By Melanie Jackson
msjacksonpei@gmail.com
P.E.I. has a problem.
By the end of this year, once the new Hermanville wind farm is up and running, P.E.I. will be producing a little over 200 megawatts of energy from wind.
That’s energy that could be sold to off-Island customers – if there was a way of getting it to them, that is.
In 2008, the Ghiz government announced its plans to establish 500 megawatts of wind energy on P.E.I. over the next five years.
On average, Islanders only use about 160 megawatts of electricity a day, so government’s plan was to make money selling P.E.I.’s excess energy to export markets – like the New England states.
But without a transmission cable to transport that much electricity, government’s plan is at a standstill.
The need for a new electricity transmission cable between P.E.I. and N.B. has been a growing concern for many years. It’s one that has been growing faster as the demand for energy increases.
In addition to falling short of its target energy production, government also fell short on its estimation of how long it would take to secure another transmission line.
“What we didn’t anticipate was how long it would take to get a cable,” said Wayne MacQuarrie, CEO of the PEI Energy Corporation.
Right now, P.E.I. has two 100-MW transmission cables that run across the Northumberland Strait into New Brunswick. Despite being able to meet the Island’s current needs, they don’t have the capacity to support any excess energy P.E.I. could sell for export.
Not only is there potential to move energy off P.E.I. for sale, but with Islanders’ increased demand for electricity, importing more electricity is a reality government must face, too. And soon.
“Just our regular load growth alone is going to dictate that the existing cables aren’t going to be sufficient,” said MacQuarrie.
A new 200-MW capacity cable will cost approximately $100 million, he said. And who will be paying for it remains unclear.
“You and I, as ratepayers, are either going to pay for (it) over the life of the cable,” said MacQuarrie. “But what we’re hoping is that we’ll get a contribution from the federal government in the form of a grant.”
The precedent for a federal funding grant has been set, he said.
In 1977, the cables cost $36 million and $18 million of that was in the form of a grant provided by the federal government.
“We’re looking at the federal government to provide a similar contribution. Whether they will or not, remains to be seen,” said MacQuarrie. “At the end of the day, we need a cable.”
The urgency for a new cable is even greater since the breakdown of one of the cables last year.
In 2012, there was a leak in one cable – near an old splice – and officials thought they were finally starting to show their age. Repairs were costly.
“The repairs cost between $5 million and $6 million,” said Ron Estabrooks, an energy advisor for the province. “But that included replacement energy.”
This meant while one of the cables was out of commission, energy could not be imported from N.B., and the oil-fired generation plant on Charlottetown’s waterfront had to be used to meet the Island’s electricity demands.
“The cost of firing those up is probably three to four times what it would cost for us to buy energy under normal circumstances from New Brunswick,” said MacQuarrie.
However, government was prepared for those repair costs.
Starting in 1977, a portion of the rate that Maritime Electric customers paid was directed into a cable contingency fund. The fund was established to help cover the cost of repairs to the cables should any be needed.
“It’s designed that if something were to happen, the money in this contingency fund would be used to make the necessary ongoing repairs,” MacQuarrie said.
However, the amount in the fund was not enough to cover the total cost of repairs – nor the energy P.E.I. needed during the time of the leak.
The fund was capped once it reached $3 million, said Estabrooks. This means the fund only paid for about half of the repair costs and was depleted as a result. Now the issue government faces is how to replenish the fund.
“We’re going to have to turn our attention to, ‘Okay, what’s a reasonable contingency fund on a go-forward basis?’ and ‘How much are ratepayers going to be asked to contribute to that – over what period of time?’” MacQuarrie said.
Maritime Electric no longer has a contribution toward the fund built into the rate its customers pay. That means any further breakdowns to the cables would come at the expense of the P.E.I. government and its taxpayers.
Starting this March, MacQuarrie estimated electricity rates would be increasing to coincide with the cost of living – about two and a half per cent per year for each of the next three years.
This increased revenue could help pay the bill for the cable’s repair costs.
“We anticipate that (Maritime Electric) will be able to recover those costs within that two and a half per cent,” said MacQuarrie. “In other words, that outage is not going to cause rates to go up any higher than what they were going to be going up anyway.”
Following last year’s leak, repairs were completed and an analysis was carried out on the condition of the cables. Officials determined the cables are, for the most part, still in good shape. However, they’re not immortal.
“What the lesson has been here is that they’re not going to last forever,” said MacQuarrie. “And maybe this is just the start of things to come. This is why there’s an urgency.”
So the question now isn’t if P.E.I. needs a new cable, but when it will get one and who will fund it.
“We’ve reached the point where we just can’t wait around for someone to give us money. We’re going to have to install.”
First appeared on The Surveyor Online - February 19, 2013
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