ANOTHER $0.5 BILLION FOR HYDRO? ARE YOU OUT OF YOUR MIND?

If you wondered why the NL Hydro President, Jennifer Williams was announcing the Corporation’s intention to seek approval from the PUB for a new $0.5 billion hydro project at Bay d’Espoir, only her V-P Engineering present, you were not the only one.

When do politicians send out bureaucrats to perform a role which they jealously guard as their own? The answer: when bad news might overtake any superlatives that the politicians would have wanted to invoke.

Who wants to admit that having spent $15 billion of public money, the Muskrat Falls hydro project is substantially, if not entirely, junk?

Nalcor/Hydro used every trick in the book to abuse industry best practice and Canadian utility standards; they lied and cheated their way to Muskrat Falls sanction, having condemned the Holyrood Thermal Generating Station (HTGS) as worn out, expensive, and a wanton emitter of GHG. It turns out that the Muskrat Falls project is the one requiring “back-up”.  The ultimate irony: For now, Holyrood will do just fine!

Hydro wants the public to spend another $0.5 billion and to build the new “back up” project of its choice, even as it fabricates more deception with which to shield themselves from responsibility for Muskrat.

This is surely a test of the “greater fool” theory.

Well, how big a fool are you?

Gilbert Bennett, Vice President responsible for Muskrat Falls Project

In Jennifer Williams, GNL seems to have installed a CEO content to operate within Hydro’s culture of deceit. She describes the need for a $0.5 billion expenditure on a proposed new turbine for Bay d’Espoir (BDE#8) in terms of “forecast demand…the current supply mix…(and) the rapidly changing energy landscape including the clean energy shift and electrification.” She draws attention to the need to “mitigate against major customer interruptions in the event of an extended LIL outage…(and the necessity to) meet Canada’s goal of a net-zero electricity sector by 2035”, but she does not admit Hydro’s $15 billion cock-up, nor show proof of the new demand, or even attempt to make the case that the one proposed is a workable “fix”.

Muskrat Falls is rated to produce electricity far in excess of our needs – 2.5 to 3 times as much, in the face of the flat to declining demand experienced after the project began in 2012. Even accounting for the Nova Scotia Block, our ears still ring with the assurance of surplus power and of the huge export revenue to be earned while domestic demand catches up with the new oversized capacity. Of course, it was all nonsense.

Except to create additional support (called “spinning reserve”) for the faulty Muskrat Falls project, how is a pending shortfall even possible?

Noticeably, Hydro has the audacity to include support for wind power as evidence of this  growth potential. Yet, to date not a single figure has been produced to demonstrate what such an undertaking means for the public purse, nor even if “wind power” players are prepared to pay the marginal cost of new generation. I think we know the answer.

In fact, Ms. Williams is long-winded on every issue except an explanation as to why the public has been handed a bucket of bolts for their $15 billion.

Why would the public now give her Crown Corporation one more cent when she has failed to demonstrate either Hydro’s competence or the right to be trusted?

Think about it….10 years and $15 billion later Hydro consultants have figured out that any major power fluctuation in LIL transmission will cause the Island grid system to collapse due to its size. Isn’t this what competent designers figure out at the start? Shouldn’t the Hydro CEO have spoken to us about an impending lawsuit instead, possibly involving SNC Lavalin, which performed the engineering design?

Or, is this another, like the LIL software issue, Hydro realizing it would have to face allegations of incompetence on the Witness Stand if legal remedy against General Electric was sought?

Isn’t Hydro’s incompetence the issue at the core of all of these problems?

Paul Harrington, Project Director, Muskrat Falls

Let’s remember: The LIL was under-designed from the start. MHI warned Hydro; the PUB did, too. Weather conditions assessed by Hydro consultant, Haldar and Associates, puts the risk of a blackout having a duration of six weeks or longer having the probability of occurrence once every six years. Now, it seems the problem is not just the threat of weather and rime ice on major sections of the LIL. Insiders report concern over “galloping”; it is a condition where high winds lift and push on icicles and conductors, lifting them up, causing a jumping motion (hence “galloping”) possible causing a cascading impact on the towers.

Outside of what are winter issues, critical as they are, the possibility that LIL will collapse is a daily challenge, especially if “wind” support is part of the demand. If the problems with the Muskrat Falls project were singular, we might tolerate the friendly demeanor of the Hydro CEO. But the claimed lack of “spinning reserve”, an under designed LIL, compounded by trouble with the General Electric software and continued difficulties with synchronous condensers, monstrous tons of spinning metal essential to maintaining grid stability reported by the Liberty Consulting group to have been given a band-aid, altogether constitute too many problems to justify the of thinking of a group that, having created a mess, is determined to embrace the “sunk cost” fallacy.

Not mentioned by Hydro, the turbines, and other critical infrastructure at Muskrat Falls have not run at capacity long enough to determine whether the hydroelectric plant is reliable enough to provide firm power to anyone; ultimately it may have to be disconnected from the Island grid for the service only of Labrador-based users. In a mix of options set out by a prudent Utility, abandoning the LIL altogether, rather than risk bleeding dry an already empty Treasury trying to patch up the LIL, is a must.

Weighing all the issues, therefore, is it not an act of madness that we are asked to consider a rescue plan from the very people who got us into this mess?

The PUB is offered a single option of Hydro’s determination, to resolve a problem of its making. The PUB should tell them to go away.

Perhaps people think that the Inquiry Commissioner was just kidding when he concluded “Edmund Martin, Gilbert Bennett and the PMT frequently took what I see as unprincipled steps to help secure Project sanction.” They ought to know that some of those buckos are still on the public payroll, including Gil Bennett and Paul Harrington.

Is the public uncaring enough about their economic future, that they would let the same culprits obligate them to another $0.5 billion with no end in sight?

The answer is yes, if they are out of their minds.

Des Sullivan
Des Sullivan
St. John's, Newfoundland and Labrador, Canada Uncle Gnarley is hosted by Des Sullivan, of St. John's. He is a businessman engaged over three decades in real estate management and development companies and in retail. He is currently a Director of Dorset Investments Limited and Donovan Holdings Limited. During his early career he served as Executive Assistant to Premier's Frank D. Moores (1975-1979) and Brian Peckford (1979-1985). He also served as a Part-Time Board Member on the Canada-Newfoundland Labrador Offshore Petroleum Board (C-NLOPB). Uncle Gnarley appears on the masthead representing serious and unambiguous positions on NL politics and public policy. Uncle Gnarley is a fiscal conservative possessing distinctly liberal values and a non-partisan persusasion. Those values and opinions underlie this writer's views on NL's politics, economy and society. Uncle Gnarley publishes Monday mornings and more often when events warrant.

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