TEN YEARS AFTER MUSKRAT FALLS SANCTION – We will have to think abandonment of the Labrador Island Link

December 17th represents the 10th Anniversary of Muskrat Falls Sanction. Ten years is a long time to witness irresponsible politicians play out their fantasies and construct legacy at public expense, especially when they manifest as delusion, deceit, incompetence, and ultimately, significant financial loss.

Recent updates from NL Hydro, the Liberty Consulting Group for the PUB, and other sources, confirm that very little power will either be generated or transmitted over the Labrador Island Link (LIL) from Muskrat Falls for a very long time. If you want “reliability”, that is not on offer – at all. Hydro’s latest Reliability Study is an admission that the LIL will always be a problem.

Realistically, how do you correct an under designed 1100 kl. Labrador Island Link, anyway?

The Holyrood Generating Station (HTGS) is now saving the day, backing up the Muskrat Falls Project, rather than the reverse. Remember that the closing the HTGS was the source of most of the revenue to pay the debt on Muskrat Falls.

It’s worse that that, however. Hydro wants the right to build additional capacity AND conduct unlimited spending on its Muskrat Falls cock-ups, too.

The urgent question ought to be, after reaching roughly a cost of almost $15 billion: how much more public money are we willing to let NL Hydro spend to salvage the impossible dream?

Is the figure another $1 billion, $3 billion, $5 billion? More?

Labrador Island Link broken insulator (Photo: Ben Gould)

Who will draw the line? Like many politically difficult decisions, is this one within the capacity of any Government to make?

it does needs to be made, however, and soon.

Let’s look the specific reasons:

The NL Hydro October 2022 Reliability and Resource Adequacy Study Review states:

“Until such time as the LIL becomes fully integrated into the Newfoundland and Labrador Interconnected System and with a reliable track record established, Hydro does not advise retiring either thermal asset (Holyrood or Hardwoods) without replacement, as the Island could be subjected to unacceptable capacity shortfalls during winter peak demand periods.”

We might expect no less given recent failure to make the project work, but it is the next sentence in the Report that contains the kicker: “Once the LIL is fully integrated and the Holyrood TGS and the Hardwoods Gas Turbine have been retired and absent incremental generation additionsthe Island will still run the risk of major outages during winter peak demand periods if the LIL were to be unavailable.. (bold added)

Put simply, whether Muskrat Falls come online or not, it cannot be relied upon. Without admitting their gross negligence at the start, Hydro is essentially saying that that we should try to salvage Muskrat Falls at an undefined cost, no matter how well or poorly it operates.

Repeatedly, our Governments do not possess either the leadership or the institutional capacity to make big decisions; arguably, Premier Ball ought to have cancelled Muskrat after the Tories were defeated in 2016. Further, this inability explains why large commercial schemes should never be attempted by small and often incompetent bureaucracies. Muskrat Falls was a dumb project on every level imaginable.

There are more existential reasons, however, why the public should warn Hydro about spending public money we do not have.

If you have been keeping up to date on the crises of MF commissioning, you know that the synchronous condensers, essential to grid stability, won’t work; that the Labrador Island Link, even during normal weather conditions for the Great North Peninsula and Labrador, is prone to damage and difficult to repair, due to poor access to the towers during spring and winter seasons. There are software issues that won’t let the system operate even if the rest of the system worked; if that is not enough misery, vibrations due to undiagnosed issues are limiting production from one or more of the MF generators.    

Photo Credit: Ben Gould

NL Hydro’s chief response to all these issues, to date, is that it needs to build more generating capacity to compensate for the period when Muskrat Falls is failing. Problem is: there is no realistic “fix” for the LIL; likely not for the synchronous condensers either.

The Labrador Island Link (LIL) was not constructed in accordance with either Canadian Utility Standards or minimum acceptable standards of reliability considering the environmental conditions known to occur in some of the most inaccessible areas through which the line passes.  

Last January, and again recently, the LIL suffered damages that would have caused major power interruptions had it been fully operational. The conditions under which the damages occurred were “normal” for southern Labrador and the Great Northern Peninsula. In addition, studies carried out by Hydro Consultant, Haldar and Associates contains dire warnings that the LIL may only have a “return standard” of only 1:6 years which contrasts with the 1:500 year standard proposed by Manitoba Hydro International. The “return standard” is a measure indicating the frequency with which a damage causing event might be repeated, based on the LIL’s structural design.

On the 10th Anniversary of trying and failing to make Muskrat Falls work, I suggest that we not even try to recover the LIL. Let’s make that call – now – before hundreds of millions, possibly billions are wasted over time. What’s more, the decision will resolve the intractible synchronous condenser problem and the software issues, too.

Such a decision will have consequences for Hydro’s contracts with Nova Scotia. It will be cheaper, however, to negotiate a way out of that scheme, the UARB and Emera likely having come to the realization that their avarice overtook their common sense a decade ago. Both ignored Nalcor’s inexperience building anything. Both entities ignored the LIL reliability issues raised by the PUB and MHI Reports. On any level, NL is not in a position to build more capacity to supply the Maritime Link; nor should thermal generation be an option, something that PlanetNL has identified as already occurring.

An alternative is for GNL to establish a financial limit on repairs to the LIL, software and the synchronous condensers establishing a “drop dead” limit on Hydro’s abiility to spend money on those “fixes”.

The Island has plenty of great options to achieve both capacity and security of supply. They were described in the 2007 Energy Plan and dismissed immediately after its intended political objective was achieved, and upon the assurance that Muskrat Falls would bestow on the Williams’ Administration the greatest glory.

As a public, we have to get smarter; we are the ones that will have to pay, so let’s stop the reckless spending on Muskrat Falls, at least on the LIL anyway, and on the huge bureaucracy NL Hydro maintains in the hope that Government is mindless enough to let them build more capacity. Muskrat Falls was a dumb idea; it was crazy….and Williams and Martin were warned. Let’s not add to the craziness. If the Muskrat Falls generators can be repaired, leave the power in Labrador. Even crypto will give us better returns than low and intermittent transmission the Island and Nova Scotia now receives.

And, finally, an update from the Royal Newfoundland Constabulary – two and one-half years after Commissioner LeBlanc reported – is not too much to ask – not on whether charges are pending, which would be inappropriate, but on what resources, if any, are being employed in the investigation and when it might end. The RNC ought to know that, unlike the 10-year Hickman Equipment investigation, in this case the Inquiry Commissioner has done much of the heavy lifting.  So, RNC are you slogging or just slow?

Merry Christmas everyone.

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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