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Electricity

Overview

In Newfoundland and Labrador, the generation and distribution of electricity is provided by two utilities, Newfoundland Power (NP) opens new window and Newfoundland & Labrador Hydro (Hydro) opens new window. Together, NP and Hydro serve about 280,000 customers. The majority of customers are served by the island interconnected system which, as of June 2009, had approximately 1,966 Megawatts (MW) of net generating capacity. In Labrador, customers on the Labrador interconnected system are served by Hydro with power from the 5428 MW Churchill Falls Hydroelectric Generating Station. Customers on 21 isolated systems on the coasts of Newfoundland and Labrador receive their power from diesel generators operated by Hydro.

Newfoundland Power, an investor-owned utility and subsidiary of Fortis Inc opens new window, is the primary distributor of electricity on the island portion of the Province. NP distributes power to nearly 240,000 customers. Hydro supplies about 92 per cent of its energy requirements and NP supplies the remainder with its 23 small hydroelectric generating plants.

Hydro is a provincial Crown corporation, with the mandate to generate and transmit electricity in the province, and to provide distribution and retail services to customers in Labrador and in areas of the island of Newfoundland not serviced by NP. It was established as the Power Commission by an act of provincial legislation in 1954 and was incorporated in 1975. The company is the primary generator of electricity in Newfoundland and Labrador with an installed generating capacity of 1637 MW. In 2008, more than 80 per cent of this energy was clean, hydroelectric generation. Hydro’s power generating assets include nine hydroelectric plants, one oil-fired plant, four gas turbines, 25 diesel plants, and thousands of kilometres of transmission and distribution lines.

In 2007, Government created an energy corporation, now named Nalcor Energy. Nalcor Energy became the parent company of Hydro. It’s foundation is built on its base business: the generation and transmission of electrical power. Over the past three years, the company has expanded into the broader energy sector, including oil and gas, industrial fabrication, wind energy, and research and development. The company is also leading the development of the province’s energy resources, including the Lower Churchill hydroelectric development. Nalcor Energy has five lines of business: Hydro, Churchill Falls, Oil and Gas, Lower Churchill Project and Bull Arm Fabrication.

The Churchill Falls Generating Station is one of the largest underground hydroelectric powerhouses in the world. The plant has 11 turbines with a rated capacity of 5428 MW. In 2008, the operation produced more than 34 Terawatt hours (TWh) of clean electricity, with the majority of that energy sold to Hydro-Québec through a long-term power purchase arrangement set to expire in 2041. Power is also sold to mining operations in Labrador West and to Hydro for use on the Labrador Interconnected System. Hydro is currently exporting the unused portion (averaging about 150 MW) of its Upper Churchill Falls entitlement (300 MW) to various markets in North America.

Hydro currently has agreements to purchase energy produced by two 27 Megawatt (MW) wind projects, which each consists of nine three-MW wind turbines. In 2008, Hydro commenced purchasing power from the first commercial wind development in Newfoundland, located in St. Lawrence. The Fermeuse wind project became operational in May 2009. These two wind developments are owned and operated by private-sector companies that were successful respondents to competitive request for proposal processes implemented by Hydro.

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Regulations and Pricing

Utilities in Newfoundland and Labrador are regulated by the Newfoundland and Labrador Board of Commissioners of Public Utilities (the Public Utilities Board or PUB). The Electrical Power Control Act 1994 (EPCA) directs the PUB to enforce government policy in relation to the electricity industry and details the policy. The PUB regulates both Hydro and Newfoundland Power.

Legislation directs the PUB to use cost of service methodology to derive rates, allowing an appropriate rate of return on a rate base of allowed costs. The PUB determines the allowed rate of return according to financial market conditions.

For customers on the island interconnected system there are rates for: domestic service (residential), general service (very small, small, medium and large commercial), street and area lighting and industrial customers. Newfoundland Power also has a curtailable service option for the two largest commercial service customer groups. On the Labrador interconnected system there is a similar rate strucuture, but actual rates for customers in the Happy Valley-Goose Bay and Labrador City and Wabush areas are in the process of being equalized.

There is also a separate rate structure for isolated communities where diesel generation is used. These customers receive a first block of power at the same rates as island interconnected consumers.

As part of its Northern Strategic Plan for Labrador, the Provincial Government announced in July 2007 an annual investment for an electricity rebate to reduce the cost of basic electricity consumption for Hydro residential customers in Labrador’s coastal rural isolated diesel and the Labrador Straits communities (approximately 2,600 customers). This rebate is funded by the Provincial Government and is not included in the PUB-approved rates.

The rebate brings the costs of the monthly Basic Customer Charge and lifeline block of energy for Labrador rural isolated diesel and Labrador Straits residential electricity customers in line with comparable Happy Valley – Goose Bay residential electricity costs. It is intended to provide some rate assistance to residential customers. This electricity rebate applies to the Lifeline Block of electricity consumption, which is intended to represent electricity sufficient to cover basic needs, such as lighting, cooking and water heating, as well as the basic customer charge for residential customers. The average monthly electricity rebate, depending on usage, is approximately $45-$65 monthly.

Visit the following website for more detailed information on electricity rates in the province:

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Lower Churchill Hydroelectricity

The Lower Churchill Project opens new window is the most attractive undeveloped hydroelectric project in North America. Its two installations at Gull Island and Muskrat Falls will have a combined capacity of over 3000 MW and can provide 16.7 TWh of electricity per year. The projects could displace over 16 megatonnes of carbon dioxide emissions every year from thermal, coal and fossil fuel power generation – equivalent to the annual greenhouse gas emissions from 3.2 million automobiles. This clean, stable, renewable energy provides the opportunity for Newfoundland and Labrador to meet its own domestic and industrial needs in an environmentally sustainable way, with enough power remaining to export to other jurisdictions where the demand for clean energy continues to grow.

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Biogas Electricity Generation Pilot Program

Newfoundland and Labrador’s Biogas Electricity Generation Pilot Program (the Program) was established in 2014/15 to encourage the development of biogas power generation in Newfoundland and Labrador, and generate electricity for the system.

Biogas is a combustible gas created by landfills and farms through the anaerobic (i.e. without oxygen) decomposition of organic material. Biogas is typically composed of methane and carbon dioxide with traces of other gases. Biogas generators burn the methane gas to create heat which is used to turn a turbine and generate electricity. Burning methane as fuel in a generator has environmental benefits as it reduces its greenhouse gas (GHG) impact significantly. When released directly into the atmosphere, methane has a GHG impact 21 times more harmful than releasing the same amount of carbon dioxide. By burning the methane in biogas, the GHG impact is reduced to equal that of carbon dioxide.

Under the Program, Newfoundland and Labrador Hydro will purchase electricity from biogas projects:

  • at a price per kWh equal to 90% of NLH’s avoided marginal cost prior to Muskrat Falls entering commercial service;
  • at a price per kWh indexed to the market price minus NLH’s associated transmission costs after Muskrat Falls enters commercial service;
  • up to a maximum of 2 megawatts (MW) per biogas project. However, certain areas of the distribution system are more limited than others therefore generation output may be limited or restricted in certain areas of the province. Size limitations are determined as part of the application process;
  • up to a 5 MW aggregate provincial maximum, which will be filled on a first-come first-served basis; and
  • will provide biogas project owners with the value of any Renewable Energy Credits (RECs) or GHG-related credits available from the sale of such credits after Muskrat Falls enters commercial service.

For more information on the Program please contact Newfoundland and Labrador Hydro at:

Customer Services
Telephone 1-888-737-1296 Toll-Free
Monday to Friday, 8:30 a.m. - 4:00 p.m. (Newfoundland Standard Time)
Email: customerservices@nlh.nl.ca

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Local Utilities and Regulatory Board

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