Thursday, April 12, 2012


The glut of natural gas in the  North Eastern United States has certainly changed the water on beams when it comes to the development of costly infrastructure of wind and hydro projects designed to be underwritten by the export of energy to American markets. 

Electricity producers like Hydro Quebec just can not compete with cheap gas. While the American railroad and coal mining sectors are being hit hard by this new, cheap and abundant source of energy, their are impacts north of the border as well.

Cheap natural gas in the United States does not solve the future energy demands of Newfoundland or Labrador. In fact, it complicates our energy needs because the hopes of a lucrative export market for surplus power has vanished like a scalded cat. The market opportunities that existed in 2009 are gone. We can no longer count (if we ever could) on this market to underwrite the development of Muskrat Falls.

It is time that the government axe the Emera component. There is absolutely no logical reason to build a transmission line to Nova Scotia at this point.  It would be like building a high-tech hydroponic cucumber Greenhouse in Mt. Pearl and dumping the unprofitable veggies in Nova Scotia - except a lot more costlier that that $30 million debacle.

While it is encouraging that the province has finally seen the light -or felt the sting of a  loss of credibility, and commissioned studies on natural gas and wind power, I think there is at least one other option they need to consider. 

This option has been discussed on P&P at length but it may not be all that palatable to politicians and nationalists.  Why are they not costing the expense associated with building a transmission line from Churchill Falls to the Avalon where we could buy cheap power from Hydro Quebec. 

What, you say, buy hydro from Hydro Quebec. Surely, I have lost my mind. 

In fact, I have not. Hydro Quebec will want to sell surplus power as the natural gas drives them to loose revenue.   We would be able to address our energy needs without the risk of building Muskrat - at a fraction of the cost. It is unfortunate that the Consumer Advocate did not advocate for such an inquiry on behalf of hydro consumers.

I think that Recall Power is the key to solving our short-term energy problems (to 2041). This could be augment by purchasing additional power needs at market rates or using non-utility generated power to fill gaps.

Recall power from 2017 to 2041 is assumed to be available at 2 $ per MWh consistent with the 1969 agreement.  It is assumed that there is 1000 GWh of energy available under the RECALL arrangement. The cost of purchasing the remaining need is still much cheaper than building Muskrat at this time.

Perhaps such an arrangement could lead to a more equitable arrangement with Hydro-Quebec over the ghost of Churchill Falls.

 We must take a combined view of our domestic energy demands over the next 50 year period.


Edward Hollett said...

Just for curiosity sake, Peter, where is this 1,000 MW of recall that you assume is in the 1969 agreement ?

Anonymous said...

Ed..great to see you are still following my humble scribbles. I'll get you some answers as soon as I get a chance to sit down away from this hockey tournament that has me pretty occupied today

Edward Hollett said...

Anonymous and Peter are the same person?


Edward Hollett said...

Thanks Peter. My bad.

As I re-read your comment, you wrote 1,000 gigawatt hours which is basically one terawatt hour (if I follow the math correctly.) Again, if I follow it correctly, that's basically what you get from the unused bit of recall (less than 150 MWs, maybe around 90 MW off the top of my head)

I misread it as MW and that's why I was intrigued by where you got the idea. My mistake.

This is a pretty interesting post with a provocative idea. Unfortunately, I don't think anybody would be prepared to take it seriously even though it is a serious and worthwhile contribution.

Peter L. Whittle said...

No problem. Just as long as it carries the conversation further along.

There is 300 MW of power under recall. This would equate to 300 MW x 24 hrs x 365 days x 0.001 = 2628 GWhr of energy. They use part of this in Labrador now, and wheel the rest through Quebec.

However Nalcor have said there is 1000 GWh or 1 TWh available for use beyond the current requirements.

in which I have referenceed this post

As for the 2 $ per MWh price this is based on the rate in the 1969 agreement. It is not clear if this is correct but Jim Feehan has referenced it here as it has been used by Nalcor.

Hope this clarifies things a little.

Edward Hollett said...

Thanks, it does. I was more curious about the amount of energy not the price. I'd have to dig out the contract but the price looks about right, especially for the post 2016 period.

As it stands right now, HQ could make more money by selling power to CFLCo to meet the Labrador miners' needs. By no accident then, CFLCo could make more money as well which makes it a win-win for everyone.

You might consider too that the miners could buy from HQ and apply to the PUB to wheel it. Since April 2009 and the wheeling deal with Emera New York, NL is obliged to have open access to its transmission facilities as well. No one has tried it yet but it could get very interesting.

That's why I said you have a very provocative idea here.