Posted August 2, 2012
A central question about the proposed Muskrat Falls Power project and associated transmission line to Nova Scotia is whether we need more power and if so when. A good starting point toward an answer is the most recent Integrated Resource Plan produced by Nova Scotia Power (NSP) in 2009.
Adjusting that plan for the demise of Bowater and one of the Newpage plants and assuming that coal plants are retired when they are 45 years old to meet federal requirements (yielding a 57% reduction in greenhouse gases [GHG’s]) results in the following chart:
The chart suggests that no new generation is needed for at least the next 20 years, so the $1.2 billion that ratepayers are being asked to finance over that period is entirely unnecessary.
The chart is a considerable simplification of a complex topic . It does not reflect the impact of interruptible power arrangements with the paper plants. It does not incorporate changes in the availability of potential imports, for example from NB Power’s Point Lepreau plant which is nearing the end of its refurbishment. It does not distinguish wind power, which arrives independent of demand, from other sources which can be turned on when needed. In short it does not inform us well enough to be the basis for a final policy choice.
The government’s requirement that renewable sources provide 40% of power by 2020 would require creation of new but otherwise unneeded power sources. That requirement was first announced by the NS Department of Energy’s Renewable Electricity Plan in 2010. Reducing GHG’s matters, but a credible case for also imposing a renewable requirement has not been made. Revealingly the document, while gushing with pride over the 40% target, provides little analysis about the possible cost.
Operating within the 40% renewable framework, Emera and NSP argue that the Muskrat Falls project is the right way forward, pointing out that it will provide stable costs and is better than all the alternatives, including imports from New Brunswick and Quebec.
That argument is a considerable simplification of a complex topic. The selectively chosen information so far provided does not tell us the cost of meeting the renewable target. Electricity prices in Nova Scotia have been going up while those in New England have been going down—due to vast new discoveries and reduced prices for natural gas. Apart from that there is a conflict of interest.
Emera and NSP make profits by investing capital in power related projects. So there is far more profit for them in building facilities (in this case the $1.2 Billion for the Maritime Link) than in importing power which may not require as large an investment in transmission, or buying it from independent producers ( say wind or tidal) in Nova Scotia. Furthermore the Maritime Link serves Emera’s long term interest in transmitting power to other jurisdictions, which is not germane to the interest of Nova Scotia ratepayers. In short, Emera’s advocacy is does not inform us well enough to be the basis for a final policy choice.
The Government seems to be intent on a procedure that will avoid the important questions. If the UARB is asked to evaluate the Muskrat Falls project in the context of the 40% renewable requirement we will never find out what that requirement costs. If the starting point is Emera’s evaluation of the eligible alternatives an objective comparison will not be possible.
There is no urgent need for a decision. The right way forward would include:
- An update of the 2009 Integrated Resource Plan to show demand and the need (if any) for new generation without the 40% renewable target, and which of all possible sources (other than new coal generation) is the least
- The same as above with the 40% target, and a process that allows for Hydro Quebec and NB Power to directly compete with the Muskrat Falls project. Comparing these two will reveal the cost of the renewable target.
- If it is concluded that bringing electricity from Labrador is the best alternative for ratepayers, a competitive bidding process on the installation of the Maritime Link.
The continuing rise in electricity prices in Nova Scotia, while other jurisdictions are enjoying reductions, hurts both the budgets of families and the competitiveness of employers. The Government must provide a thorough examination of these issues before ratepayers are asked to sign up for another $1.2 billion.
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