Waiting for the Muskrat
It’s fallback time again at the Newfoundland and Labrador Hydro corral.
Often, when you hear about Nalcor and Muskrat Falls, the message is about delays and the project’s budget situation. All depressing enough.
But imagine that you are Muskrat Falls’ single largest customer, and it turns out you’re not going to get power for much longer than you think.
Suddenly, you need new options — or more precisely, in Newfoundland and Labrador Hydro’s case, you need old options. Very old options. And you need them to work.
Tucked aware among thousands of pages of regulatory documentation at the province’s Public Utilities Board, Hydro is trying to get permission to replace a series of controller cards on voltage control systems at two generating units at the Holyrood station. It’s a $1.3-million project, which isn’t small potatoes, and the PUB took the opportunity to ask an interesting question of the utility: with Muskrat Falls now delayed, what are your capital plans and the costs of maintain the Holyrood plant until you do get power?
Some of the answers are sobering.
The original plan was that Hydro expected to have Muskrat power by 2015. The plan now is to evaluate operating the entire generation station, all three units, until 2021. And 2021 is a fair ways away.
“There are several major assets at Holyrood that Hydro is monitoring for the need for capital upgrades, considering reliable operation is required to 2021,” the company wrote. “Such assets include fuel storage tanks, boiler stacks, and the Unit 1 and Unit 2 generators. As an example, Hydro is working to ensure the required life of at least three of the storage tanks to 2021 without a requirement for an internal inspection, which, including cleaning costs and confined space work requirements, is expected to cost in excess of $600,000 per tank. If this approach is not successful, then significant capital investment will be required to complete the internal inspections to keep the tanks in service.”
The utility is already preparing to have consultants upgrade a 2010 study, the “Holyrood Condition and Life Extension Study” by AMEC Foster Wheeler to see what work would have to be done now; originally, that study expected Holyrood to have entered only a standby operation almost two years ago.
So Hydro is looking ahead: “The current schedule for Muskrat Falls in-service has also resulted in the addition of projects to the capital plan. For example, Holyrood has been following original equipment manufacturer recommended intervals for the capital overhaul of major equipment such as the turbine/generator and major pumps, to ensure reliable operation. Overhaul projects for turbine valves, generators, and major pumps have been added to the five year capital plan for 2018, 2019, and 2020.”
(Interestingly, studies done to support Muskrat Falls indicated that, just to reach 2017, Holyrood would need $800 million in upgrades, including $600 million in pollution control upgrades. Substantially less than that has been done.)
In April, the utility will go to the PUB again: to ask permission for a further $2.6 million in unexpected upgrades in piping, boiler reliability and turbine reliability at Holyrood.
All of this will require more money from ratepayers — as will Muskrat Falls itself, not only because of the increased cost of the project, but because the delay means Muskrat isn’t paying off its debts. It’s still under construction, rather than selling high-priced electricity to us, so the interest clock is ticking along. Five years’ worth of interest on billions in borrowing is no small potatoes.
It is a long road with no turns. But surprises? Yes, far too many surprises — and surprises beget still more surprises.