Muskrat Falls is likely our only option

Or is it a case of, when you leave a decision for long enough, it simply makes itself, good or bad? Because while going ahead with the Muskrat Falls project might not be the best choice for ratepayers, it might be the only remaining choice for Newfoundland Hydro, the province’s major power generator.

Why?

Well, it’s in the fine print of Hydro’s current capital projects application to the province’s Public Utilities Board — the utility wants to spend $66 million on capital projects in 2013, and argues the money needs to be spent to shore up huge portions of its equipment that are operating years past the dates when it should have been upgraded or shut down completely.

First, Holyrood.

“The three units of the Holyrood thermal generating station have now reached or exceeded their generally expected service life of 30 years. Condition assessment and selective life extension will permit them to operate reliably until 2020.

“Holyrood remains critical to the reliable supply of power to the island interconnected system, as it serves the base load of the system and will be required to do so in the short to medium term.

“The long-term operational plan for this facility has been developed in the context of the proposed development of Muskrat Falls with a high voltage direct current (HVDC) transmission link to the island. Should that project be determined to be the least-cost option for consumers and be sanctioned, Holyrood will remain a critically important facility during construction.

“Following completion of Muskrat Falls and the Labrador island transmission link, the Holyrood plant will continue to be an essential component of the provincial electrical grid as a synchronous condensing facility. Additionally, the plant will function as a standby facility during the early years of operation of the Muskrat Falls generating plant and the HVDC link between Labrador and Newfoundland, until 2020, when it will be converted to a synchronous condensing configuration.

“The challenges faced by Hydro are complex because circumstances require that Holyrood must operate in a manner quite different than the norm for thermal plants. Conventional practice is that a thermal plant is base loaded throughout its career until it reaches maturity and then the plant is operated as a peaking or standby facility in its final years, thus operating at a very low capacity factor, often less than 10 per cent.

“This thermal plant has passed the age at which other utilities have performed condition assessment and life extension studies and have either retired their facilities or have initiated major life extension projects. However, until the Muskrat Falls generating plant is sanctioned and completed and power is brought to the island interconnected system via a HVDC link, the Holyrood plant must continue to operate at, or near, its historical average capacity factor of 40 per cent to 50 per cent annually and higher through the critical winter period. …

“The Holyrood capital projects contained in this application are necessary to replace assets which are at the end of their useful lives, and which must be replaced to maintain reliability through to the completion of the Muskrat Falls development.”

To say the Holyrood units have “reached or exceeded” their 30-year operating life is being generous: the units are 42, 42 and 33 years old.

Hydro’s gas turbines, which run for emergency peak power needs?

“Hydro’s gas turbine plants at Stephenville, Hardwoods and Holyrood are more than 30 years old. The generally accepted life expectancy for gas turbine plants is between 25 and 30 years.

“A complicating factor in Hydro’s case is that the manufacturer of the power turbines, one of the key components at the Stephenville and Hardwoods plants, is no longer in business, eliminating the availability of factory technical support and spare parts.

Also, the manufacturer of the gas generators (jet engines) at the Stephenville and Hardwoods plants has declared them obsolete, and the supply of spare parts, technical support and repair facilities continues to diminish.”

Older than 30? Stephenville is 36 and Hardwoods is 35.

How about the company’s transmission network?

“Many of Hydro’s transmission lines were constructed in the 1960s with expected useful lives in the 40 year range. Annual reconstruction and general upgrades are needed to ensure that Hydro can continue to provide customers with reliable electrical service.”

It leaves a question that many might well ask: how does a skilled and forward-looking utility end up with so many critical assets operating so far beyond their life expectancy? Is it mostly because the assets date back to particular all-at-once investment by long-gone administrations?

And, without a Hail Mary Muskrat Falls pass attempt — bringing both new power sources and new transmission infrastructure by 2017 and allowing Holyrood to limp along as a generating plant in one form or another until 2020 — how would Hydro have time to solve the problem that much of its equipment is too old to be fully trusted?

With Muskrat Falls as the expected solution, is anyone looking at the options that would be needed if Muskrat didn’t go ahead?

Are all our eggs firmly in the Muskrat Falls basket?

It sure looks that way.

While our energy warehouse and provincial government may not want to admit they’ve painted themselves — and us — quite carefully into the Muskrat corner, an ungagged Public Utilities Board might have a different view.

Russell Wangersky is editorial page editor of the St. John’s Telegaram. He can be reached by email at rwanger@thetelegram.com.