Customers won't pay for NL Hydro's mistakes, PUB says
PUB report finds NL Hydro delayed regular maintenance on aging equipment
The Public Utilities Board (PUB) is slamming Newfoundland and Labrador Hydro in a new report, blaming management for #DarkNL winter blackouts and for delaying maintenance that was necessary for its aging equipment.
That neglect is the reason why the PUB is also denying Hydro's request that some costs be passed on to customers.
The 88-page report states that Hydro is hoping to recover costs from a number of projects, including repairs to a turbine generator at the Holyrood generating station.
Customers should not bear the costs of Hydro's imprudent actions.- The Public Utilities Board
Additional expenses include a new combustion turbine for the Holyrood station, necessary repair work on the Sunnyside station following a 2014 fire and "additional supply costs as a result of capacity constraints on the Island Interconnected system during the first quarter of 2014 as a result of the January 2014 outages."
But the PUB report found that between 2010 and 2013, Hydro put off scheduled preventative maintenance on its transformers and airblast circuit breakers.
The report goes on to state that delaying such maintenance on aging equipment "was not in accordance with accepted utility practice and exposed customers and the system to unnecessary risk and potentially serious consequences."
The report found that Hydro's own "imprudence" is to blame for the significant costs incurred in repairing and replacing damaged equipment, and customers shouldn't have to shoulder the cost.
"While Hydro is entitled to recover its prudently incurred costs, customers should not bear the costs of Hydro's imprudent actions," it reads.
"This is the first time that the board has undertaken a prudence review of this scope. The resulting findings by the Board ... are significant and reflect failure on the part of Hydro's management to exercise the reasonable standard of care expected in certain aspects of its operations."
It's unknown just how much of the cost Hydro will have to cover, but the PUB said Hydro must revise its revenue requirements for 2014 and 2015 so that customers aren't left covering the cost.
The PUB said this information will all be considered in the ongoing review of Hydro's general rates.