Nfld. & Labrador

N.L. Hydro unnecessarily spent nearly $30M, report finds

Consulting experts have found that Newfoundland and Labrador Hydro has unnecessarily spent $26.9 million due to “imprudent” decision-making.

Liberty Consulting finds Hydro acted "imprudently" on several accounts

Hydro could have avoided failures and saved millions by adhering to proper maintenance cycles, Liberty Consulting says. (CBC)

Consulting experts have found that Newfoundland and Labrador Hydro has unnecessarily spent $26.9 million due to "imprudent" decision-making.

Liberty Consulting examined 12 Hydro items dating back to 2009, looking at the Dark NL blackouts, maintenance at the Sunnyside terminal station, and the installation of diesel generators in Holyrood that would allow it to restart when it disconnected from other sources.

Liberty found "Hydro's decisions and actions imprudent" in the majority of the projects it investigated.

The Public Utilities Board asked Liberty Consulting to prepare the report. The board is evaluating whether to allow rate increases for Hydro's customers.

The report found that Hydro could have avoided spending $10.9 million in 2014 capital costs, $13.4 million in 2014 operating expenses, and $2.6 million in estimated 2015 operating expenses.

According to the firm, Hydro failed to adhere to appropriate maintenance cycles for some of its Sunnyside transformers and breakers over several years.

Liberty says if Hydro had completed maintenance according to the cycles, it could have avoided problems that contributed to widespread blackouts in January 2014.

Hydro also spent several million dollars leasing and installing eight diesel generators to provide interim restarting capacity at its Holyrood plant. However, Liberty found that Hydro left Holyrood without this capacity, called "black start," for an extended period of time and that its spending on the generators wasn't justified.

"Liberty concluded that Hydro did not choose from a reasonable set of alternatives for providing black start," the report said.

"Hydro's imprudence produced too short a 'used and useful' period to justify the expenditures made to implement black start."

Hydro is the main energy supplier for Newfoundland Power. The Public Utilities Board is still determining how the costs will be recovered.

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