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Hydro review called better than nothing

Muskrat Falls, on the Churchill River in Labrador. Federal and provincial sources say Newfoundland and Labrador Premier Kathy Dunderdale will announce financing details Tuesday for the Muskrat Falls hydro project.

PAUL DALY / THE CANADIAN PRESS Enlarge Image

Muskrat Falls, on the Churchill River in Labrador. Federal and provincial sources say Newfoundland and Labrador Premier Kathy Dunderdale will announce financing details Tuesday for the Muskrat Falls hydro project.

A review of Manitoba Hydro's plan to build two dams and a transmission line to the United States, criticized as being a rubber-stamp process, is better than nothing, the former chairman of the Newfoundland and Labrador Public Utilities Board says.

David Vardy, ex-head of the Newfoundland and Labrador PUB, compares hydro projects in Manitoba and Newfoundland and Labrador, such as Muskrat Falls.

Enlarge Image

David Vardy, ex-head of the Newfoundland and Labrador PUB, compares hydro projects in Manitoba and Newfoundland and Labrador, such as Muskrat Falls. (WAYNE GLOWACKI / WINNIPEG FREE PRESS)

David Vardy spoke Wednesday at a Frontier Centre for Public Policy luncheon on how the debate over Manitoba Hydro's plan to build the Keeyask and Conawapa generating stations compares to the debate in Newfoundland and Labrador over Muskrat Falls, a $7.7-billion hydro project.

Vardy said despite criticism of the review of Manitoba Hydro's plan (the province's Public Utilities Board is made up of government appointees and not truly independent), the Manitoba review is better than what occurred in Newfoundland and Labrador leading up to the approval of Muskrat Falls.

"The fact that it's being done is better than not doing it," he said. "It is better to light one little candle than to curse the darkness."

However, Vardy was critical of the government's promotion of further hydro development to take advantage of power sales to the U.S. Midwest because of the high capital costs and overstated demand or load growth.

"The main reason public utilities are in the business of selling electric power is so they can reduce the rates of their domestic customers," he said. "If they can't reduce the rates to their domestic customers, then it makes no sense to do it."

Rates for Manitoba consumers are expected to climb almost four per cent a year over the next decade, rising at about twice the forecast level of inflation. Hydro says it needs the increases to help pay for the two dams. Keeyask, to be in service in 2019, is projected to cost $6.5 billion and Conawapa is forecast to cost $10.7 billion, although Hydro says it does not have to make a decision on Conawapa for another four years. The Manitoba-Minnesota transmission project is forecast to cost $350 million and be in service in mid-2020.

Vardy was critical of governments that promote large hydro projects, which often take more than a decade to plan and build, without acknowledging how dramatically the North American energy-supply market has shifted in the past few years. Shale gas through fracking has made it less expensive for combined-cycle combustion turbines to produce power. Wind and solar development have also exploded in North America.

He said the responsibilty of setting energy conservation or demand-side management targets should be taken away from utilities and handled by an independent authority because utilities are in a fundamental conflict of interest.

bruce.owen@freepress.mb.ca

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