P.U. 5
(2000-2001)
IN THE MATTER OF the
Public Utilities Act, (“the Act”)
and
IN THE MATTER OF an Application by
Newfoundland and Labrador Hydro (“Hydro”),
pursuant to S. 38 of the Act, to abandon
the Roddickton diesel generating plant.
On November 16, 1999, Hydro applied to the Board to abandon the woodchip fired thermal generating plant (the “thermal plant”) and the diesel generating plant (the “diesel plant”), both located in the Town of Roddickton, pursuant to section 38 of the Act. Section 38 of the Act states,
A public utility shall not abandon a part of its line, or works, after they have been operated, or discontinue a service without notice to the board, and without written consent of the board, which consent shall only be given after notice to an incorporated municipal body interested, and after there has been an inquiry.
Upon the receipt of a submission from the Town of Roddickton and the conclusion of the preliminary investigation, the Board decided to hold a hearing into the matter. Subsequent to publishing notice, the hearing was held on February 3, 2000, beginning at 9:00 a.m., at the Apostolic Faith Group Center, 73 Cloud Drive, Roddickton.
The following were in attendance at the hearing:
Mr. Geoffrey P. Young, appearing as counsel for Hydro;
Mr. Arthur A. Locke, Roddickton Town Manager, appearing on behalf of the Town of Roddickton.
During the hearing the Board was assisted by:
Mr. J. Randall Pelletier, Legal Counsel;
Ms. G. Cheryl Blundon, Board Secretary.
Dr. Wallace Read appeared as an expert witness for the Board, and his report was entered as evidence.
Evidence was given for Hydro by the following:
Mr. Derek Osmond, Vice-President of Finance and Chief Financial Officer;
Mr. Hubert Budgell, Director of System Planning;
Mr. Tom Vatcher, Director of Transmission and Rural Operations.
Evidence was given on behalf of the Intervenor by:
Mr. Arthur Locke, Roddickton Town Manager.
The following
letters of comment from various communities were entered into the record, and
expressed, among other things, opposition to the application.
1.
Ms. Alice
Flynn, Town Clerk, Town of Conche, NF., dated November 30, 1999;
2.
Mr. Robert
Mesher, Mayor, Town of St. Anthony, NF., dated January 28, 2000;
3.
Mr. Wade
Reid, Mayor, Town of Bide Arm, NF., dated February 3, 2000.
In addition to
the evidence and representations given at the hearing and the pre-filed
evidence circulated in advance, Hydro replied to and filed additional
information by way of exhibits.
Responses were also provided to information requests submitted by
parties to the hearing.
During the
hearing, the Applicant agreed to undertake to file additional information
requested by the Board. The
undertakings were filed on February 8, 2000, subsequent to the adjournment of
the hearing.
Final summations were presented by Mr. Geoffrey P. Young for Hydro and Mr. Locke for the Town of Roddickton. Mr. Young presented rebuttal on behalf of Hydro.
The Board, upon conclusion of the hearing and consideration of the evidence and representations given at the hearing, decided to separate the application into two components, one dealing with the abandonment of the thermal plant and the second dealing with the abandonment of the diesel plant. Board Order No. P.U. 26(1999-2000) was issued on February 18, 2000, dealing with the abandonment of the thermal plant. At that time, the Board decided to continue the hearing on March 14, 2000, in St. John’s, to consider further evidence relating to the application by Hydro to abandon its diesel plant in Roddickton as well as allowing cross-examination with respect to information filed pursuant to undertakings given in Roddickton and to review responses to any further information requests which may be issued by the Board.
The Town of Roddickton, represented by the Town Manager, Mr. Arthur A. Locke, upon receipt of the order, advised that they would continue to be a registered Intervenor in the continuation of the hearing set for March14, 2000.
On February 18, 2000, the parties were advised that the hearing would continue. The hearing was held on March 14, 2000, beginning at 9:30 a.m., in the Board’s main hearings room.
The following were in attendance at the hearing:
Mr. Geoffrey P. Young, appearing as counsel for Hydro;
Mr. Arthur A. Locke, Roddickton Town Manager, appearing on behalf of the Town of Roddickton.
During the hearing the Board was assisted by:
Mr. J. Randall Pelletier, Legal Counsel;
Ms. G. Cheryl Blundon, Board Secretary;
Dr. W.R. Read, Engineering Advisor.
Evidence was given for Hydro by the following:
Mr. Tom Vatcher, Director of Transmission and Rural Operations.
Mr. Hubert Budgell, Director of System Planning;
In addition to the evidence and the pre-filed evidence circulated in advance, Hydro replied to and filed additional information by way of exhibits. Responses were also provided to information requests submitted by parties to the hearing.
Final summations were presented by Mr. Geoffrey P. Young for Hydro and Mr. Locke for the Town of Roddickton.
Hydro has requested that approval of the Board be given, under section 38 of the Act, to abandon its diesel plant in Roddickton. Hydro’s position is that the diesel plant is no longer required for back up power and that the diesel plant located at St. Anthony can provide the emergency power requirements of the Roddickton area. While Hydro’s application relates specifically to the diesel plant, Hydro has also indicated its intention of relocating to St. Anthony its mobile 850 kW diesel plant currently located at the site of the woodchip plant.
The Town of Roddickton takes the view that the reliability of power supply at Roddickton has declined since the interconnection and some standby power is required. They consider the risk of relying exclusively upon emergency power from St. Anthony to be unacceptable.
They believe that abandonment of the diesel facility, located in the center of the Town, would leave the immediate Roddickton area dependent, in the event of an interruption of the interconnected system, upon power flowing from the St. Anthony plant through transmission lines 261(from St. Anthony to St. Anthony airport) and 257 (from the airport to Roddickton). The only remaining source of power in the local region would be from the mini-hydro plant. This plant is rated at 400 kW and is not large enough to supply power in the event of a power outage.
The 1987 report of the cost effectiveness of a wood fired generation facility at Roddickton provided in response to PUB 3 suggested that, following the commissioning of the woodchip plant in 1989, the generating capacity of the St. Anthony-Roddickton area would be 16,360 kW. The component sources for this capacity are shown in the response given by Hydro to the Board’s request for information PUB 11(page 3 of 3). This did not include the two 850 kW mobile units at Roddickton, one of which was destroyed by fire, nor did it include the 850 kW transportable diesel unit currently located at St. Anthony. Hydro witnesses were unable to advise the Board as to when these mobile and transportable units were introduced into the region.
The interconnection study of 1993 anticipated that the generating capacity in the St. Anthony-Roddickton area, following interconnection, would be 15, 950 kW. This would have included the woodchip plant (5000 kW), the St. Anthony plant (10,550 kW) and the small hydroelectric plant in Roddickton (400 kW), but the diesel plant in Roddickton would have been retired.
In the period 1993 to 1995, generation planning in relationship to interconnection was undertaken based upon a higher level of capacity in the region. This higher level of capacity (20,950 kW) continued to assume that the Roddickton diesel plant would be retired. However, two mobile diesel plants (850kW x 2 ) were planned to be based at Roddickton (as required) and diesel plants (5000 kW) at Hawke’s Bay were to be relocated to Roddickton. This 20,950 kW of capacity is strikingly different from the 10,100 kW of capacity which would remain in the St. Anthony-Roddickton region, with the abandonment of both the woodchip (thermal) plant and the diesel plant, with the loss of one of the mobile units by fire, and the reversal of the plan to relocate the Hawkes Bay plant.
In request for information PUB 12 the Board asked why Hydro now believes that this significantly reduced emergency capacity level is adequate to meet the needs of the region. Hydro responded that, in their planning, they elected to employ different technology, with less reliance upon local generating capacity for voltage support and greater reliance upon other means of achieving voltage support. The new system of voltage regulation was to use a combination of switched reactors and capacitors and thereby to eliminate the requirement for generation for voltage support.
Hydro had initially planned not only to relocate the diesel plant at Hawke’s Bay but also to convert the Roddickton thermal plant from woodchips to oil fired generation. Hydro concluded it was more cost effective to cancel these plans in favour of the alternative mechanism of regulating voltage through switched reactors and capacitors. In response to information request PUB 18, Hydro disclosed that the estimated cost for the one static var compensator (SVC) system, originally planned, along with the relocation of the Hawke’s Bay diesel, was $4.2 million, compared with $3.4 million for the system ultimately used, employing distributed capacitors and reactors.
Hydro also pointed out that the planned capacity of 20,950kW was well in excess of the St. Anthony-Roddickton load and was not intended to serve the emergency requirements of this region only. Rather it was intended to consolidate generation in the St. Anthony-Roddickton area, to reduce operation and maintenance costs and to eliminate redundancy in voltage compensation facilities.
The current plan of Hydro is to maintain 15,100 kW of generation capacity on the Great Northern Peninsula, consisting of 9700 kW of diesel and 400kW of hydro in the St. Anthony-Roddickton area and 5000 kW of diesel at Hawke’s Bay. Hydro believes that 9700 kW of generation is adequate to meet the emergency requirements of the St. Anthony-Roddickton area. Its evidence is that this capacity level is sufficient to back up approximately 85% of the total peak load of the St. Anthony-Roddickton area and can supply 100% of the area’s load in excess of 99% of the time. The projected load in 2008, as presented in the response to PUB 4, is 10,742 kW and the generating capacity of 9700 kW can meet 85% of this demand.
The load north of Hawke’s Bay can vary between approximately 3,500 kW and 20,000 kW, from summer light load to winter peak load. The standby and mobile generation is 8,850 kW available from St. Anthony and 850 kW from mobile generation at Roddickton, for a total of 9,700 kW. This means that all customers in the area cannot always be supplied by the available standby generation when the main transmission line up the Peninsula is out of service.
Hydro’s plan to supply this area in the event of an outage is given in response to PUB 5. This plan shows how the generation capacity in the region would be brought into operation for outages longer than 30 minutes. The plan also shows how the power would be allocated among various customers, depending upon their proximity to the St. Anthony plant.
For extended outages of longer than eight hours, emergency power would be rationed, if necessary. If the repair were to take longer than three days then Newfoundland Power would be requested to make available its seven megawatt mobile gas turbine. In the meantime, power would be rationed. Hydro forecasts that, even without the gas turbine, it can presently meet the Roddickton-Main Brook load 99.5% of the time and that, even by the year 2010, it will be able to meet the load 99% of the time. (PUB 5, page 3 of 3). Hydro takes the position (PUB 7) that the generating plant at Roddickton is of potential benefit only one percent of the time. This benefit, according to Hydro, would be realized only if an outage occurred during the highest load periods of the year.
The Town of Roddickton expressed concern as to the effect of a prolonged outage in the area, during which power from St. Anthony might be unavailable. In particular, Mr. Locke asked how the Town would cope with a freeze up in its sewer system. Commissioner Crosbie raised a similar concern. Hydro responded that in the event of an extended outage they might reduce the possibility of damage by ensuring that available stand-by generation, including the gas turbine owned by Newfoundland Power, will be used. The approach that Hydro would take would be to supply the more essential loads on a priority basis, should there be rationing or rotation of feeders underway. Hydro also indicated that Roddickton’s position during such an outage would not be significantly different from other communities who do not have emergency power provided by the electric utility.
Turning to the electrical history of Roddickton and its diesel plant, the Town first received electrical service in 1964. The diesel facility was expanded in 1972. In 1980, the community of Englee was interconnected to the Roddickton system and the Englee diesel plant was retired. In 1989 TL 257 was completed and served to interconnect the Roddickton, Main Brook and St. Anthony distribution systems. At the same time the diesel plant at Main Brook was retired.
There is some uncertainty as to when the two mobile units were brought into the region. Based upon the evidence in response to PUB 2, it was subsequent to the 1989 completion of the capital projects interconnecting the region that the two 850 kW mobile diesel plants were relocated from the Roddickton diesel plant to the Roddickton terminal station. The terminal station was located at the site of the woodchip plant, on the edge of the Town. In 1995, one of the mobiles was lost due to fire. The existing diesel plant has an installed capacity of 2000 kW (PUB 2, page 2 of 3).
Evidence was provided by Hydro as to the status of the Roddickton diesel plant since 1989. Up to the interconnection in 1989 it was operated as a fully attended plant with four operators on a schedule. After interconnection it was operated on a semi-attended basis with two operators on a stand-by basis. This means that it was maintained in operating condition so that it could be expected to start and run reliably whenever called upon.
A decision was taken in 1994 to take the plant off standby status. After that time the plant was available for use, but at a lower priority, and with a longer lead-time to start. It remained available, and therefore was used and useful, until 1999 when, in July, the corroded exhaust stacks and mufflers reached a point where they became unsafe to operate.
The Board enquired as to the extent of usage of the diesel plant prior to interconnection. In the response to PUB 28, Hydro stated that the plant operated on three days in advance of the interconnection that took place on September 7, 1999. It was used to support the reconfiguration of the St. Anthony Airport Terminal Station as a part of the construction of the interconnecting grid.
Performance of Main Northern Peninsula Transmission Lines
connecting with Transmission Lines 257 and 261 in St. Anthony-Roddickton
Region
The need for emergency power in the region is a direct function of the reliability of the transmission lines serving the St. Anthony-Roddickton area.
By the same token, the need for emergency power in the Roddickton sub-region depends to a large measure on the reliability of the lines connecting Roddickton with emergency power from St. Anthony. On February 8, 2000 Hydro provided evidence, sworn by affidavit, concerning the performance of 138 kV lines on the Great Northern Peninsula, compared with other lines of the same voltage.
Schedule 4 attached to the affidavit provided this comparison for the period 1996 to 1999. This evidence shows that the main transmission lines are subject to significant reliability problems. TL 239, between Deer Lake and Berry Hill, had six sustained outages, with a total duration of more than 20 hours. The frequency of outages and their duration were well in excess of other main lines elsewhere in the Province shown in the table. TL 259, between Berry Hill and Peter’s Barren, and TL 244, between Plum Point and Bear Cove, also exhibited significant reliability problems. These problems have a cumulative impact on consumers in the region. The evidence does not disclose whether the remedial measures taken, such as insulator replacement, on TL 239, and replacement of defective ball head eye bolts, on line TL 241, between Peter’s Barren and Plum Point have had the effect of progressively improving reliability and mitigating the high level of outages. It is therefore difficult to assess whether the need for emergency power supply has been reduced.
The response to information request PUB 34 provides information on momentary outages on various 138 kV lines. The high frequency of momentary outages on TL 239 stands out in a similar fashion to the sustained outages on the same line, noted previously. Of the five lines shown, four of them report a higher frequency of outages than the average reported by the Canadian Electrical Association for 138 kV lines.
The Board notes from evidence given during the hearing (March 14 Transcript , page 35, lines 29 – 39) that a previous move by Hydro to close the diesel plant met with resistance from local residents and that the plant was kept in place for a further period, pending additional progress in mitigating TL 239 problems through insulator replacement.
In addition to the 138 kV lines, the Board looked at a number of 66-69 kV lines serving the Great Northern Peninsula. The Board reviewed evidence provided in response to information request PUB 10(e), referring to comparison of the 69kV line, TL 261, between St. Anthony and the Airport, and TL 257, between the Airport and Roddickton, with other similar Island feeders. These include those 66-69 kV lines running parallel with the 138 kV lines serving the Great Northern Peninsula. This evidence shows that there have been significant reliability problems not only on the 138 kV lines serving the Great Northern Peninsula, but also on the 66/69 kV lines which run off the 138 kV lines. The lines between Deer Lake and Berry Hill (TL 226) and between Berry Hill and Daniel’s Harbour (TL 227) have experienced a high level of sustained outages over the period from 1996 to 1999. Again, it is not clear to the Board, on the basis of the evidence presented, whether the efforts to mitigate these problems have had an appreciable impact in reducing the frequency of outages and in shortening their duration.
The evidence provided in response to PUB 34 shows that 66/69 kV line TL 227, from Berry Hill to Daniel’s Harbour, has exhibited a very high level of momentary outages. TL 221, from Daniel’s Harbour to Hawke’s Bay, also has demonstrated a high frequency of momentary interruptions.
In examining the need for emergency power in Roddickton it is necessary not only to consider the main line up the Great Northern Peninsula but also TL 261 from St. Anthony to the Airport and TL 257, from the Airport to the Roddickton area. TL 257 was built in 1989 and has demonstrated good performance from a reliability perspective. There was only one event on record that caused a forced outage, which occurred on December 4, 1993. The line experienced a total of six outages at that time, with a total outage time of 2.93 hours. However, the operating history has been recorded only from 1992 to the present.
TL 261 was constructed to 138 kV standards but is operated at 69 kV. Hydro has given evidence to the Board that they have not experienced severe icing and salt contamination on this line. The winds impacting on the line are mostly from the west and the area is subject to high gusts up to 160 km. Since 1996, four forced outages were experienced. Two were sustained and two were momentary. In May of 1997 a sustained outage was experienced which did not affect the supply of power to Roddickton. In July of 1997 there was a sustained outage which resulted from a lightning strike on TL 261 which interrupted the supply to Roddickton for approximately 100 minutes.
Hydro
reported on a storm which affected the northern tip of the Great Northern
Peninsula beginning on Friday, March 3, 2000 and continuing on until Monday,
March 6. The communities involved were
Goose Cove, St. Anthony Bight, St. Carol’s, Grand Bruit, St. Lunaire, L’Anse au
Meadows, St. Anthony Airport, Cook’s Harbour and Raleigh. This storm
brought heavy ice, with a diameter up to eight and one-half inches and averaging
somewhere between four and five inches.
Hydro said that it was the worst storm that they had seen on the
Northern Peninsula. Mr. Vatcher said
that the next one in severity to the 2000 storm was the one which occurred in
1993 and the icing at that time was only half what was experienced in the
recent 2000 storm. He said that there
were 42 pole replacements with 67 spans restrung, and four transformers
replaced, along with other hardware.
Mr. Vatcher said that on TL261, the line from St. Anthony terminal
station into the St. Anthony diesel plant, there was five inches of radial ice
on the line. TL257 also had as much as
five inches of ice. Hydro did not lose
power on either TL257 or TL261.
The
area did experience a loss of power, but it was caused by damage to the
distribution system and not to transmission lines. Mr. Vatcher said that “the 69 kV transmission line stood its
ground, but it [the storm] flattened all the trees and the distribution
system.” (Transcript, March 14, 2000, page10, lines 20-22)
In
Goose Cove, there were two outage with the longer outage lasting for a period
of 44 hours and 35 minutes. In St.
Carol’s, the duration of the outage was 33 hours and two minutes. In St. Anthony Bight, the interruption was
for 32 hours and 35 minutes. St.
Anthony Airport was affected but has its own power back up. There was no icing in Roddickton and no
distribution problems to cause an interruption in service, nor was there an
interruption in Main Brook.
In
response to a question by Mr. Locke, Mr. Vatcher said that there would have
been momentary outages because of what was happening on the system, with the
loss of load and with load being put back on again. Mr. Locke said that “the surges and the ups and downs and ins and
outs is really what basically ruins equipment.” (Transcript, March 14, 2000, page11, lines 29-31) Mr. Vatcher said that these momentary
outages cannot be avoided during such a storm.
Mr.
Locke asked about the storm design criteria for TL257 and TL261. Mr. Vatcher said that the design criteria is
for 38mm radial ice, out from the conductor, for a diameter of 76mm. Mr. Vatcher
said that TL257 and TL261 experienced icing conditions which exceeded the
design criteria and the transmission lines performed well.
In the response to PUB 10 (e) Hydro gave evidence to the effect that TL 261 had one of the lowest frequencies of outages in the lines considered. The mean duration of the outages on TL 261 was slightly under one and one-half hours. The data on momentary outages, presented in response to PUB 34, show that TL 261 is equal to the CEA average in terms of frequency of outages per 100 km.
TL 261 was put into operation in 1996 and, accordingly, the history upon which its future performance can be inferred is limited. Prior to its construction, the 25 kV line from St. Anthony to the Airport was used, along with TL 257, to interconnect St. Anthony with the Roddickton-Main Brook area. In assessing the future performance of TL 261 it may be possible to draw some inferences from the past performance of the 25 kV line, in light of the fact that the new line, TL 261, generally followed a similar route. However, the Board notes that Hydro did not record information on the performance of the 25 kV line prior to 1993. The response to PUB 15 shows that the reliability measures for the 25 kV line showed significant, if not severe, problems in 1996. Generally, since 1993, the performance of the line has been reasonably good.
In measuring the reliability of power in the area, the Board asked, in PUB 32, for a report on the extent to which damage claims on the Great Northern Peninsula are in excess of those recorded in other parts of the Province, in the period since interconnection. Hydro indicated that the records maintained are limited to three regional levels: Central, Northern and Labrador. Since 1997, damage claims in the Northern region have been higher than in both the Central and Labrador region.
One measure of the dependence of the area upon emergency power is the extent to which the St. Anthony diesel facility has been used since interconnection on September 7, 1996. In Hydro’s response to PUB 19 the evidence is that the facility was started eight times to respond to unplanned requirements while there were 40 starts to accommodate planned maintenance. The follow up from Hydro to PUB 19, provided on March 17, 2000, showed that the St. Anthony plant was used for a total of 420 minutes over the four year period 1996 – 99, with 234 minutes to cover planned outages and 186 to cover unplanned outages.
During the hearing, Hydro indicated that the normal practice upon the interconnection of an area is to maintain the diesel plant for one operating season only, for the purpose of verifying the performance of the interconnection. After this period the diesel facilities are decommissioned and removed from the site. Many areas of the Province, which are radially connected to the grid, do not have access to an on-site emergency power supply, because of the cost implications. Hydro gave the reasons for its departure from the strict application of this approach in the case of Roddickton. The factors which Hydro considered in evaluating the need for emergency on-site power were as follows: the length of the transmission line (400 km); the operating history of the transmission line; and the significant installed capacity in the area which could be of benefit to the overall Island system.
In their brief, the Town noted that it is not always the practice of Hydro to close out their diesel plants when an area is connected to the main grid. The brief refers to Goose Bay and to Hawke’s Bay. They also cite the availability of stand-by power at Stephenville and in the Port au Basques area. These examples were cited to support the continuation of emergency power in Roddickton.
Hydro also made reference to the fact that, in the original plan, the stand-by generation was intended to provide emergency service and backup for a static var compensator (SVC) system. The final decision was to implement a voltage regulation system, consisting of switched capacitors and reactors. Stand-by generation was no longer required for voltage regulation.
The Town of Roddickton has opposed the abandonment of the diesel plant. They have a number of concerns with respect to the lack of emergency power in the Roddickton area. Their municipal water supply is driven by electrically powered pumps and, in the event of a protracted outage, the pipes could freeze. They also have a concern with the sewer lines freezing. In assessing the emergency power supply in the region, the Town has expressed concern with respect to the ability of the plant at St. Anthony to deliver a full 8,850 kW. This power is available when the generators are running at peak capacity, in their opinion. Instead, they believe it may be capable of producing only 75% of this level for a sustained period. The mini-hydro plant is available only at certain times, based upon hydrological conditions and the availability of an operator. The plant is currently operated by staff based in St. Anthony.
The Town believes that Hydro has allowed the diesel plant to deteriorate to the point where its usefulness is seriously impaired. They attribute this lack of readiness to negligence on the part of Hydro in their failure to maintain the condition of the plant.
The Town points to the evidence of Hydro that annual savings would amount to only $20,000 while the one-time write-off value is $158,000. They believe that the plant could be put back into operation for a considerably lower cost than that reported by Hydro. They believe that linesmen could be trained as operators in order to minimize operating costs.
Mr. Locke raised a number of questions concerning the cost estimates in PUB 22, in relation to issues such as corporate overhead and the 25% contingency allowance. He also questioned the salary cost for two operators. He asked as to why linesmen could not be trained to operate the diesel plant. Hydro responded that transmission line workers are in a different classification but that, in addition, line workers are normally required to attend to the lines in the case of an emergency situation. Hydro said that if you are maintaining a stand-by system then generation must be available at all times so that you need to have two operators on a shift in order to operate properly.
Mr. Locke asked whether Hydro has done any training of linesmen to become diesel operators. Mr. Vatcher said that Hydro is introducing a new classification which is a diesel system representative to do both the operating and the mechanical, electrical and minor maintenance, along with limited line duty. The first duty of such people is as an operator rather than a linesman. Mr. Locke said that training of existing personnel could be pursued in order to minimize operating cost.
The Town attributes the reliability problems in the area to transmission and distribution difficulties. They made reference to the expenditures made by Hydro in upgrading the transmission lines. Their comment is that they have seen no significant improvement over the past year or so in the number of outages being experienced. In their written brief the Town refers to specific outages which took place in the past two years.
The Town believes that the high winds experienced and the extremely low temperatures create a unique situation in the Roddickton area, calling for the need for emergency power close by and not depending on power from St. Anthony. They make the statement in their brief that a great portion of the transmission line is built a short distance from the shoreline and is susceptible to the same salt contamination, strong winds, and even colder temperatures than are experienced in the more southerly areas of the Peninsula.
Hydro does not accept Roddickton’s position concerning the unique climatic conditions of the area and does not believe that evidence has been presented to show that weather conditions are more severe than elsewhere on the Island.
Roddickton takes the position that a supply of emergency power in their community would be beneficial to other communities in the Straits area and perhaps to customers of Hydro as far away as Plum Point.
The Town is not satisfied with the statement that the St. Anthony plant can meet 75% of the load through to 2010. It believes that capacity should be available to meet 100% of the peak. This is based upon the extreme weather conditions and the undue hardship which may result from extended power outages.
The issue of financial responsibility for damage due to power surges, dips, and extended outages was raised. The Town believes that the onus should be on Hydro to prove that it is not responsible for such damage and that if it cannot prove same it should bear the financial responsibility.
After the conclusion of the hearing on February 3, 2000 in Roddickton the Town provided a further brief dated February 4, 2000. In this brief the position presented by Mr. Locke, on behalf of the Town, was that Hydro should not be allowed to abandon the diesel plant unless they provide an alternative emergency supply of power by adding one or more mobile units to the existing unit at the woodchip plant site and relocate the existing 450 kW standby generator used to blackstart the woodchip thermal plant within a building where it can function in concert with the mobile units. The Town’s position is that the capacity to be made available at the woodchip plant site should be in the range of 2,500 to 3,000 kW. This position was presented as the first priority or preferred position of the Town and the benefits were set forth by Mr. Locke in the brief.
The second preference or priority of the Town is to restore the existing diesel generating plant so that it can be used as a reliable source of power in the event of an extended outage. This would require the testing and reconditioning of the two units at the plant. The Town proposes that the 450 kW unit be relocated from the woodchip plant site to the diesel plant site. The position of the Town is that the requirements for an emergency operation can be met without any extensive repairs and renovations, either to the generating units or to the building. Its understanding was that the cost would be in the order of $150,000.
The third priority for the Town is a total rebuilding of the diesel plant, which it understands would cost in the order of $2.6 million.
The concept of a “sunset clause” was raised by the Town, whereby the Town would agree to the final closing of the plant after a period without serious extended outages.
The Town believes that an operator must be trained and made available in the immediate area and that this should be done regardless of which approach Hydro chooses.
Dr. Wallace Read prepared a report which was circulated prior to the hearing in Roddickton on February 3, 2000. In his report Dr. Read reviewed the information available to him and concluded that abandoning the diesel plant is not an unreasonable request. When giving evidence under direct examination he said that the information provided by Hydro at the hearing gave him reason to reconsider his position. He said that the load in the Roddickton-St. Anthony area is split, with Roddickton accountable for one third of the demand on the system. St. Anthony is two thirds of the demand. If he were looking at the “right decision” to take for the backup of reliability for the joint area Dr. Read would propose that there be enough capacity in the St. Anthony area to meet the immediate needs of the area, which is roughly two thirds, with the remaining one third of the region’s capacity based in Roddickton.
Dr. Read took the position that refurbishment of the existing diesel plant site should be rejected in favour of locating emergency capacity at the woodchip plant. Looking at the load forecast to the year 2010 Dr. Read said that the forecast peak is 3,960 kW, including 1,480 kW for the industrial load. He said that, in an emergency, the industrial operations could be asked to shut down, leaving a load of 2,480 kW to be served. Dr. Read suggested that planning for this load be addressed through the deployment of the existing mobile diesel (850kW), another mobile unit of the same size (i.e., 850 kW), the transfer of the 450 kW auxiliary diesel to a small building alongside the existing mobile, all combined with the mini-hydro plant (400kW). As an alternative he suggested the purchase of another 1,000 kW unit which could be placed with the mobile diesel plant at the woodchip plant terminal.
Dr. Read spoke of the need to have one diesel operator based in Roddickton, one in St. Anthony and another in Hawke’s Bay.
Having presented his suggestions, Dr. Read said that his proposal was intended as the “right” solution from a reliability perspective. He acknowledged that cost considerations associated with consolidation might lead the utility to a decision to concentrate their emergency power capacity in St. Anthony.
The cost of maintaining emergency power in Roddickton was an issue that received considerable attention in the hearing. Evidence on the cost of maintaining a diesel facility in Roddickton was presented by Hydro. The capital cost given in the response to PUB 8 was $4,200,000 for restoration of a facility on the present site, with associated operating cost of $90,000.
The Board asked, in PUB 22, what would be the cost of providing 2000 kW of emergency power (a) by refurbishing the existing diesel plant, and (b) by establishing 2000 kW of capacity at the site of the woodchip plant. The cost associated with refurbishing the existing plant is higher than moving to another site. With local control in Roddickton, the capital cost of a diesel plant at the woodchip plant site would be about $1 million. The corresponding operating cost, based upon two operators, would be $125,000.
The evidence provided by Hydro in response to PUB 22 indicates that continued operation at the site of the existing diesel plant is a more costly operation than relocating instead to the woodchip terminal site. Based upon local control, rather than remote control from St. John’s, the cost of refurbishing the existing site ($1,920,000) is almost twice that of the alternative site ($1,020,000). These data were given in response to the question as to what would be the minimum cost of providing 2,000 kW of emergency capacity in Roddickton, not including the mini-hydro plant in Roddickton (400 kW). The scope of the development at the woodchip terminal, whose cost is estimated at $1,020,000, includes using the existing 850 kW mobile, the 450 kW auxiliary unit as well as the purchase of a 700 kW mobile unit. An alternative, whose cost was not presented in evidence, was one whereby the transportable diesel unit at St. Anthony might be moved to Roddickton to obviate the need to purchase a new unit. This option would likely be less costly.
During the hearing, Hydro expressed its intention to relocate the 850 kW mobile unit from Roddickton to St. Anthony. Mr. Pelletier asked Hydro for its approach in applying the provisions of section 38 of the Act to the 850 kW mobile unit. He asked whether the relocation of the unit would constitute discontinuance of a service and therefore require the consent of the Board. Hydro’s response was that it is not a discontinuation to move the plant from one part of the interconnected grid to another. In Hydro’s opinion the mobile unit was not put in Roddickton only to provide service locally.
Mr. Pelletier argued that if the unit is relocated to St. Anthony the service that Roddickton has would be different because it will take at least a day for that unit to be returned to Roddickton. When based in Roddickton, the service can be provided in the time it takes an operator to travel to Roddickton, which would be an hour to an hour and a half. According to Mr. Pelletier the basing of the unit in Roddickton does not preclude its temporary use in another site.
This discussion raises the question as to what level of emergency capacity can the Board expect to be available to the Roddickton-St. Anthony area, if it consents to the abandonment of the diesel plant. While the 850 kW mobile unit was not part of the application, it is clear that Hydro proposes that the unit will be based in St. Anthony (March 14, 2000 Transcript page 58, lines 3-5). However, there would appear to be no assurance that either the mobile unit or the transportable unit already located in St. Anthony will continue to be available within the region. Without such assurance the issue of the abandonment of the Roddickton diesel facility has to be considered within the context of a regional capacity of 8,000 kW, rather than 9,700 kW (exclusive of the mini-hydro).
The Board has considered the evidence in relation to the decision it must take. The reliability of TL 257 appears to be well documented from 1992 to the present, and the performance has been good. The history of performance for TL 261 is short and, in the opinion of the Board, there should be a longer history of performance available before the Board agrees to consent to the abandonment of all emergency power in the Roddickton area. The Board believes that the experience of three additional years will provide a sufficient record of historical performance for an assessment to be made. During this period there should continue to be a reasonable level of emergency capacity available.
The Board has reviewed the performance of the 138 kV and the 66/69 kV lines serving the Great Northern Peninsula. The performance leaves much to be desired notwithstanding the various initiatives that have been taken by Hydro to upgrade the reliability of the lines, through such measures as the replacement of insulators and ball head eye bolts. The quantum of emergency capacity which should be in place on the Peninsula depends upon the reliability of the lines connecting the Peninsula with the main Island grid. It has not been documented, through evidence presented at the hearing, that there has been any progressive improvement, year over year, in the performance of the lines, which would justify a diminution in the total quantum of emergency capacity located at Hawke’s Bay, St. Anthony and Roddickton.
The Board is of the opinion that the Roddickton diesel plant has, de facto, even if not de jure, been abandoned. This in itself limits the range of feasible options open to Hydro and to the Board. The Board does not believe that the evidence presented at the hearing justifies the refurbishing of the old and obsolete plant in the center of the Town. Nor is the Board convinced that a capital expenditure of $1,020,000 is warranted to build a new diesel plant at the site of the woodchip plant or that additional operating costs of $125,000 should be incurred. The Board is disappointed that Hydro has not proposed other options for its consideration which would mitigate the concurrent decommissioning of two sources of emergency power through a more measured approach to the dismantling of emergency facilities. The Town has been left to rely upon a mobile plant which Hydro believes it is free to relocate upon demand.
The Board has concluded that a supply of emergency
power in the Roddickton area should be maintained for a period of time even
though the refurbishment of the present diesel plant is not an economically or
environmentally sound option. Dr. Read’s
evidence was that the forecast peak of demand is 3960 kW of which 1480 kW is comprised of
industrial load. This leaves a peak
load of 2480 kW to be met. The Board
is of the view that some further load reduction could be achieved, without impinging
on essential services, to address an emergency situation. The Board has concluded that for the next
three years the availability of an emergency power supply of 1500 kW to 2000 kW
would be prudent. This emergency power
supply should be put
in place for a period up to September 1, 2003, after which the Board will make
a further determination in this matter.
An Order will be issued to approve the abandonment of the Roddickton
diesel plant subject to a number of conditions, including the provision of
emergency power in the amount of 1500-2000 kW, in addition to the mini-hydro
plant, for a period of at least three years and until discontinuance of service
is authorized by the Board pursuant to an application by Hydro.
This capacity level could be achieved by relocating
the transportable unit from St. Anthony to Roddickton so that it can supply
power in concert with the existing 850 kW mobile plant. This is an option, but it will be left to
Hydro to decide how the emergency power required is to be met. Hydro will also decide on the staffing it
deems necessary in accordance with good management practice to make emergency
power available on a timely basis.
The Board will be ordering that all outages in the
area north of Hawke’s Bay be monitored and that a record be kept of their
causes, their duration and the number of customers affected, along with the
complaints received and the number of damage claims filed. These records should be summarized in a
quarterly report to be filed with the Board along with Hydro’s regular
quarterly report. In each report on the
performance of the electrical system in the area north of Hawke’s Bay, Hydro
should advise the Board of any generation units which have been relocated from,
or into, the region for a period of more than 60 days, and whether such
relocation has been undertaken as a temporary measure or on a permanent basis,
along with the reasons for such relocation.
The Board will be ordering that Hydro conduct a study into the reliability of the transmission line serving the Great Northern Peninsula and the amount of emergency power which should be in place. The study should draw upon the quarterly monitoring reports to be prepared by Hydro. The study will also identify the role of mobile, transportable and fixed generation units and where they should be placed, recognizing the history of reliability and the performance of the transmission lines. This study should be conducted by an independent consultant and the report should be submitted to the Board no later than July 1, 2003, reflecting the performance of the electrical system and the reliability thereof, up to the end of May, 2003.
The Board will also be including in its order a provision to allow Hydro to take whatever action it deems necessary to make use of the auxiliary 450 kW unit which was exempted by the Board by Order P.U. 26 (1999-2000) from its consent to abandon the Roddickton thermal plant. The previous Order will be amended to remove the exemption.
The Board will be ordering Hydro to pay the costs of the Board.
As a creature of statute, the Board recognizes that it is limited to the authority conferred upon it by its enabling statute. The authority of the Board in this matter is contained in two statutes. According to section 4 of the Electrical Power Control Act, 1999 (the “EPCA”) the Board must, in carrying out its duties and exercising its powers, implement the power policy of the Province.
The power policy is contained in section 3 of the EPCA. According to section 3 (a) (iii) the rates charged for the supply of electricity;
should provide sufficient revenue to the producer or retailer of the power to enable it to earn a just and reasonable return as construed under the Public Utilities Act so that it is able to achieve and maintain a sound credit rating in the financial markets of the world.
Pursuant to section 80 (1) of the Act,
a public utility is entitled to earn annually a just and reasonable rate of return as determined by the board on the rate base as fixed and determined by the board .
Section 3 (b) of the EPCA also states that it is part of the power policy of the Province that,
all sources and facilities for the production, transmission and distribution of power in the Province should be managed and operated in a manner …
(iii) that would result in power being delivered to consumers in the Province at the lowest possible cost consistent with reliable service.
When examining any provision of the Act, the Board is mindful of the balance that must be struck between a utility’s right to earn a reasonable rate of return and the protection of the consumer. In this latter role the Board must be satisfied not only that the price charged to the consumer is the lowest possible, but also that the service provided is reliable.
The present application is brought under the provisions of section 38 of the Act. This section states that:
A public utility shall not abandon a part of its line, or works, after they have been operated, or discontinue a service without notice to the Board, and without the written consent of the Board, which consent shall only be given after notice to an incorporated municipal body interested, and after there has been an inquiry.
As can be seen, a public utility must receive the consent of the Board before it can “abandon a part of its line, or works, ….or discontinue a service”. The question then becomes what is the purpose of obtaining the Board’s approval prior to abandonment or discontinuation of service.
Hydro is of the position that section 38 of the Act should be read narrowly. According to Hydro, the Board may only approve Hydro’s plan to abandon the diesel plant, or not approve.
However, this narrow interpretation of the Board’s authority is, for reasons which will be set out below, not consistent with the Act. This is particularly so, where, as in the present case, the facility in question has been effectively abandoned prior to the making of the application. Owing to the deteriorated condition of the diesel plant, a narrow interpretation of section 38 would restrict the Board’s ability to discharge its responsibilities. A narrow approach would allow only for two options; to order that a new diesel plant be put in place, at great cost, or to grant the application. According to Hydro, the Board has no authority beyond these two options.
However, keeping in mind the power policy referred to above, the purpose in obtaining the Board’s approval pursuant to section 38 is two-fold. First, in order to confirm that a utility is earning only a just and reasonable rate of return on rate base, the Board must regulate those items contained in the rate base. The Board regulates a utility’s rate base in two ways, first by approving items going into the rate base, through capital budget approval and, second, by approving items coming out of the rate base, pursuant to section 38.
The second objective of section 38 is to allow the Board to protect the consumer in a monopolistic environment. It is necessary for the Board, in exercising its discretion under section 38, to be satisfied that the abandonment or discontinuance of service does not unacceptably impair reliability of service.
Section 118 (1) of the Act stipulates that the Act is to be “construed liberally in order to accomplish its purpose”. If one of the objectives of section 38 is for the Board to ensure reliability, then the Act must be read in a manner which will accomplish this objective. Therefore, the Act must be read so as to give the Board sufficient authority to ensure that this objective is realized.
Section 118 (2) of the Act states that the Board has “in addition to the powers specified in this Act, all additional, implied and incidental powers which may be appropriate or necessary to carry out all the powers specified in this Act.” Implied with the responsibility to protect the consumer is the authority to execute that responsibility. This authority includes attaching conditions to an approval under section 38 where such conditions are necessary to accomplish one of the purposes of section 38.
This approach is more consistent with section 118 (1) than would be the approach argued for by Hydro. Furthermore, this approach allows the Board to implement the power policy of the Province, thus fulfilling its duty under the EPCA.
IT IS
HEREBY ORDERED THAT:
(a) Hydro will put in place a supply of emergency power by November 1, 2000 in the amount of 1500 – 2000 kW, in addition to the mini-hydro plant, with any future discontinuance of this service to be authorized by the Board pursuant to an application by Hydro to be filed on or after July 1, 2003;
(b) Hydro will decide on the staffing it deems necessary in accordance with good management practice to make emergency power available on a timely basis;
(c) Outages, other than failures specific to the distribution system, which affect the area north of the terminal station in Hawke’s Bay, will be monitored, and a record kept of their causes, their duration and the number of customers affected, along with the complaints received and damage claims filed. These records are to be summarized in a quarterly report to be filed with the Board, along with Hydro’s regular quarterly report, beginning with the third quarter in the year 2000. In each quarterly report on the performance of the electrical system in the area north of Hawke’s Bay, Hydro will advise the Board of any generation units which have been relocated from, or into, the region for a period of more than 60 days and Hydro will advise whether such relocation has been undertaken as a temporary measure or on a permanent basis, along with the reasons therefore;
(d) Hydro is to conduct a study into the reliability of the transmission line serving the Great Northern Peninsula and will identify the amount of emergency power required. The study is to draw upon the information acquired by Hydro through the monitoring activities initiated pursuant to this Order. The study will also identify the role of mobile, transportable, and fixed generation units and where these units should be placed, recognizing the history of reliability and the performance of the transmission lines. This study shall be conducted by an independent consultant and the report should be submitted to the Board no later than July 1, 2003, reflecting the performance of the electrical system and its reliability up to May 31, 2003.
3. Hydro will pay the costs of the Board.