Ontario is the latest customer to line up to purchase Newfoundland and Labrador’s growing supply of hydroelectricity in a move that could one day lead to a “national grid.”
The two provincial energy ministers will announce Monday they’re launching a study of the potential for Ontario to buy power from the Muskrat Falls hydroelectric plant and the pending Gull Island development at Lower Churchill Falls, the National Post has learned. But power won’t start flowing west from Newfoundland for years to come as both projects and associated transmission lines are still years away from coming online.
Andrew Vaughan/ The Canadian PressThe construction site of the hydroelectric facility at Muskrat Falls is expected to wrap up in 2017.
Though negotiations are in the early stages, Ontario energy minister Bob Chiarelli said the move is “very significant to (the development of) a Canada-wide grid, to be able to get (power) from Newfoundland to Ontario. That’s a pretty big chunk of the country.”
The move comes less than a week after Ontario Premier Kathleen Wynne toured the Muskrat Falls construction site in advance of the annual meeting of the premiers at Council of Federation in St. John’s. She expressed interested in the value of the project for Ontario, which is increasingly looking outside its boarders for cheap power.
These are first steps towards creating a national grid
At that St. John’s meeting, premiers signed on to the Canadian Energy Strategy, which was parsed predominantly for its stance on pipelines and action on reducing hydrocarbon emissions, but also included language on better coordination of clean-energy electricity transmission across Canada.
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Ontario late last year signed onto an agreement to swap power with Quebec, with either province being able to tap into the other’s grid when needed. Those negotiations took about two years, and Chiarelli said the talks with Newfoundland will likely take just as long.
“These are first steps towards creating a national grid,” Chiarelli said Sunday from Halifax, where provincial and territorial energy ministers will meet in a follow-up to last week’s premiers’ gathering. “That’s one of the desired outcomes of the new energy plan, which the provinces are adopting.”
The negotiations with Newfoundland will assess “the technical and economic feasibility of what is a potentially interesting future between the two provinces.”
Matthew Sherwood/THE CANADIAN PRESSOntario Energy Minister Bob Chiarelli in 2013.
Ontario’s energy rates have soared as it phased out coal, which has drawn the ire of businesses and residents alike. Costly nuclear refurbishment and expensive gas plant scandals have exacerbated both the problems and the perception of issues within the industry. The province’s long-term energy plan, released in 2014, outlines a balance of energy sources, which includes new gas plants, more wind and solar power and more ways to purchase clean energy from other jurisdictions.
Purchasing hydro-power from Newfoundland “gives Ontario a very good option,” Chiarelli said, adding “it’s all subject, of course, to price and to contractual terms” but “we wouldn’t be entering into (these talks) if they wouldn’t bring down rates.
“This is Canada building. It’s looking to the future. It’s taking into account this is clean energy for climate change purposes,” the minister said, pointing out hydroelectricity is emissions free.
The nearly $7.7-billion Muskrat Falls project includes new transmission lines through Nova Scotia, which will also buy a chunk of the power churned out. Those lines continue into many northeastern U.S. states, some of whom have also expressed interest or signed up to buy some of Muskrat Falls over 800 megawatts of power once it’s online in 2017. The Gull Islands project, which is still in planning stages, would add another 2,250 megawatts to Newfoundland’s generation capacity around the end of the decade. That’s being touted as an economic opportunity by Newfoundland’s political leaders, but some are concerned whether the costs will be passed onto provincial ratepayers.
Paul Daly/ The Canadian PressMuskrat Falls, on the Churchill River in Labrador, is shown in a Feb., 2011 file photo.
The new developments are downstream from the nearly 5,500 megawatt Churchill Falls Generating station, which is jointly owned between Newfoundland’s Nalcor energy Crown corporation and Hydro-Québec. The two provinces have been embroiled in court battles over rates set out in a decades-old deal, which gives Québec 34 per cent ownership and lower costs to purchase the power. Though not directly related to the new Lower Churchill projects, that case could potentially affect the Muskrat Falls and Gull Islands development or how much of the surplus power Newfoundland could sell.
That wrangling continues, but Chiarelli suggested Quebec knows about and is on board with his province’s negotiations with Newfoundland.
“Quebec is very aware that collectively we’re all trying to move toward a national grid…. They’ve very ok with it,” he said. “We’re all on the same page. Very happy to see Quebec being part of the national energy strategy … to see change from where it has been in the past, when Quebec was an impediment to national progress.”