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Comments on the Muskrat Falls Reference

Presentation to the Public Utilities Board of Newfoundland and Labrador

Philip Raphals

For Grand Riverkeeper Labrador Inc.

February 23, 2012

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Optimality

• « How did you ensure that ... you were dealing with the optimal scenario under each one? » > Technical optimization vs. planning processes

> Iterative process seeking robust solutions

> Real time (evolutive) versus planning exercise

> Avoiding irrevocable choices that would turn out badly in certain possible futures

> Scenario versus plan

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PPA payment options

• "Does the 2035 ratepayer have to pay more so that the 2017 ratepayer can pay less?" > Nominal LUECs vs. escalating prices

> Same present value, but different reality

> Consumers unlikely to prefer escalating prices

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PPA vs cos • Simulate annual costs for Muskrat

Falls under COS > Higher than PPA in early years

> Drastically lower in later years

• Prices post 2067 > PPA: maintaining 2067 price levels

($400/MWh) ~ windfall profits

> COS: continue to decline « $20/MWh)

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CDM

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> model COM like generation

> End-use modelling

_ Nalcor's approach > Integrate into load forecast through technological change

variable

> No mesure-by-mesure or program-by-program analysis

_ Objectives to date not met

_ Sensitivities > Far less than Marbek scenarios

> At low demand (= high COM) scenarios, CPW preference for Muskrat drastically reduced

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Fuel price forecasts Figm'e A-9: "Vorlc1 Oil PIices: History and Forecast

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Wind power assessment

• 2004 NLH study > Sole source for Strategist inputs

> 80 MW limits primarily economic • Based on minimizing spill

• Fails to take into account cost of wind, net of curtailment or spills

> « preliminary »

> Government RFP shows that higher penetration remains an objective

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Conclusions \

• Reference question > Verify that the costs attributed to each scenario are

correct?

> Verify that each scenario makes sense?

• Analyses of MHI and others > Results highly dependent on assumptions

> Great uncertainties

> Little confidence that the Isolated Island scenario would play out as defined

• If M uskrat Falls does not go forward > planning process will continue

> May lead to solutions very different from liS

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