A report filed January 14 with the Public Utilities Board in Newfoundland reveals ongoing delays associated with the transmission portion of the Muskrat Falls hydroelectric project, pushing back by another two months the transmission of the bulk of hydro power to Nova Scotia.
Nova Scotia Power is relying on the hydro project to generate up to 20% of electricity from renewable sources but full delivery from the project is more than four years behind schedule.
Newfoundland & Labrador Hydro’s report for the month of December details ongoing problems with the General Electric software that controls the transmission of electricity from the dams in Labrador to the island of Newfoundland via the Labrador Island Link (LIL). The report says the installation of an updated version of the current software will delay the commissioning completion date of the LIL until the end of May instead of the end of March.
Reads the report:
As previously reported, this version of software is not suitable for Trial Operations and Final Commissioning due to unresolved critical punches. The Labrador Construction Project permitted GE to release this version of software in order to test the stability and robustness of the software. This version of software has been operating continuously at various levels, up to 435 MW, since December 17, 2021. GE is working to release a new version of software in the first quarter of 2022 which is planned for use for Trial Operations and Final Commissioning, targeted for completion by May 31, 2022.
In November, Newfoundland & Labrador Hydro said March 31 was the target completion date. The previous software did allow the Labrador Island Link to transmit hydroelectricity to Nova Scotia Power on an interrupted basis since mid-August of last year.
Nova Scotia Power is asking the Utility and Review Board (UARB) to approve charging ratepayers $169 million in 2022 to cover the cost of installing the Maritime Link cable between Newfoundland and Cape Breton. At a public hearing this December, ratepayers learned Nova Scotia Power had received only 19% of the energy that should have arrived between August and the end of November.
In its final submission to the UARB on January 7, 2022, Nova Scotia Power claimed that from mid-December until the end of the first week in January, the company had received between 70-100 percent of the contracted NS Block.
The UARB decision is pending. Several commissioners expressed concern that the original Muskrat Falls deal sanctioned by the UARB in 2013 has not been upheld and there is still no firm date when full power will arrive.
The $169-million question is whether the UARB will hold ratepayers or Nova Scotia Power shareholders responsible now that the original deal is arguably in default.
Ongoing delays associated with the megaproject in Labrador affect ratepayers in several ways. Nova Scotia Power estimates buying replacement power for Muskrat Falls energy cost about $200 million over the past four years but that figure tells only part of the story. In its Management Discussion and Analysis filed to SEDAR in November, Nova Scotia Power noted concern over carbon emissions led to a change in its generating mix and an additional $52 million in fuel costs.
Average fuel costs for the nine months ended September 30, 2021 increased compared to the same period in 2020. This was primarily due to changes in generation mix driven by emissions constraints, with increased generation from lower carbon intensity sources such as Independent Power Producers, import, and biomass generation and decreased generation from solid fuel and natural gas.
“Solid fuel” refers to coal.
Delays in the arrival of energy from Muskrat Falls may also force Nova Scotia Power to buy allowances (also known as carbon credits) from other companies in order to meet emissions targets under Nova Scotia’s Cap and Trade program.
And there is something else. Under the deal approved by the UARB in 2013, Nova Scotia was supposed to get first dibs on an additional 1.2 terawatts of Muskrat Falls energy at “market price.” The inclusion of the market priced energy made the megaproject the “least cost option” for consumers and was the reason the UARB approved the entire project. That amount is also significant because it would supply an additional 10% of renewable energy to the grid, helping the province transition off coal sooner.
In December, Nova Scotia Power told the UARB this market price energy will not be available until at least September 2022. Coal-burning generating stations at Trenton and Lingan that were slated for closure will be kept in-service longer.
All this said, there is hope Muskrat Falls will eventually be up and running at full capacity.
An Energy Supply Report filed by Newfoundland and Labrador Hydro for the month of December shows deliveries from Muskrat Falls appear to have risen to 65% of what Nova Scotia expected, although Nova Scotia Power has not verified that figure.
Reports for the month of January are not yet available.
Last but not least, Newfoundland and Labrador Hydro signed an agreement with Nova Scotia Power committing the utility to “make up” all shortfalls as soon as possible and before serving any other customer.