Muskrat Falls is the right choice
As published by The Telegram
July 2, 2011
By Shawn Skinner, Minister of Natural Resources
I would like to respond to some statements and address some factual errors that have been made in letters to the editor printed in this newspaper over the past several weeks with regard to the Muskrat Falls project.
Newfoundland and Labrador Hydro has been providing reliable and least-cost electricity to the residents of this province for more than 50 years. Electricity is an essential service and the decision to develop new generation and transmission is made by professionals at Hydro whose responsibility it is to ensure electricity is there when needed.
These professionals manage and plan your electricity system based on their expertise and understanding of electricity supply and demand. Hydro must comply with legislation and regulations that require it to ensure sufficient electricity is available at all times. If supply is required to meet demand, then the Electrical Power Control Act states that this new generation must come from the least-cost source.
I’ve heard the question many times; where is the demand coming from? Simply put, the demand for electricity is coming from residential and commercial growth. Our economy is growing, and this growth triggers new electricity demand. Hydro has completed an assessment of possible options to meet this new demand and after careful analysis determined that Muskrat Falls is the least-cost option.
Should we develop more wind? Of course, wind is an important renewable resource and we have plenty, but wind is not predicable and if wind does not blow or does not blow at the time when we need electricity to cook breakfast or supper, then Hydro will not be able to meet customer demand.
Throughout Canada and the United States, the electricity grid is interconnected and if a particular jurisdiction needs electricity because the wind is not blowing, then there are places from where the power can be purchased from other sources to meet demand. Newfoundland and Labrador is presently not connected to the North American electricity grid and does not have this option.
The Lower Churchill Project has been conceptualized for almost 40 years and detailed planning has taken place on a number of occasions. The difference between today and the past is that the project is being developed to meet our own electricity needs. In the past, the impetus was economic development and the goal was revenue from electricity sales.
The Muskrat Falls project will see the Holyrood oil-fired thermal generating station phased out, thereby eliminating the volatility of oil prices and eliminating harmful emissions. At the time the Holyrood facility was constructed, the oil price was $3 per barrel; at today’s price of $110 per barrel, we need a source of electricity that provides stable electricity prices.
As the demand for electricity increases, more power from Holyrood will be required. At today’s oil price, electricity from Holyrood costs 16 cents/kwh. This price will increase as the price of oil increases and international experts are projecting oil prices will continue to rise.
We take it for granted that our electricity will be there when we want it, yet we don’t always see the important work that goes on behind the scenes to plan and manage the electricity system.
The decision to develop Muskrat Falls was not made for political purpose as has been suggested, but rather made at the recommendation of professionals who have been keeping our lights on for decades.