Natural Resources
September 14, 2007

Province Committed to Energy and Industrial Development in Labrador

Attracting energy intensive industrial development in Labrador is a priority for the Provincial Government. Through Newfoundland and Labrador Hydro (Hydro), the Provincial Government will work with interested developers to ensure that sufficient power is available on-time for economically-viable projects, said the Honourable Kathy Dunderdale, Minister of Natural Resources, in outlining the direction for development in Labrador as contained in the province�s Energy Plan, Focusing Our Future.

"We are fully committed to making electricity available to any company or business interested in setting up in Labrador," said Minister Dunderdale. "Transmission lines can cost hundreds of millions of dollars and we need to understand the size and timing of any additional demand so that we can plan, design and build any required facilities. This is sound energy planning for taxpayers and ratepayers."

The Provincial Government and Hydro are currently working with a number of potential developers interested in establishing industrial operations in Labrador to understand their needs. Hydro's legislated mandate is to deliver least cost, reliable power to its customers and Hydro has committed to having electricity service available in time to meet developers' needs.

"Labrador has key energy assets and the development of these assets will provide significant employment and business benefits for Labrador," the minister said. "New Labrador transmission infrastructure will be constructed as needed to support energy intensive industrial development. Increasing power demand in Labrador will grow the economy and further power development, including the Lower Churchill Project."

In the Energy Plan released Tuesday, the Provincial Government committed to building transmission lines to the north and south coasts of Labrador when it becomes more cost effective to do so than the current cost of diesel generation. As a regulated asset, new transmission infrastructure will be paid for by all interconnected ratepayers in Labrador. Currently, power generation in these communities is subsidized by over 70 per cent. In the Northern Strategic Plan, the Provincial Government provided an additional rebate to ensure that these residents pay the same rate for electricity for basic needs as other residents of Labrador. The rates these residents now pay for their lifeline block is lower than general service rates on the island. The Energy Plan also commits to reviewing commercial rates in conjunction with the Lower Churchill Project.

"The cost of running lines to the north and south coasts is between $375 million and $400 million to service 3,500 customers," said Minister Dunderdale. "This is over $100,000 per customer and building this infrastructure would impose a significant rate increase on these customers and all Labrador ratepayers. At this point, diesel-generated electricity is more cost effective for these customers."

The concept of tapping into the DC transmission link between Labrador and the island is technically challenging and, at approximately $300 million for transmission and a DC/AC conversion facility for the south coast, the cost is also greater than continuing to provide diesel-generated electricity to these communities.

Once the transmission link is constructed, Hydro will enter into a Power Purchase Agreement with the Lower Churchill Project for the purchase of power to offset thermal generation at the Holyrood Generating Station, which will assist in financing the project.

A key action of the Energy Plan is the reinvestment of Provincial Government revenues from non-renewable resources into the construction of renewable infrastructure, of which Labrador will principally benefit. The Provincial Government is committed to directing a portion of its oil and gas revenues to advance energy developments in Labrador.

"We are a single province with a single destiny. We have a vision for Newfoundland and Labrador that includes the principles of adjacency, meaning those closest to the resource will be the principle beneficiaries," said Minister Dunderdale. "We are committed to developing Labrador energy resources and infrastructure in a way that supports and attracts development and provides long-term and sustainable employment and economic benefits for the people of Labrador."


Media contact:
Tracy Barron
Director of Communications
Department of Natural Resources
709-729-5282, 690-8241

2007 09 14                                                   12:50 p.m.


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