Newfoundland Power warns of 'elevated' supply risk given problems facing Hydro grid

Newfoundland Power, the island's main electricity distributor, is sounding the alarm over what it says is an "elevated" risk that electricity demand could surpass supply this winter.

The utility is warning that could lead to potential rotating power outages, given the ongoing challenges facing plants operated by Newfoundland and Labrador Hydro.

As things stand, one of three units at the Holyrood thermal generating station is down until mid-March and the Stephenville gas turbine is out of service until February. Reliability concerns also continue to dog the Muskrat Falls project's Labrador-Island Link transmission system.

"For the 2023-2024 winter season, Newfoundland Power observes that supply risk to customers on the Island Interconnected System is elevated," wrote the private utility in a letter to the Public Utilities Board on Dec. 6. 

"The LIL is early in its operation and has experienced damage in the past two winter seasons, the Holyrood TGS is without Unit 2 for the majority of the winter season, and the Stephenville gas turbine is out of service."

Expect normal winter season, says Hydro CEO

Despite those concerns, Newfoundland and Labrador Hydro's CEO is promising customers won't see more power outages than normal this winter.

On Wednesday, Jennifer Williams stressed she feels confident about the Crown corporation's winter preparations as the coldest part of the year approaches and electricity demand soars.

"Hydro obviously didn't plan for a unit [at Holyrood] to be unavailable, but when you have equipment issues you have to address it," Williams said, adding that a four-year $28-million project is underway to reinforce the 1,100-kilometre LIL.

"I feel comfortable that we are doing everything we can to have a reliable system."

Remaining Holyrood units 'not without risk'

In its five-page letter to the PUB, Newfoundland Power noted that N.L. Hydro projected last month a peak demand of 1,802 megawatts on the island this winter, a near-record level. Provincewide, N.L. Hydro relies on 11 hydroelectric plants, one oil-fired plant, four gas turbines, and 25 diesel plants to supply customers with electricity, according to its website.

At present, the 490-megawatt Holyrood plant can only run at 370 megawatts. The 50-megawatt Stephenville plant is totally offline. While the Muskrat Falls power lines are designed to carry up to 900 megawatts of electricity, they are currently cleared to transport up to a maximum of 700 megawatts.

"Together, these assets comprise a significant portion of the available capacity on the Island Interconnected System to meet forecast load for the 2023-2024 winter season," reads the letter.

Newfoundland Power, which buys almost all the electricity it distributes from N.L. Hydro, adds that the reliability of the two remaining units at Holyrood is "not without risk," given their advancing age. There have also recently been fuel contamination issues at Holyrood, the utility notes.

N.L. Hydro has repeatedly stated equipment failures in the last two years affected a fraction of the LIL towers and had no impact on service to island customers. Williams said Wednesday the LIL is now fully commissioned and is functioning well at current levels.

However, the Newfoundland Power letter argues that "weather conditions and loads in the eight months since commissioning are not comparable to those that can be experienced during the winter months." 

Williams downplays new reliability report 

On Wednesday, Williams also downplayed new modelling contained in N.L. Hydro's latest near-term reliability report, filed with the PUB on Nov. 15. 

In five of the six models included in the analysis, electricity demand in 2024 was projected to surpass supply for more the 2.8 hours per year, which is the limit considered "acceptable" by the Crown corporation.

In the report's base-case model — in other words, the expected scenario — demand outstripped supply for only about 10 minutes more than Hydro's accepted limit, said Williams. In three other scenarios, demand was greater than supply for about three to five hours more than the limit. 

"We had a similar situation last year, in last year's report, where we had violations of our criteria … [in] five of 10 scenarios, and we met a near historic peak with excess capacity available," Williams said. "There's a balancing of cost and reliability."

In the report's worst-case scenario — the LIL unable to be relied on at all — demand was projected to outstrip supply for almost 58 hours during the coldest months of 2024. 

"That is an extreme worst-case scenario that we do not expect," Williams said, noting that further winter readiness work has been completed since the study was written. "We model it to say, 'What does it look like?' but we do not expect it to look like that at all."

Supply risk expected to persist

Hydro says repairs at the diesel-burning Holyrood and Stephenville plants will be completed this winter, but the reliability report states supply risks "will likely not diminish until new generation is added." 

LIL reliability will take "multiple years of operational experience" to fully assess, according to the study. Meanwhile, Hydro continues to rely on aging diesel-burning assets such the Holyrood, Stephenville and Hardwoods plants — all facilities commissioned in the 1970s — to shore up the grid in the event of issues related to Muskrat Falls.

"It is noted that the majority of the Holyrood TGS assets are over 40-50 years old; increased age can result in increased service failures. Recent age-related failures have been experienced on the boilers, turbines and electrical equipment at Holyrood TGS," the document reads.

Building more generation

Hydro is studying a number of options to increase generation, including a new unit at the Bay d'Espoir dam and a new combustion turbine on the Avalon Peninsula. Both projects would need to be approved by the PUB and wouldn't be operational until the early 2030s. 

In its letter to the PUB, Newfoundland Power says it believes finding alternative sources of supply and speeding up the replacement of Holyrood, currently expected to operate until at least 2030, could "improve reliability for customers as well as reduce future supply costs."

The Hydro study adds: "As load growth increases, driven largely by electrification, the risk of lost load and unserved energy will as well.

"If projected load growth is higher than currently forecast, the projected shortfall will also increase. This also presents a risk to any new customer seeking firm capacity, as Hydro is significantly capacity-constrained in the near term."

Download our free CBC News app to sign up for push alerts for CBC Newfoundland and Labrador. Click here to visit our landing page.