Not enough info to choose best power option, PUB says

The Public Utilities Board says it does not have enough information to determine whether the Muskrat Falls hydro project is the best long-term power option for Newfoundland.

Government now says it will commission further analysis, table reports on gas and wind options, and hold special debate

Muskrat Falls — site of the proposed Lower Churchill hydro project — is pictured at the Churchill River in central Labrador in this undated file photograph. (REUTERS /Greg Locke/Files )

The Public Utilities Board says it does not have enough information to determine whether the Muskrat Falls hydro project is the best long-term power option for Newfoundland.

The board's report, made public Monday morning, is a stinging rebuke for the project’s proponents.

The PUB said there were "gaps in Nalcor’s information and analysis" in several areas related to the project.

And the PUB said it was forced to use outdated information — data that is 18 months old — in conducting its review.

"The board does not believe that it is possible to make a least-cost determination based on a concept study or feasibility level of information generally from November 2010 which was intended only to ground Nalcor’s decision to move to the next phase of the analysis, especially given that so much additional work has already been done to define the project and costs and to further eliminate uncertainties," the PUB report noted.

The board concluded the information provided by Nalcor was not "detailed, complete or current enough" to determine the least-cost power option for the island.

'Disappointed and puzzled'

Premier Kathy Dunderdale told the legislature she was "disappointed and puzzled" by the PUB's report.

She noted that the province spent nine months and over $2 million and did not get any recommendation from the board.

"The PUB walked away from its responsibility, the terms of its mandate, to give us a recommendation," the premier said.

Premier Kathy Dunderdale says she is "disappointed and puzzled" by the PUB's report. (CBC)

The government will now commission a comprehensive analysis of up-to-date numbers on load forecasts, fuel price forecasts, defined capital costs, and system integrated studies.

Dunderdale said that information will be tabled in the house of assembly.

So will reports on natural gas and wind — options that went unexamined by the PUB, as they were outside its mandate.

The government will hold a special debate in the house of assembly once all that information becomes available.

Natural Resources Minister Jerome Kennedy said the opposition parties should be satisfied with those commitments.

"They will have their opportunity of a full, special debate on Muskrat Falls," he said in the legislature. "An independent expert, Mr. Speaker, has been engaged who will continue their work and provide the information. We have indicated that we will provide studies on natural gas and wind, Mr. Speaker. So everything I thought they were asking for we are giving them today."

Opposition reaction

The two opposition parties slammed the Tory government.

"The PUB has put up a giant stop sign on this project," Liberal MHA Andrew Parsons said.

Liberal MHA Andrew Parsons says the PUB has put up a "giant stop sign" on the Muskrat Falls project. (CBC)

"It’s amazing that even though the government did all they could to limit the scope of the PUB’s review, they came back with a damning report."

NDP Leader Lorraine Michael called for the PUB to do a full review of the project when all details are finalized.

"Government’s best attempt the thwart real discussion and debate on the Muskrat Falls proposal has failed," she said.

Two choices

Last June, the Tory government asked the board to look at which of two choices — the "island interconnected" option using Muskrat power, and the "isolated island" option, with no power from Labrador — was best for Newfoundland over the next 55 years.

The PUB clashed with Nalcor, the Crown-owned energy corporation backing the project.

In January, PUB chair Andy Wells said Nalcor was not co-operating with the review. "It's been a torturous process," Wells told CBC News at the time. Nalcor rejected the claims.

But those criticisms continued in today’s report, although couched in much more bureaucratic language. The PUB was initially supposed to complete its work by the end of December, but had the deadline extended three months "as a result of delays in receipt of critical documentation" from Nalcor.

"This significantly impacted the board’s process and ability to answer the reference question as key procedural steps had to be changed or eliminated in order to meet the March 31, 2012 deadline," the PUB report noted.

The PUB had asked for a second extension. The province rejected that request.

The board also raised concerns about the risks of capital cost overruns and the uncertainties of forecasting load demands and fuel prices over a 50-year-plus time frame.

And the PUB also had issues with Nalcor not accepting a consultant’s recommendation about the design of transmission lines for the project.

Conditional support

The consultant hired by the PUB — Manitoba Hydro International — gave Muskrat Falls the thumbs-up as the better of the two options.

But MHI indicated that support was conditional, with some risks and uncertainties. Those included the length of the time frame involved in the analysis, and the possibility that changes in key inputs and assumptions could shift the numbers.

Consumer advocate Tom Johnson, whose job is to represent electricity customers, also backed Muskrat.

"I have concluded, based on the evidence in the [Public Utilities Board] review, that the Muskrat Falls-Labrador island link represents the least-cost option of the two alternatives examined," Johnson said last month.

The PUB’s mandate was to solely examine which of the two options presented the least-cost choice from now until 2067.

Other power supply options, and the potential impact on electricity rates for Newfoundland customers, were not part of the board’s review.