Here is an insightful analysis of the role of the Public Utilities Board in Newfoundland & Labrador in inquiring into the ongoing blackout issues in that province. The analysis addresses the same concerns I presented in Part 103 of the Ontario Electricity Regulation Crisis Report where I concluded that Toronto Hydro’s self-commissioned, self-selected, and self-funded blackout inquiry cannot be independent.
13 Jan 2014
The Telegram (St. John’s)
BY RON PENNEY AND DAVID VARDY Ron Penney is a former deputy minister of justice for the province and former St. John’s city manager. David Vardy, is a former clerk of the Executive Council and chairman of the Public Utilities Board.
PUB probe is welcome news
We are pleased that the Public Utilities Board (PUB) will conduct a full enquiry, including public hearings, into the failure of Newfoundland and Labrador Hydro (NLH) to meet its legal obligations to provide electricity to the province.
The proposal of the government to hold an “independent enquiry” under terms of reference it establishes and conducted by someone it appoints cannot inspire confidence and was obviously an attempt to foreclose a PUB inquiry and hearing.
The PUB has acted with courage and integrity and we are confident it will get to the bottom of why this has happened and what remedies must be put in place to prevent repetition of the threats to public safety and security posed by instability in our electrical system.
We trust this inquiry will also closely examine the reliability issues associated with the Muskrat Falls project, which may make last week’s problems seem minor in comparison, with possible outages up upwards of a month or more if there is a loss of power, according to Manitoba Hydro International, who recommended a higher construction standard be used in building the transmission lines from Muskrat Falls to customers on the island and on the mainland.
While the recent outages were driven principally by generation failures, during high wind conditions and low temperatures, there is also a high risk associated with the 1,100 km transmission line from Muskrat Falls to St. John’s.
Many power interruptions in the past have been caused by the icing of transmission lines and power poles combined with high winds, when the temperature has been just below the freezing point.
We are concerned that government has not given sufficient weight to the question of reliability and sufficiently compensated for the risks associated with this long distance transmission line, given the adverse maritime climate and the sub-sea crossing under the iceberg-scoured Strait of Belle Isle.
These risks are exacerbated by the high wind and icing conditions prevalent in alpine conditions, on high ground in southern Labrador, on top of the Long Range Mountains and across the Isthmus of Avalon.
Nalcor’s plan to remove the Holyrood plant from the island’s generation system after the interconnection of Muskrat Falls and to rely on hydro generation exclusively must be revisited.
For this reason we believe that it would be short sighted to limit the board’s inquiry to the system as it is currently configured. We have written to the PUB to frame a wider range of issues which should be included in the terms of reference of the board’s inquiry and hearing. A copy of this letter is posted on the PUB website.
The recently approved Energy Access Agreement with Nova Scotia commits from 44 per cent to 57 per cent of Muskrat Falls energy output to Nova Scotia. Yet there is no provision for emergency power to flow the other way, from Nova Scotia to Newfoundland.
Exhibit 106, submitted by Nalcor to the PUB as part of the Muskrat Falls hearings, reveals that emergency energy from Nova Scotia would be required in the event that the Labrador interconnected link were out of service for long periods.
Despite this requirement, there has been, to the knowledge of the undersigned, no firm contract between Emera and Nalcor for the provision of such emergency power.
What action has been taken to arrange for such emergency power supply from sources on the mainland?
There is a troubling aspect to the PUB process and that is the way in which the consumer advocate is appointed, particularly when the focus is upon a provincially-owned Crown corporation, such as Nalcor or NLH.
In Nova Scotia, the consumer advocate is appointed by the Utility and Review Board. In our case, the consumer advocate is appointed by government with a budget also approved by government.
That may not make much difference in matters involving privately owned utilities, such as Newfoundland Power, but it certainly does in the case of an inquiry into the actions of Newfoundland and Labrador Hydro, which is a corporation owned by the government. There is an inherent conflict of interest.
We are calling for the government to give the PUB the power to appoint an independent consumer advocate and allow the PUB to determine what financial resources must be made available, along with other terms and conditions of appointment.
We also recommend that the government show deference to the initiative of the PUB to undertake an independent inquiry with public hearings rather than to duplicate the work of the board or implicating the board and Newfoundland Power in causing the recent outages.
The board is a duly appointed quasijudicial body which can restore confidence in the system if allowed to discharge its statutory duties by receiving all relevant information from the public, NLH and independent energy experts, through an open and transparent public hearing.
We ask that government reconsider its proposed investigation and allow the PUB to function in accordance with its mandate and in keeping with good governance practices throughout Canada and the United States.