Newfoundland utility files application to finance capital investments

Newfoundland and Labrador Hydro capital plan targets grid reliability, investment, refurbishment, maintenance, and financing for a 100MW combustion turbine and new transmission lines from Bay d'Espoir to Western Avalon and in Labrador West.

Newfoundland and Labrador Hydro filed an application with the Newfoundland and Labrador Board of Commissioners of Public Utilities PUB recently for approval to borrow $200 million in long-term debt to appropriately finance upcoming capital investments.

“Significant capital investment is critical to ensuring a safe and reliable electricity system for the people of this province,” said Rob Henderson, Vice President, Newfoundland and Labrador Hydro. “Aligned with Newfoundland Power's 2004 capital budget planning priorities, the additional funds will help finance the required refurbishment and maintenance of the existing electrical system and will also help finance recently announced projects including the 100MW combustion turbine generator, the third transmission line from Bay d’ Espoir to Western Ava lon and the new transmission line in Labrador West – all to benefit the overall electricity system and service to customers.”

Newfoundland and Labrador Hydro has not required any long-term debt since 2006. This is a favourable time for Hydro to return to the market, as, similar to NB Power's debt reduction progress this winter, interest rates for long-term debt are very attractive relative to historical levels.

The project costs and associated financing has already been incorporated into all long-term rate projections, in line with Manitoba Hydro's rate hike plans observed recently across utilities.

From 2009 to 2013, Hydro’s annual capital programs averaged $66 million per year and focused largely on planned maintenance and the rehabilitation of existing assets. However, for 2014, capital investments will increase nearly fourfold to $264 million, a shift comparable to Manitoba Hydro's growing debt pressures during expansion phases.

“Our increased investment in the system has been anticipated for some time,” explained Henderson. “As our electrical system ages, like other utilities in North America, where BC Hydro's deferred costs placed burdens on customers, continued capital investment in maintenance and replacement is required to provide the service our customers expect.”

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