Newfoundland and Labrador Hydro submitted its capital budget application to the Public Utilities Board recently, and some of the highest priorities on the list are upgrades to the facilities in Labrador West.
Hydro is submitting to spend $3.4 million on the Wabush terminal and substation and another $593,000 on work in Labrador City.
The Wabush upgrades are multi-year projects until 2023, part of $22 million Hydro earmarked to “maintain reliable service to industrial customers in western Labrador and to meet forecasted load growth,” according to the filing with the PUB.
Labrador City Mayor Fabian Benoit said he understands the work needs to be done on the infrastructure, but he is concerned about who will have to pay for it.
“I’m almost positive it’ll be us paying for that in the long run, the residential consumers,” he said. “It’s expected and it’s needed, I’m just worried what the increases will be at the end of the day.”
A Hydro spokesperson told SaltWire they appreciate the concern that customers may have regarding additional investments and impacts on electricity rates.
Costs for NL Hydro projects on the Labrador Interconnected System are recovered through increases to all residential, commercial, and industrial customers, which Benoit said doesn’t make sense in all instances, such as this one.
According to Hydro, the cost of assets that benefit commercial and industrial customers are shared based on the portion of their peak load requirements, of which industrial customers pay almost 60 per cent.
In the filing to the PUB Hydro said the customer load in western Labrador is forecast to reach 379.9 megawatts (MW) by this winter and 383.3 MW in 25 years. The transfer capability of the existing Labrador West transmission system in winter is 350 MW under normal operating conditions with all of Hydro’s assets in service.
Currently, Hydro said, power supplied to the Iron Ore Company of Canada and Tacora Resources must be limited to not go over the 350 MW in winter.
“My argument since Day 1 has been the load increase is just because of industry, not residential use,” Benoit said. “There hasn’t been any real big changes in the towns, just the needs of industry. If the increase is because of industry they should cover the cost, not the end-user.”
He said he understand money needs to be brought into the economy, but residents shouldn’t have to pay for upgrades to keep businesses going.
The PUB has not yet made a decision on the applications by NL Hydro.
UPDATED: This story has been updated from an earlier version to include further information from NL Hydro.
Evan Careen is a Local Journalism Initiative reporter covering Labrador for SaltWire Network.