthy and detailed concept report will be coming. Yet, having reviewed all documents related to the Reliability hearing on the PUB website, no indication that such a report is in the works can be found.
In lieu of any such commentary from Hydro, you may wonder if combustion turbines would be a better solution and what the cost is, relative to running the Holyrood plant. The answer to the first part is likely a big yes. The cost is likely no more and possibly slightly less – 1.5 c/KWh is a reasonable basis to start with. Any analysis should include a wide range of scenarios based of varying degrees of performance of the LIL ranging from very good to very bad. The scenario of a perfectly-performing LIL, as was the fundamental and sole assumption of the consultant report into the Holyrood plant, is woefully inadequate.
Let’s hope Hydro has more in-depth reports yet to come and that future ones are more on target with reality.