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RUSSELL WANGERSKY: In this power play, everything’s on the table

['Wire stringing on the transmission line crossing the Churchill River at the Muskrat Falls site in Labrador.']
Wire stringing on the transmission line crossing the Churchill River at the Muskrat Falls site in Labrador. — file photo

Remember when the much-hyped plan was to make this province an “energy warehouse”?

Well, now it looks like there are some people looking at an energy warehouse sale.

What a difference a decade — and an off-schedule, over-budget megaproject — make.

The plan, launched under then-premier Danny Williams in 2007, had lofty goals: to “ensure that Newfoundlanders and Labradorians become the principal beneficiaries of our great supply of energy resources, which we refer to as our Energy Warehouse.”

It hasn’t worked out quite as planned.

Already, oil and gas has been broken out into a separate line of business.

Now, the Public Utilities Board, charged with mitigating the huge power rate increases needed to pay for Muskrat Falls, has asked the province’s two utilities about whether there are cost savings in combining or transferring some of their operations.

The things being looked at?

Well, transferring all of Newfoundland and Labrador Hydro’s retail operations and all of its transmission lines on the island to privately owned Newfoundland Power, for example. (The PUB has even asked about the implications of transferring the operations and maintenance of the not-yet-completed Labrador Island Link to Newfoundland Power.)

Taking over the retail operations would see Newfoundland Power take over the Labrador Interconnected System and the province’s isolated systems, and provide all power distribution and customer service.

Newfoundland Power says the full savings from that aren’t known, but that there would be savings: “(There) are obvious efficiencies resulting from having a single retail operator for all electricity customers in Newfoundland and Labrador. Examples include the consolidation of two existing customer contact centres, two existing customer billing systems, and two distribution planning functions.”

What a difference a decade — and an off-schedule, over-budget megaproject — make.

Another option being considered? Transferring all of Hydro’s small generating stations to Newfoundland Power. (There’s even a plan to transfer Newfoundland Power’s small generating facilities to Hydro, but it’s hard to imagine where Hydro would get the money to pay for the assets, given that the lack of money is exactly the problem here.)

There are different ideas about what that means.

For Nalcor and Newfoundland and Labrador Hydro, “small hydro” means just three small plants at Venams Bight, Snook’s Arm and Roddickton, making the argument that it has to maintain the ability to plan for the overall electrical system: “Appropriate planning in this regard includes decision-making control for various aspects of any hydro facility that is of a material contribution to the Island Interconnected System.”

But Newfoundland Power is not only thinking of those three generating stations, but also Paradise River on the Burin Peninsula, the Star Lake hydro facility in central Newfoundland and the Grand Falls and Bishop’s Falls hydro facilities on the Exploits River. It says that “small hydro” should include any turbine rated at 30 megawatts or less. It also says it could take over operations of those operations with just 19.5 new full-time positions, pointing out, “For customers to benefit in the form of lower rates … the additional resources incurred by Newfoundland Power would have to be more than offset by reductions in resource expenditures by Hydro.”

At this point, the provincial government says the option of moving assets to Newfoundland Power aren’t in its rate mitigation plan right now — but it is the government that told the PUB to build a rate mitigation plan, and the PUB is asking the utilities for detailed plans, right down to calculating the possible savings and the number of full-time employees that would be needed after a transfer of assets.

So, it’s early days.

Newfoundland Power’s management has been signalling for months that it would be delighted to take over the assets that are now being discussed.

Imagine if the financial catastrophe that is Muskrat Falls means the transfer of a huge part of the province’s electrical resources into private hands.

Energy warehouse, indeed.

Russell Wangersky’s column appears in 36 SaltWire newspapers and websites in Atlantic Canada. He can be reached at — Twitter: @wangersky.


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