NB Power wins regulatory approval for Tantramar gas/diesel plant despite harsh EUB rebuke

The New Brunswick Energy & Utilities Board has approved NB Power’s plans for a 500 MW gas/diesel plant near Centre Village that would be built and operated by the U.S. company PROENERGY for 25 years.

In an oral decision, Board Chair Christopher Stewart endorsed NB Power’s argument that it needs additional power by 2028 to avoid the risk of blackouts, especially during periods of peak demand.

“NB Power is not required to show that the proposed project is the only reasonable solution,” Stewart said.

“It must, however, provide sufficient evidence to satisfy the Board that after careful consideration of plausible alternatives, the chosen project is reasonable,” he added.

Thursday’s decision approved the eight combustion turbines NB Power says it needs to quickly generate 400 MW of peak power.

“Each turbine will be capable of ramping up to full power in six minutes,” Stewart said, adding that the turbines will also “be equipped with a synchronous condenser” to provide grid stability as more intermittent renewable sources such as wind and solar are integrated into the system.

The Board also approved two additional turbines that would generate 100 MW of power for Nova Scotia’s Independent Energy System Operator for an initial 10 year period.

Higher costs justified

The EUB noted that contracting the project out to a private operator would cost NB Power between $82 and $221 million and possibly even more than operating such a plant itself.

 But it said the arrangement is justified because it transfers significant financial risks in constructing, operating and maintaining the plant to the private developers.

“NB Power contends that the chosen delivery model secures eight combustion turbines at a locked-in price in a market where such turbines are in high demand and prices are not decreasing,” Stewart said, “and shifts responsibility for planning and managing the facility from NB Power at a time when its resources are stretched and would be more adequately focused on other large projects.”

The Board also accepted evidence that the multi-billion dollar project could increase power rates by 5% in 2029 and that since NB Power is supplying the fuel, it must shoulder the risk of fluctuating fossil-fuel prices.

The Board rejected evidence from energy consultant Toby Couture that renewables coupled with battery energy storage systems (BESS) would be a cheaper alternative to the gas/diesel plant.

“The evidence presented by the intervenors regarding BESS was general in nature and did not address the specific conditions, costs, and system requirements in New Brunswick,” Stewart said.

“Based on all of the foregoing, the Board is satisfied that meeting the need for at least an additional 400 megawatts of capacity by 2028-2029 with a combined turbine facility in southeastern New Brunswick is technically sound and likely less costly than an adequately sized BESS solution,” he added.

Harsh words for NB Power

Although the EUB approved the project, it rebuked NB Power for how it handled the process suggesting that the utility’s failure to provide needed information could have led the Board to reject the gas plant project.

“In the Board’s view, the summary nature of the evidence initially filed by NB Power with its applications did not lend itself well as to full, transparent, and as rigorous a process as New Brunswickers in general and ratepayers, interveners, and the Board in particular, should expect,” Stewart said.

“The process was rushed by deadlines imposed upon itself by NB Power that were exacerbated by what the Board views as the unnecessarily late filing of the application,” he added.

Stewart said NB Power failed to file key documents until prodded to do so by Board staff and interveners shortly before the EUB hearings began and did not subject the project to its mandatory investment governance framework which ordinarily would have required investment rationale documentation (IRDs).

“NB Power’s failure to apply its investment governance framework and the resulting absence of IRDs at key decision points is and was regrettable,” Stewart said.

“It denied both NB Power’s Board of Directors and this Board the structured, documented analysis of need, plausible alternatives, risks, and costs that all New Brunswickers and ratepayers are entitled to expect before a multi-billion dollar, 25-year commitment is made,” he said.

“But for the fact that the board was able to satisfy itself based on the evidence that it had before it of the need for an additional 400 megawatts of capacity, that the combustion turbine solution is technically sound and will provide the required dispatchable capacity and synchronous condenser capability, and will likely cost no more than a BESS project with equivalent attributes, the Board could not have found the current project prudent,” he concluded, adding that the EUB will start a process for identifying minimum filing requirements for similar applications in the future.

Note: Thursday’s EUB decision brings the project one step closer to approval. It is also subject to a provincial environmental impact assessment.

To read a Warktimes report about NB Power’s late filing of documents, click here.

This is the first in a two-part series. In Part II, reaction from NB Power and gas plant critics.