Costly catch-up

The Gulf News (Port aux Basques) - - Editorial -

o be fair, this is a good news story, or at least one with in­ter­est­ing im­pli­ca­tions.

Or, you might see it as a cau­tion­ary tale. Re­cently, New­found­land and Labrador Hy­dro went to the Pub­lic Util­i­ties Board to ask for per­mis­sion to spend $4.7 mil­lion to ser­vice its com­bus­tion tur­bine. It’s work that would need to be done, ac­cord­ing to man­u­fac­turer’s guide­lines, in Fe­bru­ary. Rec­og­niz­ing that peak power use is at that time of year, Hy­dro is fast-track­ing the work, pre­par­ing to do it be­fore win­ter. That’s good plan­ning — ser­vic­ing as­sets ef­fec­tively so they’ll be ready when needed. It’s worth point­ing out that Hy­dro says it un­der­stands that try­ing to get the work done by Dec. 1 means an “ag­gres­sive” main­te­nance ef­fort, but it’s one that can’t, be­cause of the cir­cum­stances, be weighed against slower, cheaper op­tions. Now, the cau­tion­ary tale. Re­mem­ber the com­bus­tion tur­bine? It was pur­chased, brand new, for $120 mil­lion, and only went into full op­er­a­tion in March 2015. It pro­vides backup power for the North­east Avalon grid, and was ex­pected to be used fairly lightly.

Prob­lem is, it hasn’t been used any­where near as lightly as the util­ity ex­pected. The tur­bine’s main­te­nance sched­ule re­quires in­spec­tion and over­haul of its com­bus­tor unit af­ter the equiv­a­lent of 400 start-ups. When the tur­bine was pur­chased, the util­ity had no idea that work would be done so quickly; the orig­i­nal es­ti­mate had the unit reach­ing that mile­stone in spring 2018.

But the knee bone’s con­nected to the leg bone, and if the knee bone is the com­bus­tion tur­bine, the tot­ter­ing old leg bone is the Holy­rood Gen­er­at­ing Sta­tion. Prob­lems with boiler tubes at Holy­rood mean that gen­er­at­ing units at the sta­tion were shut down for part of the win­ter, and de-rated af­ter that, mean­ing they no longer op­er­ated at full ca­pac­ity un­til re­pair work was done. (So far this year, Hy­dro has gone to the PUB for $26.5 mil­lion in un­ex­pected re­pairs, rang­ing from the com­bus­tion tur­bine over­haul to re­pairs to a hy­dro­elec­tric tur­bine at Baie d’Espoir.)

Us­ing the com­bus­tion tur­bine more of­ten means the $4.7 mil­lion in main­te­nance came sooner than ex­pected — and an­other, even larger job, a $10-mil­lion hot gas path in­spec­tion and main­te­nance, will be re­quired sooner, too, in 2019.

What we’re see­ing now is a util­ity play­ing catchup. Both the Lib­erty Con­sult­ing Group and the PUB have pointed out there were on­go­ing main­te­nance is­sues at Hy­dro that fell well be­low the stan­dard set by usual util­ity prac­tice.

The un­ex­pected emer­gency cap­i­tal work, all of which ends up be­ing paid for by ratepay­ers, may be a sign that Hy­dro is tak­ing pre­ven­ta­tive main­te­nance more se­ri­ously.

It’s only a shame that this prov­ince and its ratepay­ers are now nowhere near as able to ab­sorb the un­ex­pected costs.

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