Time to pay up
Beginning July 1st and every month for years and years to come, ratepayers in Newfoundland and Labrador are going to be paying directly for the $13.37 billion Muskrat Falls “boondoggle.” We all knew the day would come.
You may not notice it on your bill on July 1st. The reason is NL Hydro has been delivering some power from Muskrat Falls which has resulted in a savings on the cost of oil that would otherwise have been burned at the Holyrood generating station. Those savings will shave a few percentage points off your July bill which means the few percentage points added for Muskrat Falls won’t be noticeable. Despite the soothing words about rate mitigation from Premier Andrew Furey, that, of course, is going to change.
If seeing the cost of Muskrat Falls on your electric bill every month doesn’t remind you how flawed the plan was, then a new proposal from a company called World Energy GH2 should. As first reported by allnewfoundlandlabrador.com, World Energy GH2 wants to build a wind-to-hydrogen project in the Bay St. George area. According to the company’s environmental assessment application, it plans to operate a hydrogen production facility with power from 164 wind turbines on the Port aux Port peninsula.
The 164 wind turbines would produce 1 GW of power. That is 1,000 MW of power. In contrast, Muskrat Falls will only produce 850 MW of power. World Energy GH2, which has also applied for Crown Land leases, estimates the capital cost of generating 1 GW of power from 164 wind turbines at $1.3 billion. Muskrat Falls’ capital cost to date is $10.18 billion.
Ah, how is it possible to produce 1,000 MW of power for a fraction of what Muskrat Falls costs to produce 850 MW of power? One answer may be the issue of availability. The wind doesn’t always blow so it is a less dependable say the dam builders. Remember that when a February ice storm drops a couple of the 3,200 transmission towers and some of the high voltage lines on the 1,100 km extension cord carrying Muskrat Falls’ power to the Avalon Peninsula.
Another reason 164 wind turbines will produce more power and at a much lower cost than Muskrat Falls may be because wind generation technology has made great strides in the last decade. Too bad the Muskrat Falls planners didn’t anticipate that when they were doing their forecasts. Another reason may be because it is less expensive to build wind generators on the island than damning rivers in Labrador. Another reason may be because it is less expensive to build the power source close to the end user.
The issue of the proximity of the power source to end users may also factor into the World Energy GH2 proposal. The hydrogen production plant is only expected to use 500 MW of the 1000 MW the 164 wind generators will produce.
The other 500 MW would be available to meet NL Hydro’s needs on the island and its contractual commitment to deliver electricity to Nova Scotia via the subsea cable our Atlantic Canadian neighbors financed.
It was Stan Marshall, the former Fortis Corporation executive who was brought in to clean up the Muskrat Falls mess, who called it a “boondoggle.” Mr. Marshall made that observation in June, 2016. At the time he estimated the project would deliver full power in the 2nd quarter of 2020.
Turns out Stan Marshall was too optimistic. As the second quarter of 2022 comes to an end, the project continues to be plagued by software issues and Mr. Marshall’s successor at NL Hydro and consultants hired to monitor progress on Muskrat Falls won’t forecast when the project will deliver full power. Yet, beginning in a couple of days we all get to start paying for it month after month for years and years to come.