How Newfoundland Power was shut out of the Muskrat Falls debate

The CEO with Newfoundland Power Inc. was a late addition to the witness list at the Muskrat Falls inquiry, butPeter Alteen delivered some of the harshest criticism yet of the controversial hydroelectric project.

"We believe the government was motivated by political, not public utility concerns," Alteensaid during a scathing condemnation of the process by which Muskrat Falls was reviewed by the utility regulator, the public utilities board, in 2011-12.

We believe the government was motivated by political, not public utility concerns.- Peter Alteen

Alteentestified Monday morning, and quickly served notice he was anything but friendly toward the project.

He criticizedthe fact that Newfoundland Power, the primary distributor of electricity to ratepayersin Newfoundland, was completely shut out of the review process.

Newfoundland Power hadbig concerns about what the project might mean for electricity rates, Alteen said, and the reliability of power supply along the 1,100-kilometre transmission line from central Labrador to Newfoundland's Avalon Peninsula.

"(Muskrat Falls)was conceived, announcedand conducted in a way where the government never sought any opinions of Newfoundland Power," Alteensaid.

Concerns about loss of Holyrood

Newfoundland Power is a fully regulated utility providerand a subsidiary of Fortis Inc. It supplies more than 80 per cent of the homes and businesses in Newfoundland with electricity, whichit purchases in bulk from Newfoundland and Labrador Hydro, which is a subsidiary of government-owned Nalcor.

The company was a very interested player during the debate over Muskrat Falls, since the plan for the so-called interconnected option called for the eventual decommissioning of the 500-megawatt power station at Holyrood, which is an aging oil-fired plant in the heart of Newfoundland Power's largest customer base, and reliance on the Labrador-Island transmission link.

Documents submitted by Nalcor prior to sanctioning gave the mean duration for an outage if the new transmission line failed at 14 days, and possibly longer, Alteensaid, if the problem occurred on the Long Range Mountains.

Applying load rotation for a substantial number of customers when a single component of an electrical system fails, does not meet North American norms of reliability.- Peter Alteen

And Alteen said technical experts at Newfoundland Power were concerned that the Labrador-Island link did not meet Canadian standards, and that Nalcor'splan in a power outage was to apply what's called load rotation to blocks of customers.

Alteensaid that scenario raised big concerns for the experts at Newfoundland Power, since Holyrood'sgenerating capacity proved to be a critical resource during major power outages over the years.

"That change has obvious potential reliability consequences for the customers we serve," Alteensaid.

"Nalcor here, in the interest of cost, has opted to apply load rotation. What I'm saying in my evidence is that applying load rotation for a substantial number of customers when a single component of an electrical system fails, does not meet North American norms of reliability."

No intervener status

After intense public debate about the merits of Muskrat Falls, the provincial government sent what's called a reference question to the public utilities board in mid-2011, directing the PUB to review two options Muskrat Falls and the isolated island power gridand determine which was the least-cost alternative forfuture electricity needs.

Repeated reviews by Nalcor and its experts had already reached a conclusion that Muskrat was the preferred option.

But after nine months of review and expenditures of more than $2 million, the board was unable to reach a conclusion, saying it did not have enough information, including the most up-to-date cost estimates for Muskrat.

And the constrained timeframe for the review meant Newfoundland Power and others were not able to participate.

"The process adopted,it didn'tmake a complex proposition less complex or more transparent. It tended to makeit a little more difficult," said Alteen.

He went further, saying the process was "politically constrained," and prevented Newfoundland Power from scrutinizing the work of Nalcor and its expertconsultants.

The specifications for the Labrador-Island link were enhanced following the DarkNL power outage of winter 2014, and the public utilities board is again reviewing Muskrat Falls.

Newfoundland Power is an intervener in this latest review, said Alteen.

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