Stop Muskrat Falls

Open letter: To the electricity consumers in Newfoundland and those who care about future electricity consumers in Newfoundland
From: Tom Adams, Toronto
I urge you to do what you can to stop the Muskrat Fall power development.

Nalcor is vastly overstating the usable output from Muskrat Falls that the grid will be able to accept. By overstating the benefits of Muskrat Falls, the utility is understating the rate impact.

Nalcor has spent approximately $500 million trying to develop a justification for the politically driven but fundamentally uneconomic project. For $500 million one can buy a lot of fancy legal, electricity, and financial tricks but all the smart help in the world can’t turn this dog into gold.

My argument is presented in a series of modules with some bolded sections to help you follow the thread.

Framing the Question

Here is a simple question: What is the incremental stand-alone per kWh cost of Muskrat Falls power delivered to Soldiers Pond near Saint John’s? Good question. I hope some day to meet the author who put this to Nalcor in the hearing. Everyone in the province should care about that question and everyone in the province deserves a simple, straight answer with all the calculations laid clearly out.

Consider Nalcor’s apparently confusing answer.Nalcor’s answer starts: “The requested analysis does not assist consideration of the Reference Question.”

The first sentence of the reply is a preëmptive legal strike by the litigation team. To keep the real cost of Muskrat Falls power concealed, Nalcor has to ensure that this question is stopped and any supplemental questions that intervenors or the Board might raise also get stopped. The first sentence argues that the question is irrelevant. If pressed, the lawyer in the hearing will argue that even if the question was relevant (and they will say it is not) the utility has already provided a full three paragraphs of detailed explanations and a pretty picture. If pressed further, the lawyers want the option to argue that forcing an answer to the question would be unfair.
The second sentence: “Consistent with the Terms of Reference and the Reference Question, Nalcor’s analysis of the costs of the Interconnected and Isolated Island alternatives is  undertaken on a total power system basis, and is based on an evaluation of all costs  incurred to meet the Island’s forecasted electricity requirements for each alternative.”
Translating into English, Nalcor’s regulatory costing consultants are saying that when calculating costs, you cannot isolate Muskrat Falls but must look at the integrated system. Nalcor’s lawyers are saying that the question is still out of the frame of reference of the hearing.
There is an element of truth in the claim that the costs of Muskrat Falls are best considered on an integrated system basis and with respect to comparative cases.  I disagree with the methodology, the lack of error bands on estimates, and the assumptions used by Nalcor for its analysis, and the artificial restriction on the scope of the two alternative cases that the hearing is allowed consider, but those are matters for another time.

Although estimates for the delivered cost of Muskrat Falls are best considered on an integrated system basis, once an integrated scenario is established, it is a simple matter for Nalcor to calculate the cost for the Muskrat-plus-transmission element of the new integrated system. There is no justification for Nalcor not answering the question with full disclosure of the methodology and assumptions used.

Usable Output

Here is another simple question: How much power will Muskrat Fall generate?

Obviously, you can’t figure out the costs without knowing how much output benefit you’ll get.

Nalcor has been answering that question over and over. The reply always given is 4.9 TWh/yr of electricity.

Here is Nalcor explaining in June of last year that it conducted a long list of studies on exactly that question using Canada’s top engineering consultants. Nalcor puffs up the answer by pointing out that the consultants even used computers to perform the calculations.

The average monthly water flows on the Churchill River at Muskrat Falls are provided in the Environmental Impact Statement (EIS) here at page 5-5. The first observation to focus attention on before considering the units of measure is that the water flow, and hence the potential power production, is twice in June what it is in January. The usage pattern of power by consumers on the island is more or less the opposite — low in June, high in January.

The Muskrat Falls dam design has almost no storage, so inflow timing drives the power potential in nearly real-time.

I have manually calculated the area under the curve presented in the EIS to get a ball park estimate of Muskrat Falls production assuming no grid constraints and no down time for servicing.

The EIS says that the total max discharge rate from the powerhouse will be 2,660 m3/s. I have assigned this output as 824 MW.

My area under the curve estimate of the average production rate over the year is 577 MW (taking into account the nameplate capacity). Assuming a theoretically perfect 100% load factor, this corresponds to 5.05 TWh of production — i.e. pretty close to the project estimate of 4.9 TWh of production. Are you starting to smell the rat?

What this means is that Nalcor’s claim of 4.9 TWh/yr of production, backed by a list of fancy engineering studies, is based on a simple-minded average water flow study rather than a fully integrated power system simulation study. When Nalcor reports “firm” production of 4.5 TWh/yr, what Nalcor is providing is the unconstrained theoretical power production in a low water year.
Nalcor’s power engineering group is answering the question “how much does it produce?” by directing you to wander out into the wilderness of a utility-generated snowstorm of confusion.
The timing of output from Muskrat Fall over the course of the year corresponds pretty closely to the timing of water availability for on-island hydro-electric generation. Just as on-island generation throws away water in May and June when electricity demand is low but water flow is high, Muskrat Falls will also throw away water.
How much water will Muskrat throw away?

We already know that significant on-island generation potential is spilled due to differences between the patterns of natural inflows vs. the annual pattern of electricity usage. This is a normal and expected outcome for a system that gets a high fraction of its supply from hydro-electric generation. If the timing of inflows matched the timing of demand, the island wouldn’t need much or any oil-fired Holyrood output today. In an integrated system where Muskrat Falls is connected to the island, water coming to Muskrat Fall in June is useless for island consumers because the island generation is already spilling water. Generators closer to the consumer have reliability and cost advantages over remote generators.

During times when the island generation network without Muskrat Fall would be spilling, the 500 MW interconnector with Nova Scotia will be used to capacity, with that generation met from surplus on-island generation and the rest from Muskrat Falls. Any extra water at Muskrat Falls at these times will be spilled. In years of good inflows on the island and with the prospect of further loss of some significant industrial loads on the island, it is conceivable that Muskrat Falls generation will have periods in June when it will be generating nothing or close to nothing.

What about winter?

During the times of the year when Holyrood would have been running near capacity, all on-island generation will be running flat-out (as it does today) and Muskrat Falls will not be able to supply enough power to move any significant amount of power to Nova Scotia. This is because in Jan./Feb./Mar. the maximum output of Muskrat Falls will be about 500 MW due to the seasonality of water flow. This maximum output is after taking into account the operation of the Upper Churchill facility upstream which is contractually bound to maximize winter production for sales to Quebec.

No wonder Emera hasn’t signed the final deal. Emera has figured out that Nova Scotia gets nothing or close to nothing when customers there need it most.

Power exports from Newfoundland further downstream of Nova Scotia at peak winter times are absolutely zero.

What does this mean?

The key point here is that the annual output of Muskrat Falls is never going to get close to 4.9 TWh. Nalcor’s use of the term “firm” with reference to the output estimate of 4.5 TWh is also deliberately misleading. Muskrat Falls output will never get anywhere near Nalcor’s “firm” production estimate.

If pinned down, Nalcor’s regulatory economists might agree that some water at Muskrat Falls might get wasted but it will be insignificant. The power engineers might even have prepared for this threatening eventuality in the hearing by drafting some study that shows low water wastage at Muskrat Fall. If there is such a study up Nalcor’s sleeve, one thing it won’t include is an integrated system perspective on water losses. One can inflate the apparent production at Muskrat Falls by playing the mind game of taking all of the power spill that will happen on the integrated system and assigning it to existing on-island generation.

The actual usable output of Muskrat Fall will be a fraction of the 4.9 TWh Nalcor claims. I wouldn’t be the least bit surprised if the usable generation from Muskrat Falls calculated using realistic estimates for load, generation servicing, transmission servicing, and transmission congestion turns out to be half of the unconstrained potential generation that Nalcor is now parading around.

Although Nalcor knows how much the station will have to turn down due to grid constraints, the utility says that the answer to that question is confidential. (MHI-Nalcor 74 and 77)

Lower usable generation benefits from the investment increases the delivered cost of Muskrat Falls power.

Bottom Line

When calculating costs, Nalcor (incorrectly) says that you may only look through the wide-angle lens showing the integrated system. However, when calculating production benefits, Nalcor’s says you may only look through its pin-hole perspective that isolates Muskrat Falls and ignores the constraints imposed by the integrated system.

You need lots of high priced consultants to cook up a regulatory mind game that sophisticated.

If the argument presented here is wrong, I will promptly issue an apology to Nalcor, its lawyers, and consultants.

A further analysis attempting to put the costs of Muskrat Fall in perspective will be presented on this web site in coming days.

Post script #1 (6:30 am Jan. 30): The above essay attracted the following important criticism: “Muskrat will be connected to Churchill Falls. Related to the CFLCo contract I think that CFLCo/Nalcor can wheel 300MW through Quebec but is currently doing a bit less than half of that.  I think some of the Muskrat June supply could be swung through the Quebec grid (at least up to the 300 MW.) 

The transmission connection between Muskrat Falls and Churchill Falls would be a factor improving the operational value of Muskrat Falls. Failing to address the benefits of this element of the project is an oversight in my essay.  Quantifying the benefit of the MF x CF transmission link for the production output of Muskrat Falls would require load flow analysis for Labrador’s connection with Quebec and the transmission interfaces in Quebec flowing south.

While my essay should have addressed the benefits for Muskrat Falls of it being connected through Quebec, I do not believe that this factor has a large impact on the economics of Muskrat Falls. The reason is that Muskrat Falls has the same basic inflow characteristics as compared with all the other generators in the electrical neighbourhood — Churchill Falls, the Manic complex, Saint Marguerite, Bersimis, Peribonka, Toulnustouc, Outardes, and others. The soon to be completed 1550 MW Romaine complex will require significant capacity the the transmission carrying power south out of the region. Much of the hydro-electric capacity in Quebec sharing the transmission lines running south are run of river designs. Looked at as an integrated system, the generators in Labrador and north eastern Quebec will be spilling water during the freshet and leaving empty headroom on the transmission lines running south the rest of the time.




I wouldn’t be surprised if all the generators in the neighbourhood spill during the freshet.



  1. the political reality of the Island of Newfoudland is, it is not based on reality. From the beginning of this colony in the 1500’s it was a question mark of survival. Perhaps the biggest impediment to success was the crooked merchants. Well here we are in the 21 century, the same mentality exists, politicans on the take and trying to hood wink the tax payer with grandiouse schemes, the latest being the Lower Churchill.

    Even with oil this colonial attitude is losing the battle of progress. To say a simple minded publc is no help, might be your next clue to Newfoundland’s failure as a viable state.

  2. This project has been essentially “reverse engineered” so that Muskrat Falls must come out as appearing to be the best option for Newfoundland and Labrador. Our real energy needs, our lowest cost energy needs, the economic viability of this project does not matter.

    “All” matters related to Muskrat Falls have been exempted from the province’s Electrical Power Control Act and the Public Utilities Act.

    However, to give this project a perception of credibility, the government subsequently referred the matter to the province’s Public Utilities Board —- but only within the strict and limited terms of a very narrow Reference Question — a Reference Question that limits the Public Utilities Board to comparing the Muskrat Falls option to only one other “Isolated Island” option that was predetermined by Nalcor — and the cost comparative analysis must be done using Nalcor’s numbers, principal elements and over a time frame (50 years) that necessarily biases any analysis in favour of the Muskrat Falls option.

    Maurice E. Adams
    Paradise, NL

  3. Hi Tom:
    I find your comments to be logical and compelling. Many residents of Labrador recognize that we are being snowed by stupid responses from the big players in this situation. Your insights are most welcome. Please keep them coming!
    Jill Airhart
    Happy Valley Goose Bay, NL

  4. Fair Hydro Rates for the People of Newfoundland and Labrador! Government are on the eve of making the biggest mistake since signing the Churchill Falls contact with Quebec Hydro- We can see the Muskrat Falls has the potential of having long term legacy costs with no exit plan . If this project does happen we will be paying the most for electricity in North America! WOW what a government Hey, you can do anything on the Rock if you have misguided people at the table doing the bargaining or have a ton of resentment towards our fellow province of Quebec. (1)Remember Sprung? Home of the $149.00 Cucumbers. (2) Hydro Quebec .0025 cents per kw and reselling kw now for over .08 per kw to Quebec Hydro users Take a look below EG Current Electricity Bill in a 2500 square foot home in Newfoundland with Electric Heat Winter $600.00 Feb 2012 Winter $1200 Feb 2019. OPEN YOUR JANUARY HEAT/LIGHT BILL NOW! Now DOUBLE THE PRICE…….. Will your wages double in the next 7 Years? or will you be on a fixed Income and not afford to turn on your heat. Can you see yourself paying most of your CPP retirement benefits to the province in the form of a hydro bill every month? This is just another form of tax except they will bury it into your Heat and Light Bill. This will led to increase in hardship for the low income and people on fixed income and help with banking foreclosures. Our gas( .62 per liter in 1991) and home heating oil bill(.48 per liter 1991) has not double in 20 years so why should on Hydro Rates?. Now is the time that we need leaders in place and not follow the former leader(s) Why not asked the government to fund this project by raising corporate taxes? LETS WAKE UP NEWFOUNDLAND AND LABRADOR BEFORE IT’S TOO LATE!

  5. Hey Tom, do yourself a favour and fuck off. The last thing we need is another Mainlander, who probably couldn’t find this place with a map and a GPS, to be telling us what to do with OUR energy efforts. Maybe you can pour some more of your time into the failed Green Energy projects that you have been pedaling in ON.

  6. Tom, this is a very interesting read, though I temper my acceptance of your pertinent facts with the understanding that you are a proponent of Wind Power. I also believe that we should be using wind power for increasing energy demands but I do not have any expertise to know if what you have written is indeed fact. Most of our province’s people feel the same as I do, in that we have no trust for this Dunderdale government and her swift and speedy need to move on with the Muskrat Fells project. Most of feel that we should slow down and make sure that there is no doubt before we gamble on such a mega project that will equate to a mega debt for us and our children.

    I so find it pathetic that the one person who so very foul-mouthed, negatively commented on your post is also the only one, to this point, to hide behind anonymity.

    • My analysis of wind power in an Ontario context is documented in several posts on this blog. I have not analyzed wind power in a Newfoundland context.

  7. Unfortunately the reply from Torbay Willie is part of the problem in NL, we usually attack the messenger
    when we do not like the message, as it is easier than a though full response. Please remember that the

    “The highway to hell is paved with good intentions”.

  8. Letter of Response from Ed Martin, President & CEO, Nalcor Energy

    Your blog displays a clear lack of understanding of the Lower Churchill Project, including the Muskrat Falls Development. I’m compelled to correct the statements made by you, and request the prompt apology you said you would make if your arguments were wrong.

    Usable output
    Contrary to your statement that “Nalcor has vastly overstated the usable output from Muskrat Falls,” Muskrat Falls will generate 4.9 terawatt hours of energy per year. This analysis is based on several studies completed by reputable engineering consultants. It’s not based on an average water flow study as stated in your blog.

    I’m not sure if you are aware of legislation in our province that requires a water management agreement to be in place between Nalcor Energy and Churchill Falls (Labrador) Corporation (Churchill Falls). The legislation requires the two power producers to use available storage, primarily in the Churchill Falls reservoir, and their respective generating facilities to optimize the production of power while maintaining the contractual obligations of Churchill Falls to its customers.

    The terms of the agreement, which have already been established, requires Muskrat Falls and Churchill Falls to operate as an integrated system. This provides the Muskrat Falls hydroelectric facility with access to over 30 billion cubic metres of storage upstream in the Churchill Falls reservoir. With production at Muskrat Falls completely integrated with Churchill Falls, this means that during May and June Muskrat Falls will be producing at full output, and the resulting production not required on the island will be displacing production at Churchill Falls. This energy will be drawn down when rivers flows are lower, and during peak winter periods when electricity demand is higher on the island.

    Finally, the only water not utilized at Muskrat Falls is the amount spilled during the spring freshet when runoff is greater than the capacity at Muskrat Falls. On the island, we have significant storage capability in our reservoirs and the amount of water spilled in the spring freshet on the island is relatively small.

    Evaluating the costs
    The Government of Newfoundland and Labrador has asked the NL Board of Commissioners of Public Utilities (Board) “to provide a supplemental review of the process used to determine that Muskrat Falls represents the least-cost option for the supply of power to Island Interconnected Customers compared to the Isolated Island development option.”
    I appreciate that you’ve read some of Nalcor’s over 400 responses to information requests as part of the Board’s review. However, I’d like to draw your attention to some of the material you may not have had an opportunity to review.

    The terms of reference for the review requires that Nalcor compare costs on a system basis, and consider the least-cost expansion for the island. All of the costs associated with both generation expansion plans are posted on the PUB website, and can be found in Exhibit 99:
    Nalcor has publically answered this question and the annual costs for Muskrat Falls and the Labrador-Island Transmission Link are included in our modelling. The methodologies for recovering costs associated with Muskrat Falls (escalating Power Purchase Agreement) and with the Labrador-Island Transmission Link (cost of service) as well as the annual amounts recovered are disclosed and shown annually.

    Costs of the Isolated Island (current system) and Island Interconnected (Muskrat Falls) are disclosed in our analysis. When compared to the Isolated Island expansion alternative, there is a cost preference for Muskrat Falls of $2.2 billion ($2010).

    Muskrat Falls is the least-cost supply for Newfoundland
    Muskrat Falls (824 megawatts (MW)) will provide us with clean, stable, renewable electricity that will allow our province to meet its own domestic and industrial needs in an environmentally-sustainable way and also provide export opportunities.

    Nalcor and its subsidiary Newfoundland and Labrador Hydro have a mandate to meet the province’s growing electricity needs. The recommendation we’ve put forward is that the lowest-cost alternative to meet our future energy requirements is Muskrat Falls with a transmission link to the island.

    Nalcor’s immediate priority is to meet the increasing need for electricity in Newfoundland and Labrador and replace the 40-year old 500 MW oil-burning plant in Holyrood, thereby eliminating our dependence on oil for generating electricity.

    Muskrat Falls will enable our province to be powered by 98 per cent stable, clean renewable energy. It’ll also significantly reduce greenhouse gas emissions in Eastern Canada and Northeastern US.

    Future Benefits
    The development of Muskrat Falls, and in due course Gull Island, will have far reaching benefits, including: lowest-cost electricity to our province’s consumers, stable electricity rates, support for industrial development and a long-term source of revenue for our province. There are also tremendous benefits regionally and nationally from these hydro developments.

    Ed Martin
    President and CEO, Nalcor Energy

  9. Tom,I applaude your interest into digging into this project….BUT….if you apply all your investigation knowledge and contracted services information you will find that, in Newfoundland and Labrador….Saint John’s is ACTUALLY spelled …..St. John’s Newfoundland and Labrador. I’m sick of mainlanders thinking Canada stops in Nova Scotia…open your eyes, look at a map…you can google one of those….Look to find New Brunswick, which is where they use spelling of SAINT JOHN and let your eyes drift a little to the right and up including Newfoundland and Labrador.

  10. Tom,I applaude your interest into digging into this project….BUT….if you apply all your investigation knowledge and contracted services information you will find that, in Newfoundland and Labrador….Saint John’s is ACTUALLY spelled …..St. John’s Newfoundland and Labrador. I’m sick of mainlanders thinking Canada stops in Nova Scotia…open your eyes, look at a map…you can google one of those….Look to find New Brunswick, which is where they use spelling of SAINT JOHN and let your eyes drift a little to the right and up including Newfoundland and Labrador.

    How can you expect credibility if you can’t corrct the error in your blog?
    Here is a simple question: What is the incremental stand-alone per kWh cost of Muskrat Falls power delivered to Soldiers Pond near Saint John’s?

  11. Hi Tom,
    Sounds like you hit a nerve here in Newfoundland. All the policitians and Mr. Martin himself is all bent out of shape. Usually if anyone is challenged and they come out firing and PO’d means that either they have been backed into a corner or been caught with their hands in the cookie jar. I am hearing half a billion dollars have been spent so far by this crowd…and for what? Who is paying for this half a billion dollars? There seems to be a very strange sense of urgency and at the same time secrecy over this project. Our current government is more secretive than the CIA, do they not understand that they work for their voters. It would appear to me someone is waiting to get their palms greased by this project and getting the contracts awarded. Also why are they dealing with a publically traded company….a publically traded company in my experience has no merrit, if their profits go down, the bigs guys sell out and leave the little guy holding the bag, just look at the stock markets for plenty of examples. Funny no privately held companies are interested in this project….I just hope my kids are not going to be left holding the bag on this one. Oh and that Torbay fella is just an ignorant Newfoundlander that give alot of us educated Newfoundlanders a bad reputation…he is so brave that he won’t even use his real name….

  12. Mr. Adams, although I’m not going to use the language of the guy from Torbay, I would like to offer similar advice. NL’s don”t need someone telling us what to do with our resources. My limited investigation into your most recent opinions around wind energy in ON, reflects a lack of common sense around sustainability of these projects. The last time we let Mainlanders look after our resources, we ended up with a fishing moratorium. Please take Torbay Willie’s suggestion and focus your uninformed efforts toward the good folks in Ontario. We’ll figure this one out on our own!

  13. From all the people telling people to mind their own business, well … we kind of are.
    That happened when it became an election topic federally and loan guarantees were promised.

    For those who think you don’t need anybody’s advice, a reminder you are selling 30TWh a year at about 1/16th the market price, and are committed to doing so for decades more… partly because of a terrible bargaining position resulting from the funds that were sunk into a project before having an iron-clad power purchase agreement.
    You might want to attempt to appreciate critics, to ensure the arguments for the project can withstand criticism.

  14. Tom,
    Thanks for presenting a very logical analysis based on the information that has been made available. All Newfoundlanders and Labradorians deserve to have complete open access to all the information, presented in a straight forward way that takes out all the apparent bias.

  15. Those of you attacking Mr. Adams because he is not a Newfie like you need to take their medsand stop shooting the messenger. As a born and bred Newfoundlander, I am agast at the approach our elected MHAs have to the house of assembly and many other things including Muskrat Falls. The more smart CFAs we have sticking their noses in here to help us the less likely we will be misled by our politicians and their appointees. (keep in mind that it is the smart CFAs that are pumping our oil, digging our nickel etc., keeping the politicians flush with cash)

    Mr. Martin and Ms. O’Neill have failed to answer Mr Adams assertions and given the secrecy of this project I am inclined to believe his analysis, rather than the ‘trust us’ side.

  16. I somewhat understand the general MYOB sentiment but believe that in this case it’s misguided. Consider where things are at presently. As Dr. P. Hil would ask, “How’s that working for you ?”.

    As for whether Tom is pro- or anti-wind, all I can say is that thankfully he’s no ideologue and so he’s pro-good-idea and anti-bad-idea. For the record and for the way wind and other renewables are being implemented in Ontario, he’s spoken out a lot on the many mistakes made.

  17. I have inside information on this issue that I cannot disclose but suffice it to say that this province has sufficient energy and power delivery today but only with expensive oil fired generation from the Holyrood generating station. In the near future power delivery will become difficult if not impossible without adding more generation. In the not to distant future energy delivery will be the same. (Yes there is a difference between power and energy.) The ONLY way to meet these requirements on an isolated system is with oil fired (reads expensive) generation. There are technical limitations to adding much more wind on the island portion of the province and as much as people are against Muskrat Falls that is nothing compared to how they will react to suggestions we will dam and harness all the rivers of the island for electricity. The current fuel purchase costs for Holyrood could pay for our portion of the Muskrat Falls (the $6.2B includes the Maritime link that will be wholly paid for by N.S./Emera) in ~25 years. After that if we remain isolated we will still have to buy fuel but if we are interconnected we will not. The only way remaining isolated makes sense is if the cost of oil will go down in the future and if anyone believes that they should seek professional help. The biggest problem with this project is that there is SO MUCH information that it is nearly impossible to understand it all unless you have been working on it for years. Many people are spouting opinions base on a lack of full understanding, as Tom has missed the water agreement, and some are intentionally twisting the information or leaving bits out to further their ulterior motives. I know some of the people working on this project and trust fully that they would act in the best interest of the province, and from my substantial personal understanding, over many years, of this project I believe they are. My biggest fear is that this does not get done in time, or at all.

    • I believe that the Water Management Agreement has no significant impact on the production of Muskrat Falls under the integrated island scenario. I would welcome any documented refutation of this point.

  18. I think it makes a significant impact on production. In your post you state that the water will flow more at times when not needed and less at times when needed. This agreement (which I just reread) means that at those time of more production than needed Nalcor can store water/energy in the CF(L)co. reservoir and retrieve it at a later time when it is needed. There are restrictions that prevent each producer from impacting each others operation but there still remains the ability to store large amounts of energy for the Muskrat Falls project in the Churchill Falls reservoirs when needed thus making Muskrat Falls less of a run of the river operation and more of a traditional reservoir hydro project. It is not fully the same, obviously, as having your own reservoir but it should allow Muskrat Falls to achieve near full capability of production.

    • Using the Churchill Falls reservoir to allow Muskrat Falls to deliver more energy in winter than in summer would be possible but would sacrifice a significant amount of annual generation at Churchill Falls. Because Hydro Quebec relies on maximizing the annual energy of Churchill Falls and because nothing in the Water Management Agreement impairs Hydro Quebec’s control over generation at Churchill Falls, I believe that there is no strength in the claim that Water Management Agreement impacts significantly the usable production to arise from Muskrat Falls. I continue to assert that Nalcor is overstating the usable output from Muskrat Falls by approximately 50%.

      Nalcor wants people to focus on the Water Management Agreement because it distracts attention from the fact that Nalcor has misused the 1998 Acres study (CE 28) that estimated the energy production to come from Muskrat Falls but under a fundamentally different transmission configuration.

  19. A quote today from Nalcor’s vice-president in charge of the Muskrat Falls project (from an
    article in today’s The Telegram):

    “With the exception of about 80 MW of recall power from Churchill Falls in the winter and a little more in the summer, all available production from Churchill Falls and Twin Falls is fully committed and utilized in Labrador.”

    Maurice E. Adams
    Paradise, NL

  20. Tom,
    That is the difference between power (Megawatts MW) and energy (Megawatt hours MWh). Right now Hydro Quebec is maximizing the energy output of Churchill Falls but that does not mean it is running at 100% power output 100% of the time. It is actually running at far less than that. By adding the energy from Muskrat Falls to the equation it is a simple change. It simply means that sometimes Churchill Falls will be running at reduced power output with the difference coming from Muskrat Falls thereby storing energy from Muskrat Falls in the Churchill Falls reservoirs and at other times Churchill Falls will be running at increased power output providing the energy back to Muskrat Falls. This all results in a net energy change to Hydro Quebec of zero. They do have direction over the output of Churchill Falls but not absolute control to the detriment of others and the water agreement clearly (as much as a legal document can be clear) states how this moving of energy is to happen without interfering with the energy requirements of Hydro Quebec. A simple way of looking at it is there is a set amount of gas (water) in the tank (reservoir) and Hydro Quebec can chose to run Churchill Falls at full throttle for a little while or part throttle for a long while, the gas from Muskrat Falls will just fit in between. I hope this helps clarify the difference between energy output of Churchill Falls and power output.

    • Ted,

      My previous post was a bit sloppy. Churchill Falls operations maximize energy production under the constraints of the Guaranteed Winter Availability Contract (GWAC). It determines when maintenance is done at Churchill Falls so that both capacity and energy are maximized in two time periods — from November to March and from June to August. The requirements of the GWAC compete with the forebay level optimization in that the efficiency of winter generation degrades through the season because the usage of water exceeds inflows and therefore the forebay level drops. In summer, inflows peak in June but some of the spring inflow is stored and shifted into July and August, with lower efficiency later in the season. Other than that, HQ keeps the forebay as close to full as possible to maximize the efficiency of water utilization. The flow down steam of the the CF generators is more steady through the seasons than would be the natural flow of the river — lower peak flow in June and higher flow in winter.

      This time shifting in the flow at Churchill Falls is a big benefit to the value of Muskrat Falls. Production in June at Muskrat is nearly useless because on-island generation is meeting all island needs and flowing excess to Nova Scotia. There is little head room on the tie with Nova Scotia during the run-off. The fact that Muskrat Falls is receiving less water than nature would provide in June means that less water has to be thrown away.

      Here is the kicker. Churchill Falls is a beautifully designed facility. It is almost perfectly optimized to make best use of the available water. June production is valuable to HQ and they don’t want a drop of water wasted in June. The turbines there run full out or close to, with excess water stored to make sure there is good generation in July and August. The transmission lines south from CF run at capacity. Excess generation at Muskrat Falls in June cannot move to Quebec and the water stored in the forebay at Churchill Falls without the forebay being drawn down extra low in May to create the room. That maneuvers creates a risk for HQ that rains might be poor and generation in August sacrificed. A May draw down also sacrifices some of the energy value of the water used during the draw down. Any losses in efficiency at CF to accommodate excess generation at MF in June are properly charged against MF.

      The movement of capacity and energy you are talking about between Churchill Falls and Muskrat Falls would create substantial commercial risks and direct costs for HQ. I recognize that the guaranteed uselessness to the island and Nova Scotia of most of the output of Muskrat Falls in June might create an opportunity for some time shifting of water, but HQ is going to heavily discount the value of any excess generation that it gets pushed into at CF during April and May to create the storage room for June water at Muskrat Falls. Another factor that limits the potential to shift June energy from MF to CF is that HQ already has a very substantial excess of generation from April and May spring runoff at more southerly generators. Nalcor will be negotiating using energy that HQ knows is otherwise useless and where the energy is of little value to HQ. Newfoundland ratepayers will pay heavily for that.

      The big problem with the usability of Muskrat Falls generation is that its seasonal output pattern is the same as all the generators in the neighbourhood — low when the power is needed in winter and high in May and June when the island already has excess.

      Nothing in Nalcor’s filings comes clean any of the above. Telling the public, “Don’t worry, we’ll just shift the energy around and everything will be fine” does not cut it.


  21. Tom,
    Your right except that the excess energy does not go to HQ it goes into the Churchill reservoirs. If I might give an example using somewhat random numbers but to illustrate just the same. If in June HQ wanted 2 Terawatt hours of energy but Muskrat had an excess of water then 1.7 of those 2 TWh could be produced at Churchill and the remaining .3 gets produced at Muskrat. HQ gets their 2.0 like they required and Muskrat gains a storage of 0.3 in the reservoir. Later when there is less water and more demand on Muskrat then the process is reversed, Churchill produces 2.3 and delivers 2.0 to HQ and 0.3 to Muskrat. There is no additional power flow across the transmission lines between Churchill and HQ. I agree that any losses due to transmission between the two sites and any reduced efficiency will be attributable to Muskrat only but the net effect should be to maximize Muskrat Falls use of water. As for drawing down the Forebay, the Forebay is only a small portion of the Churchill Falls reservoir system and the bulk of the energy would be stored in the Ossokmanuan and Smallwood reservoirs. I am very familiar with managing water across multiple reservoirs and generating stations and it is not too difficult. There is also the possibility that there will be times that Churchill will be at maximum production and unable to deliver any extra to Muskrat but those times are few and the GWAC does not require maximum production at all times through the winter only maximum availability. Again if there was a loss of efficiency it would be costed back to Muskrat. The other thing is that the energy has no dollar value at all applied to it, it is simply energy and HQ cannot apply any different value to it at different times except that there is a conversion factor applied to the water to equate it to TWh which may vary slightly. There is no risk to HQ as they will get what they request and all risk falls to Muskrat. The seasonal output of Muskrat Falls will be very much like that of the Island of Newfoundland and water management here is very good, not perfect but very good, with water stored in the low production times for the high demand times. With the size of the Smallwood reservoir I would expect the water usage at Muskrat to actually exceed that of the Island.
    By the way I agree that Churchill Falls is a beautifully designed facility and would add that the town was a beautiful place to grow up.

  22. Pingback: Newfoundland’s Muskrat Falls Megaproject Fails Test of Intergenerational Ethics | Tom Adams Energy - ideas for a smarter grid

  23. Quote from Tom:
    “Excess generation at Muskrat Falls in June cannot move to Quebec and the water stored in the forebay at Churchill Falls without the forebay being drawn down extra low in May to create the room.”

    This sentence makes no sense. In addition, the description of forebay going low shows a fundamental lack of understanding. The CF forebays are the last place the water is before it is used. It is for short term storage. No one would be concerned with doing anything about forebay levels other than keeping them topped up with feeds they control from Lobstick and Whitefish control structures. There is always lots of water available upstream at Lobstick from the Smallwood reservoir. The forebay levels are controlled by computer and water level sensors (has the Westinghouse analog computer near the underground transformer gallery ever been modernized?)

    Quote from Tom:
    “That maneuvers creates a risk for HQ that rains might be poor and generation in August sacrificed”

    The Smallwood reservoir is the second largest in the world (6,527 sq km) and even if there was a month or two of lower than average precipitation, there would be no risk of it running low. Have you looked at the climate data?

    Every drop of water that flows through the CF generating station becomes water available for Muskrat. There is no way it can go any other path. If HQ’s contract is being upheld, there is power being generated at CF and water flowing through. The only thing which could reduce that would be unit maintenance, of which there are 11. I was in CF in June 1997 and there were buses taking machinists, etc. to the powerhouse to work on a unit. They worked there seasonally. So I don’t see where this talk of not wasting a drop in June is coming from, because this work upgrading units could be done at any month they chose.

    I think there are cost and political problems with Muskrat deal, especially for Nova Scotia where there are a half dozen other options. However, to second guess the work done on stuff like the water management deal between CF(L)Co and Nalcor is silly. These professional people have worked on hydro projects all along and might have a clue how to operate it.

    I’m surprised there is no discussion on the cost of submarine HVDC cables, which are 1/2 the cost of the Muskrat Falls project. Before this cost is added, Muskrat Falls costs are comparable to another contemporary project like nearby Romaine Complex. Can anyone point out another project for submarine HVDC costing in the neighborhood of $3 billion? This is where I have a fundamental problem with the high costs, because otherwise, hydro is cheap and always has been cheap. If that wasn’t true, Quebec wouldn’t have the lowest power generation costs in North America.

    • I disagree with the blanket conclusion that “hydro is cheap”. Old and depreciated hydro, built at a time when everything else cost a lot more, is cheap. New hydro, like Wuskwatim, can’t compete.

      • Newer hydro is more expensive, but then so is the new Bluenose and everything else built today. It is clear the Romaine won’t have power production costs at the 2.11 cents HQ average, and neither will Muskrat Falls. However when you subtract the submarine HVDC costs, Muskrat Falls and Romaine are both in the same ballpark for cost per MW. If you are not going to analyze why submarine links cost 3.3 billion, then you should be just as critical of the economics of the Romaine Complex project. Let’s get real. If the economics of Romaine meant HQ could not sell power at a deal to the buyer, it wouldn’t be happening. They didn’t start doing this business last week.

        Maybe the high costs these days are just crazy markup on construction work. Nova Scotia learned about this by buying a paving plant. Suddenly all of the paving contract quotes came way down. Quebec has their own history of construction kick backs and the like.

        • The generalization that “everything else build today” is more expensive is not something I agree with. The cost of gas GTs, particularly when you look at factors like ramp capacity, has dropped. The introduction of GE’s new fast ramp “FlexEfficiency” series shows that this trend is continuing.

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