Software challenges likely to drive up Muskrat costs, says N.L. Hydro CEO

The person in charge of the Muskrat Falls project has acknowledged that the ongoing struggle to perfect software for the Labrador-Island Link will likely drive up the overall cost of the project.

"We're working through what that impact is. I don't expect it to be material,"Jennifer Williams, president and CEO of Newfoundland and LabradorHydro and interim CEO of Nalcor Energy, told CBC News Monday.

But Williams said she's confident that the controversial project will be completed early next year.

"I really do think we are approaching the finish line."

And even if Labrador power is not available this winter, N.L. Hydro, with its existing power-generating assets,will be able to meet the energy needs of residential and commercial customers, she added.

"We didn't have the [Labrador-Island Link] last year, and we had no issues with getting through the winter. We've invested in our assets, including Holyrood, to make sure that we have the power available to serve customers."

• N.L. Hydro confirms Muskrat Falls schedule 'not achievable,' with completion date now uncertain

Williams was commenting on a letter from N.L. Hydro to the utility regulator earlier this month in which the government-owned energy company acknowledged the Nov. 26 target for overall completion of the hydro generating and transmission project was no longer achievable.

That's because GE Canada continues to encounter problems developing the control and protection software for the 1,100-kilometre high-voltage DC transmission line from Muskrat Falls in central Labrador, site of the 824-megawatt power-generating station, to Soldiers Pond on the Avalon Peninsula.

"GE Canada continues to progress through the testing stages slower than planned due to increased time required to resolve punches, which are primarily software bugs," stated N.L. Hydro's general counsel, Michael Ladha, in an Oct. 7 letter to the public utilities board.

Software built 'from the ground up'

Hydro is awaiting a new completion schedule from GE for the software,and until that happens, can't say when the project will be finished.

It's the latest setback for the Lower Churchill Project, which is already four years behind schedule,more than $6 billion over budget, and was described as a misguided project following a lengthy and complex publicinquiry.

'It's important for us to get this done right'

Williams said she expects another version of the software from GE in the next four to eight weeks.

"From a project perspective, we understand that we need to get this thing finished," she said.

She said N.L. Hydro will not accept a final version of the software until it undergoes testingand the utility is confident all the glitches have been worked out.

"It's important for us to get this done right at this time."

• Contract to complete Muskrat Falls transmission system surpasses $500M

The control and protection softwareis critical for the safe and efficient operation of the link, known as the LIL, and integrating the new source of energy into the island's power grid. The LIL is capable of delivering 900 megawatts of electricity over two lines, known as bipole, but GE has struggled to deliver on its contract, and has missed repeated deadlines.

The situation has drawn parallels to a similar project in Sweden known as the SouthWest Link, in which GE was also contracted to develop the software. The 250-kilometre DC line was scheduled to be completed in 2015, but was not put into commercial operation until this past summer.

Williams said the LIL won't face a similar delay. She said she's encouraged that the LIL has beenenergized 40 per cent of the time so far this year, reaching a maximum output in September of 325 megawatts. That'sroughly two-thirds of the rated output for theHolyrood station,which is scheduled to be decommissioned in 2023, and enough energy to power 20,000 homes in Newfoundland.

"We have actually achieved what the LIL is planned for, to an extent. That's why I feel we are going to be able to get this across the finish line," she said.

She expects Muskrat energy will be powering homes and businesses in Newfoundland and Nova Scotia this winter.

But for every day the project is not complete, interest and finance charges mount. Williams could not provide a number, but expects the $13.1-billion final forecast cost for Muskrat will increase because of the software challenges.

"We'll be working through that in the coming weeks and couple of months to know exactly what that final impact is," she said.

It's not the only factor threatening to drive up the project cost. A long-running arbitration case in which Astaldi Canada, the former principal contractor on the project, is claiming it's owed millions by Nalcor, is expected to conclude with a ruling later this month.

Williams would not comment on the Astaldi matter, except to say that both sides have presented their evidence, and that an arbitration ruling will be binding on both parties.

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