Showing posts with label electricity. Show all posts
Showing posts with label electricity. Show all posts

07 April 2014

Electricity “review” a waste of time, money #nlpoli

Now we know why it took the provincial government so long to release the “review” of the provincial electrical system that former Premier Kathy Dunderdale made up off the top of her head when people were trying to take her head off over Nalcor’s giant blackout in January.

The “review” is going to involve nothing more than a description of the existing electrical system and other systems across Canada.

There’s nothing in the request for proposals – not a commission of inquiry (!!!) – that people in the provincial government either don’t know already or should know.

And since this will be just another consultant’s report, the consultant has no legal ability to obtain detailed information the way the public utilities board or a public inquiry could.

There also doesn’t appear to be any provision for a discussion of the regressive, monopoly system the provincial government created in 2012 because Muskrat Falls isn’t the cheapest way to provide electricity for provincial demand.

What’s the point of examining the province’s electricity policy if you don;t actually look critically at the policy and propose alternatives?

Yes, folks, it is a waste of time.  And you know it’s a waste of time because they released word of the request for proposals after normal working hours on Monday.  It’s a new version of “take out the trash”.

-srbp-

14 March 2012

Unions oppose energy conservation device #nlpoli

Unions representing Hydro-Quebec employees are oppose to a plan to install so-called smart meters in Quebec homes.  According to the Montreal Gazette:

One week before the Régie de l’énergie is to begin hearings on the controversial venture, the Syndicate des employés de techniques professionnels et de bureau d’Hydro-Québec denounced the move at a media conference.

The union has submitted an economic analysis of the project to the energy board that contends Hydro-Québec would lose $104 million over 20 years, while the new network would wipe out about 1,000 direct and indirect jobs.

 

- srbp -

02 March 2012

Electricity prices round-up #nlpoli

In Quebec, Arcelor Mittal mines is looking to hang onto its industrial discount electricity rate of 4.5 cents per kilowatt hour even though the company didn’t delivered on its commitment to build a second pellet plant in the province.

The Parti Quebecois wants to make sure that the company processes as much of the ore it mines in Quebec rather than take it out of the province with a minimum of processing.

For those who may have missed it, this is where Churchill Falls electricity goes:  discount electricity inside Quebec for residential and industrial consumers.

Ontario Power Generation will spend $600 million to have a consortium including SNC Lavalin refurbish Ontario’s nuclear generating stations.

In addition, the province has more than 2,000 MW of electricity from wind power either in production or in development.

- srbp -

14 December 2011

A grain of salt #nlpoli

Around this time of year the country’s major banks issue their economic assessments of the current year and their forecasts of the coming one.

Royal Bank issued the most recent one.  Not surprisingly, the bank’s economists are forecasting that the provinces that are most heavily dependent on natural resources will do quite well.  Saskatchewan and Alberta will lead the country in economic growth, with Newfoundland and Labrador in fourth place.

RBC’s forecast for 2012 and 2013 has Newfoundland and Labrador in the same relative position.  Natural resource prices and capital construction are driving things.  Over the next couple of years, new mineral developments will offset declines in oil production, according to RBC.  While their reasons may be slightly different, BMO and Scotiabank’s forecasts are all generally similar to RBC’s view.

There’s nothing surprising about any of that.  Newfoundland and Labrador has enjoyed phenomenal economic growth for most of the last 15 years.  In 2002, for example, the provincial gross domestic product grew 8.2% and in 1998 and 1999, the province led the country in economic growth for two years in a row.

There’s also nothing about the current economic growth that has anything to do with the party currently in power either. Some people would like you to believe otherwise.  A great many people in the province believe otherwise.  But they are wrong.

What you really need to do when looking at these economic projections is go beyond the short-term and the superficial.

Like oil prices.  Current thinking is that oil should be $100 a barrel on average.  In 2011, oil prices operated within a pretty narrow band, so if things stay like that, the world should be fine.

But…

The biggest, and more bullish, tail risk is of heightened turmoil in the Middle East and north Africa and, increasingly, in Russia, the world’s second-largest oil producer. An attack by Israel on Iran, for example, could push oil prices briefly towards $250 a barrel, according to some estimates.

Now with production in this province forecast to drop by 20-odd% from 2011, that might get a few people really excited.  Russia could be Kathy Dunderdale’s best friend, someone quipped.  Oil at $250 a barrel for any length of time would deliver a pretty sweet financial reward into the provincial treasury.  Some people might even use it as an “I told ya” moment to justify Muskrat Falls.

Just consider the cost of living with oil at around $100 a barrel, as it is now.  Look at the cost of living in all sorts of places, including Labrador West where housing prices are already at crisis levels for a great many families.

Now think of what it would be like with prices driven up by the costs of shipping just about all major consumer goods into the province.

Not pretty, eh?

And for those people who imagine the Americans desperate for cheap hydroelectricity at that point, well, the picture is even less rosy for them.

ExxonMobil produced an interesting energy forecast recently that looks at what the energy world might look like out to about 2040. Electricity demand will grow globally.  But in the United States, expect to see more electricity produced by natural gas.  There’s plenty of it and new natural gas plants are much more efficient at producing electricity than existing methods.

As for price, well, take a gander at this forecast of the cost of producing electricity in 2030:

exxonelectricitycostchart

Electricity produced from natural gas will be less than half the cost of Muskrat Falls electricity.

Forget about those export sales, gang.

But just imagine carrying the huge debt from Muskrat Falls, paying the electricity prices in this province because the provincial government forced you to pay for it and trying to cope with all the other increased costs coming because oil is more than double what it is today.

You really need to take all this talk of wonder and glory with just a grain of salt.  Things are good these days, better than they have ever been.  But if we make mistakes today, if we don’t look at the big picture, we can be paying for them tomorrow.

Big time.

- srbp -

01 December 2011

The Muskrat Morass Deepens #nlpoli

Kathy Dunderdale, Ed Martin and their supporters have a basic problem.

In 30 seconds, opponents of the multi-billion project can give a simple, coherent, and unassailable reason why they oppose the project.

In 30 minutes or 30 days or 30 weeks or even 30 months, the provincial Conservatives and Nalcor haven’t been able to provide a thorough, coherent argument why people should back their deal.

Take the consumer price for electricity as a case in point.

Your humble e-scribbler opposes Muskrat Falls because the people who own the resource should not have to pay the full price for development plus a profit for the companies involved while customers outside the province will get the electricity at a discount.

Then-natural resources minister Kathy Dunderdale put the cost of Muskrat Falls power on the table this time last year  - November 22, 2010 - and your humble e-scribbler put it right there so people would not forget it:

…in terms of when we bring that on in 2017 that’s the cost in 2017, $165, or excuse me it’s $143 a megawatt hour.

That works out to a range of between 14.3 cents per kilowatt hour and 16.5 cents per kwh.

That’s not the final consumer price, incidentally.  That’s the cost to generate electricity from Muskrat Falls.  What consumers in this province will pay on the electricity bills will be something higher than that.

Last April, now-premier Kathy Dunderdale confirmed that Muskrat power would cost taxpayers in Newfoundland and Labrador at least 14.3 cents per kilowatt hour.  And then she added the point about exports:

Mr. Speaker, Nova Scotia needs power. They need power and they can provide it to themselves for 10 cents or 11 cents a kilowatt hour. They are not going to buy it from us, Mr. Speaker, for 14.3, so we have to go into the market and sell at what the market can bear

Nova Scotians weren’t going to pay that much for electricity in April and that is still their position.

On Wednesday, local news media reported comments by Emera officials to the Nova Scotia legislature’s natural resources committee on October.

Andrew Younger (Lib. Dartmouth East): You undoubtedly are aware that people are talking 14, 15, 16 cents a kilowatt hour, and I do understand that doesn’t mean that’s what you pay on the bill because there are lots of other things and it averages in with the other sources but is that the sort of . . .

Chris Huskilson, CEO, Emera: Well that won’t make it. That kind of number won’t make it.

MR. YOUNGER: Why?

MR. HUSKILSON: It’s too high, so it has to be lower than those kinds of numbers.

MR. YOUNGER: That’s good.

MR. HUSKILSON: We won’t bring forward something that is not going to make it.

Huskilson knows he won;t have to worry about those sort of prices.  The working agreement between Nalcor and Emera guarantees Emera a 35 year supply of electricity in exchange for the $1.2 billion cost of a transmission line from Newfoundland to Cape Breton.

Former Premier Roger Grimes has called that free electricity and, in essence, it is.  Even if you spread that $1.2 billion over the 35 years, the cost to Nova Scotia – even though it is entirely notional – works out to something like 3.5 cents per kilowatt hour.

Emera can buy electricity beyond that base amount.  They will pay around nine cents per kilowatt hour for it under the working agreement.  Even with the anticipated inflation escalators, Emera wouldn’t pay anything close to the real cost of Muskrat electricity ever.

Ever.

This is a sweet deal for Emera.  They get to do business in Newfoundland and Labrador, with a profit guaranteed by the province’s public utilities board.

But on top of that, Emera will get what Chris Huskilson told the legislative committee a couple of times:  35 years of electricity at a fixed price.

No escalator.

Fixed.

Emera officials used that term quite a bit:

    • “Rate stability - it has a long-term fixed cost to it.”
    • “To go over the advantages of Lower Churchill, it’s 35 years of clean, renewable energy at a fixed cost.”
    • “No, in the long run it does stabilize rates because when it comes in, it’s a fixed contract for 8 per cent to 10 per cent of our load for 35 years, so that will have a stabilizing influence on prices.”

Nova Scotians have a fixed price for 35 years.  That’s almost as good as Quebec scored on Churchill Falls in 1969.

In practical terms, even if you accept that 3.5 cents per kwh for the guaranteed block of power,  inflation will reduce the cost of Emera’s electricity to almost nothing over time.

Newfoundlanders and Labradorians, on the other hand, will always have to pay to cover the full cost of the project and guarantee a profit besides that for the companies involved.

Their costs will go one way:  up.

Go back to that starting comment:

Your humble e-scribbler opposes Muskrat Falls because the people who own the resource should not have to pay the full price for development plus a profit for the companies involved while customers outside the province will get the electricity at a discount.

It won’t even take 30 seconds to read.

The rest is explanation.

Now try and find Nalcor’s explanation of what the people in the province will pay for electricity. 

Good luck. 

They’ve avoided it like the plague.

- srbp -

Related: 

22 July 2011

Containing Ottawa’s Skyrocketing Power Bill


by Tom Adams and Brian Lee Crowley

[Note:  the authors prepared the following commentary to coincide with the recent energy ministers meeting.  It has appeared in other publications across the country.]

Federal taxpayers are exposed to an explosion of liabilities to fund provincial electricity misadventures, the worst of which are undermining Canada’s international trading reputation. A federal-provincial energy conference in Kananaskis, Alberta running until July 19th threatens to up the ante.

Last week, Texas energy titan T. Boone Pickens launched a $775-million
NAFTA challenge alleging the Ontario government has discriminated against his privately owned wind energy company. Pickens is demanding that the federal government pay up.

The federal government is also defending protectionist elements of Ontario’s controversial Green Energy Act against a challenge Japan has launched with the support of the United States and European Union at the World Trade Organization.

Ontario is not the only province with electricity initiatives undermining Canada’s trading reputation and sending the bill to Ottawa.

Last August, a NAFTA dispute panel obliged federal taxpayers to pay the industrial firm Abitibi-Bowater $130 million after the government of Newfoundland and Labrador confiscated electricity generation assets. Far from holding the Newfoundland government responsible for shafting federal taxpayers, Prime Minister Stephen Harper instead promised loan guarantees for submarine transmission connections
required by a Labrador power megaproject with very dubious economics.

With the subsidy offer, Harper effectively rewarded Newfoundland’s government and further impaired Canada’s trade reputation in an unsuccessful bid to win seats on the Rock (although the Conservatives did pick up a seat in Labrador).

Newfoundland justifies its power scheme on the basis that provincial power costs are going to soar anyway, eventually making pricey Labrador power relatively cheap by comparison. Most of the new Labrador power, however, is earmarked for the Maritimes and potentially New England. Unlike Newfoundland, those markets have access to North America’s glut of natural gas, a key factor driving down average power rates across the U.S.

Any subsidies to Labrador power are likely to attract yet more trade complaints from generators in New England, particularly those now selling significant amounts of power into the Maritimes. International competitors of export industries in Atlantic Canada may also complain.

The Newfoundland government estimates that a federal subsidy for the Labrador power project in the form of a loan guarantee will cut local power costs by 6 or 7 per cent. Likely cost over-runs could push the value of the federal guarantee much higher.

The Kananaskis meeting provides a platform for provincial governments and lobby groups to push the federal government deeper into provincial electricity matters. Many, including the governments of Ontario and Newfoundland & Labrador, have demanded federal subsidies to interprovincial transmission projects. Ontario also demands federal subsidies for its nuclear expansion ambitions.

The federal track record in the electricity business is dubious, as illustrated by its recent cut-the-losses exit from nuclear power development and marketing. Even if the federal record in the electricity business was solid, using the federal spending power to buy its way into provincial energy affairs now will annoy our trading partners, promote inefficiency and create jurisdictional confusion.

The federal government should focus its electricity sector involvement first on its core constitutional responsibility for interprovincial trade and commerce. The best way to make Labrador power truly competitive against abundant natural gas is to avoid hugely expensive long distance submarine transmission and to instead achieve the best possible economies of scale with more affordable transmission over land.

To reach markets in Ontario or the U.S. Northeast, Labrador power must transit Quebec, which has its own electricity export ambitions. If those provinces cannot negotiate a mutually agreeable solution, the federal government should act to ensure the constitutionally-guaranteed freedom of interprovincial trade. Ontario and Newfoundland should not require Quebec’s approval to move electricity any more than Alberta needs Saskatchewan’s permission to move natural gas to Manitoba, Ontario and Quebec.

Naturally, Quebec does not welcome another big hydro-power competitor, particularly while market prices are low. However, to maintain its access to electricity markets in the United States, Quebec already accepts the U.S. Federal Energy Regulatory Commission’s non-negotiable rules compelling them to open their market to electricity imports. The constitutional powers that the U.S. relies upon to promote highly successful inter-state trading are similar to our own federal
government’s constitutional authority, which Ottawa has always been reluctant to exercise in the electricity sector.

Canadians too should be entitled to an open national electricity system, where no province can hold its neighbours hostage and Canadians can buy and sell power freely. The federal government should keep federal tax dollars out of the electricity sector. Any subsidies to the sector create unfairness to taxpayers across the county and harm Canada's trading reputation, vital to our long term economic interests. Instead Ottawa should use its legitimate powers to create an open national electricity market that treats everyone transparently and fairly.

- srbp -

Tom Adams is an independent energy and environmental advisor. He has held a variety of senior responsibilities including Executive Director of Energy Probe from 1996 until September 2007, membership on the Ontario Independent Electricity Market Operator Board of Directors, and membership on the Ontario Centre for Excellence for Energy Board of Management. His guest columns have appeared in many major Canadian newspapers. He has been a media commentator for 20 years and a lecturer in energy studies at University of Toronto. He has presented expert testimony before many regulatory tribunals in Canada on a wide variety of energy subjects. He has made presentations to Legislative Committees in Ontario and New Brunswick, academic, regulatory and trade conferences, the Atomic Energy Control Board, and the Canadian Nuclear Safety Commission.

Brian Lee Crowley has headed up the Macdonald-Laurier Institute (MLI) in Ottawa since its inception in March of 2010, but he has a long and distinguished record in the think tank world. He was the founder of the Atlantic Institute for Market Studies (AIMS) in Halifax, one of the country’s leading regional think tanks. He is a former Salvatori Fellow at the Heritage Foundation in Washington DC and is a Senior Fellow at the Galen Institute in Washington. In addition, he advises several think tanks in Canada, France and Nigeria.

Crowley’s published numerous books include two bestsellers: Fearful Symmetry: the fall and rise of Canada’s founding values (2009) and MLI’s first book, The Canadian Century; Moving Out of America’s Shadow, which he co-authored with Jason Clemens and Niels Veldhuis.

Crowley twice won the Sir Antony Fisher Award for excellence in think tank publications. From 2006-08 Crowley was the Clifford Clark Visiting Economist with the federal Department of Finance. He has also headed the Atlantic Provinces Economic Council (APEC), taught politics, economics and philosophy at various universities in Canada and Europe.

Crowley is a frequent commentator on political and economic issues across all media. He holds degrees from McGill and the London School of Economics, including a doctorate in political economy from the latter.

29 June 2011

Fortis, Gaz Metro in war for Vermont utility

Newfoundland and Labrador-based Fortis (CA: FTS)  isn’t alone in its bid to buy Central Vermont Public Service.

The CVPS board announced on June 27 that the company has authorized talks with Gaz Metro on Gaz Metro’s unsolicited acquisition offer.  Gaz Metro is offering $35.25 per share.  That’s slightly better than Fortis offer of $35.10 per share, which the CVPS board accepted in late May.

CVPS is the largest electrical utility in Vermont.

Vermont Governor Pete Shumlin thinks the Gaz Metro offer is better for the state given that Gaz Metro already owns an electric utility and a natural gas utility in the state.

Fortis isn’t happy with the unsolicited offer from a rival. The company wouldn’t comment on the story earlier in June with Canadian media but  Vermont Public Radio quotes Fortis chief financial officer Barry Perry as saying: 

"It is a hostile bid. In the utility sector, hostile bids are not normal.  They're rare, in fact.  So, usually you end up negotiating a transaction, the board selects a party and that's the end of it.    The party is then required to get it approved by the regulator and the shareholders of the company. In this case GMP did decide to go hostile. It is a little unusual."

Under the agreement with Fortis, CVPS could wind up paying Fortis US$19 million if the deal with the company falls through.

If it is successful, Gaz Metro would create a new utility that includes a share of the state’s transmission assets.  VPR reported that as part of the merger, Gaz Metro would create a public trust comprising 30% of the shares in the state transmission utility. The trust would reportedly generate $1.0 million a year in income.

 

- srbp -

21 June 2011

US has surplus electricity

A conference in Halifax last week heard a tale of electricity demand in the United States that you certainly aren’t hearing from proponents of mega-debt projects north of the border.

Massachusetts-based consultant Danielle Powers said that the New England states have enough capacity to meet anticipated demand in the near term.  At the same time, Powers said the situation could change if up to 8500 megawatts of existing generation in the United States wound up out of production.

But still:

"When you look at (natural gas) prices right now, I don't know how the case is made financially to bring the resources in," she responded. "In the near term, unless I'm missing something, I don't see it working."

Price seems to be the key.  Another American consultant quoted in the same New Brunswick Business Journal article put it the same way.  John Kerry is policy director for the Conference of New England Governors:

"There will be, at some point in the future, the need for reasonably priced Canadian power," he said at the Atlantic Power conference. "The lower the price, the greater the chance they will purchase Canadian power."

Something says Kerry wouldn’t think that 14.3 cents per kilowatt hour plus wheeling charges through three Canadian provinces and up to five American states will wind up with “reasonably priced” power in New England.

- srbp -

17 March 2011

Pushback in New England on hydro lines

Environmental concerns are causing problems for a proposed electricity transmission line that could help carry Labrador electricity into the United States.

The Northern Pass project will carry electricity from Quebec into New Hampshire and on to the rest of New England.

Some local residents in New Hampshire are concerned that the proposed route will damage the state’s tourism industry. 

John Harrington is a retired newspaper publisher.  He told North Country Public Radio:

“What’s being threatened is the only thing we really have left, which is tourism. All for the convenience of people far to the south. And we’re going to wind up with this huge scar right down through the narrowest and most fragile part of New Hampshire.”

Then there’s the question of whether or not big hydro is actually green. Only Vermont currently accepts hydroelectricity from large dams as renewable and green and therefore eligible to count in state-mandated energy calculations.  Most New England states require that a percentage of electricity in the state come from renewable, green energy sources.  Both the American federal and some state governments also give cash incentives to renewable energy projects.

In some states, debate is already raging about the implications of renewable energy policies.  In last fall’s gubernatorial campaign, incumbent Deval Patrick’s Republican challenger included support for big hydro as part of his campaign platform. 

In Connecticut, Northeast utilities senior vice-president James Robb told a conference last November that without big hydro, “ it will be very challenging to meet those goals” of increasing the use of renewable energy sources to 25% of generation by 2025.  Robb said that there are projects but many are uneconomical.

Still, the big hydro projects don’t meet existing guidelines.

The main concern regarding hydro is that the flooding resulting from dams causes leaves and other foliage to decompose, emitting methane, one of the worst greenhouse gases. The Canadian officials [at the November conference]  argued that the water in their provinces is so cold that the leaves don’t decompose.

“I’m struggling here in New England with how New England is going to meet its renewable requirements. Without Quebec and Newfoundland & Labrador, you will struggle to hit that,” said Ed Martin, president and CEO of Nalcor Energy, which is based in the hydro- and wind-rich Newfoundland & Labrador. “Hydro is part of the mix that has to happen if you are going to meet the goals in New England.”

- srbp -

23 November 2010

Ontario to double electricity rates

Ontario’s new energy plan will see the province’s electricity rates double, but in 20 years, not seven.

[Globe and Mail] This is the government’s second attempt to chart a long-term plan. While the latest version is broadly similar to the document released in 2007, it differs in one key respect: costs for building new power systems are estimated to be 45 per cent higher.

As a result, residential electricity prices will climb to $228 a month by 2030 for the average consumer who uses 800 kilowatt hours a month. This compares with $114 today.

- srbp -

29 August 2010

Maine’s energy future

Maine Governor John Baldacci can easily list off the elements of his state’s energy future.

“This year Maine signed a Memorandum of Understanding on tidal energy with Premier Dexter of Nova Scotia, on offshore energy research. There is a huge development in Eastport with the Portland-based Ocean Renewable Power Company. We can learn from each other and share our experiences with each other.

“We are working collectively as a region. It’s important that we are in sync, especially with the issues surrounding Hydro-Québec and New Brunswick’s nuclear plans.

Newfoundland and Labrador didn’t make the cut.

Wonder why not?

Maybe it has something to do with the current administration’s obsession with a $15.5 billion wet dream for which there are neither markets nor money.  There are plenty of other generation and transmission opportunities, smaller and more financially feasible, even on the island of Newfoundland. 

None will be developed  - including a connection from the island to Nova Scotia – unless it involves the Great White What of the Lower Churchill.

- srbp -