Newfoundland and Labrador Energy Plan Consultations Underway on the Island

As a precursor to the development of a Provincial Energy Plan the government is currently involved in Province wide public consultations. I was fortunate enough to have had the opportunity to attend the third of these sessions last night at the Holiday Inn in St. John’s, the first two took place in Labrador, and I have to admit the well attended session was very enlightening.

Although the session, attended by Minister of Natural Resources Ed Byrne and several Deputy Ministers, attempted to squeeze too many presentations into a limited timeframe some valuable points were discussed. Since all presentations were also supplied to government in full the actual session came across more as an exercise in public relations. In other words, it’s not enough to be doing something you must also be seen to be doing something.

The presenters at the St. John’s consultation ran the gambit from ex-politicians to business owners, from environmentalists to oil industry executives and from union representatives to a consumer advocate. All in all a good mix with a very diverse set of ideas and concerns.

During the session several issues resonated with me. Below are some of the highlights.

Thomas Johnson – Consumer Advocate for Newfoundland and Labrador: Going forward changes should be made to the regulations governing electrical rate setting. The current process sets consumer rates based on the utility’s earnings and doesn’t provide an incentive for them become more efficient. (The less efficient they are the lower their earnings and the higher they can raise their rates).

Recommendation: Switch to performance based rate setting or PFB. This would allow consumers to take advantage of off peak period rates. The cost of supplying electricity is lower during periods when demand is low. Consumers should be given an opportunity to reap the benefit of lower rates during those periods if they choose to do so. In this way consumers would be more likely to schedule usage during off peak periods.

Fonse Fagan – AJ Fagan Consulting: Government needs to improve efficiency in the area of changing legislation within the oil and gas sector. The current process requires both federal and Provincial agreement and since the federal government requires consistency across all provinces this in essence means the tacit agreement of all producing provinces for anything to happen.

Current policy allows an exploration company to take advantage of a “Significant Find” license when they discover a petroleum deposit. These companies should be forced to prove the economic viability of their find before such a license is issued. Currently companies can receive a license and sit on the property in perpetuity without developing it, denying access to anyone interested in exploring the area. (An example given is a situation in the Jean D’Arc Basin where a company tested a well and discovered as little as 17 barrels of oil. That company now has a Significant Find license and has full control of the entire area.)

Bob Clarke – IBEW (representing several hundred hydro workers): The supply of power on the island will not be enough to meet demand in the coming years. The situation is such that the Province cannot wait for any potential interconnectivity with Labrador and the Lower Churchill. Instead Hydro must move to install a new unit at Holyrood before it’s too late. The seriousness of this situation was evidenced on the night of the federal election when Newfoundland and Labrador Power requested that consumers ease up on their use for the evening or possible brown outs would likely take place.

Carl Powell – Retired Mining Engineer: Mr. Powell recognized the Premier of Newfoundland and Labrador as “A man who knows the price of everything but the value of nothing”. He went on to say that the Province should not only produce power at Lower Churchill but use it. According to Mr. Powell the financial benefit to Quebec from Upper Churchill power is well beyond the 1 billion a year estimate often used and is actually closer to 5 billion. This is due to the secondary and tertiary jobs that have developed as a result of that power, jobs in smelters, mills, construction and even at Bombardier. According to Mr. Powell the actual numbers show a benefit of 20 jobs per MWH or 100,000 jobs in total.

Bruce Pierce – Green Communities Canada: Any plan must have conservation and efficiency as a major pillar not just an after thought. Movement in the direction of energy savings should be as important as any new development. According to Mr. Pierce, since 1970 conservation and efficiency have provided more available power than any new sources of energy at an average cost of 3.1 cents per KWH.

Stephen Campbell – Trans Ocean Gas: In the early 1970’s $30 billion dollars worth of natural gas was discovered on the Labrador Shelf and this gas find was never developed. At the time technology and the lack of a distribution system did not make the find economically feasible however this is not the case today. Mr. Campbell, who is involved in the development of technology to transport compressed natural gas via ship and container, stated that the company exploring the area at the time took a tax write off on the find and left it unused. Due to current regulations this company still has all rights to the area and as a result nobody else has the opportunity to develop it. Mr. Campbell said would like these regulations to change to more of a “use it or lose it” approach.

Mr. Campbell stated that he was currently involved in a $250,000 study into the potential for tidal power in the Bell Island Straits which he believes has the potential to supply up to 10,000 Megawatts of energy.

Jerry Heffernan – Axxel Consulting: Mr. Heffernan identified the fact that the government’s discussion paper on the proposed energy plan states that he Province would like to become an energy warehouse. He challenged the government to put some solid numbers around that statement. Mr. Heffernan would like to see targets set that would clearly identify the Province’s direction. He suggested goals of power 25% in excess of need, zero thermal energy use by 1012 and the lowest energy costs in North America as possible targets.

Mr. Heffernan also suggested that one of the natural bi-products of hydro generation is hydrogen and that this is a potentially untapped resource of great value that could be exported onto the international market.

There were many other points made however the sample outlined above gives some idea of the diversity of thought that has been feeding the current process. The session closed with Minister Byrne thanking everyone for their input and identifying the fact that he was very impressed with some specific presentations especially the ideas of changing exploration regulations and the suggestion that any benefits from the energy sector needs to benefit all areas of the Province, not just the Avalon. (This point was raised by Burt London of the NL Federation of Labor who said that the plan must re-deploy wealth throughout different areas of the Province.) Mr. Byrne’s response to this point was, “…if that doesn’t happen then this plan will be a failure.”

Two notable local figures were also in attendance and although they did not make formal presentations they did comment during the open question period at the end of the session. Jim Morgan questioned the Minister on the ability to pipe power through Quebec and also why the Province did not approve a proposed wind farm in Labrador. The Minister responded that times had changed and with the international agreements and regulations in place today Quebec could not force the same sort of deal they did in the 1960’s.

On the wind farm he stated that he was not prepared to approve any plan until he had all the necessary information on impacts and possible benefits that might accrue from such a development. Byrne went on to say that doing so would be the same as telling SNC Lavilin (the developer of the Upper Churchill project) to go ahead and develop the Lower Churhill and that they could reap all of the benefits. According to Byrne he would not allow that to happen and he expected the people of the Province wouldn’t stand for it either.

Another well known figure was Tom Kearns, long time proponent of a fixed link between Newfoundland and Labrador who spoke of the potential impact of not creating such a link (one that would supposedly transport not only people but oil/gas and electricity as well). According to Mr. Kearns highway 128 from Quebec into Labrador will be completed in a short timeframe. Eventually Quebec will have two roads into the big land and once that happens it will open up the area to Quebec interests more so than Newfoundland interests.

Kearns proposed that within 50 years Newfoundland would lose its hold on Labrador if a fixed link was not put in place. According to Kearns allowing Quebec to have closer contact than the island was capable of would allow for more industrial and personal interaction with the other Province and over time the people of Labrador would have more ties economically and socially with Quebec than they would with Newfoundland. He saw this as the beginning of the end for this Province as we know it.