Tapping thermal to meet power demand could cost NL Hydro $33M

Newfoundland and Labrador Hydro says it will need to rely more on diesel to meet the province's power demands, withan unexpectedcost of $33.3 million, because energyreservoirs for the province are at a 20-year low.

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In a news release from the utility Monday, Hydro said it will be changing the mix of thermal and hydro generation due to dry conditions and water reservoirs that are down to 48 per cent capacity the lowest in two decades.

Consumer demand, meanwhile, is going up.

"Based on these circumstances, ifaction is not taken, there is a very real risk that the reservoirs will remain far below normal,putting Hydro's ability to provide sufficient energy generation to its customers in jeopardy," said Hydro in a letter to the Public Utilities Board [PUB] Friday.

In its application to recover costs, Hydro told the PUB that the Holyrood plant alone will not produce enough thermalpower, soit has to burn diesel in standby generating sources, and at current prices that could cost $33.3 million over 2016.

"The water itself is given to us, essentially, for free. That's not the case with oil," said Hydro Vice President, Dawn Dalley.

"Even though oil prices are low, it does cost us to generate electricity using oil or any other kind of fossil fuel."

The PUB now has to decide if the request is reasonable, and how the money could be raised.