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Energy department feared Belco planning application was ‘premature’

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The Department of Energy warned in 2018 that the planning application for Belco’s North Power Station may be “premature”, given the country had not yet had its say on Bermuda’s future electricity generation.

Documents released by the Department of Planning under the Public Access to Information Act 2010 reveal that Jeane Nikolai, director of the Department of Energy under the former Ministry of Transport and Regulatory Affairs, wrote to Victoria Pereira, then senior planning officer for the planning department, on May 21, 2018, saying that without knowing the final outcome of the Regulatory Authority’s Integrated Resource Plan, her department could not provide a response to the application.

Ms Nikolai wrote: “Whilst the department recognises Belco’s urgent requirement to retire and replace ageing generation assets, as the IRP process has not yet concluded, we believe this planning application may be premature.

“The purpose of the IRP is to allow the public to comment and challenge the IRP, and the resulting document is the electricity plan for all generation developments in Bermuda.

“The finalised IRP could yield a different result as compared with the Belco proposal for this generation. Without knowing the results of the IRP, the department does not have sufficient information about the island’s future electricity requirements to provide an informed and detailed response to this application.”

A letter from Jeane Nikolai, director of energy, to Victoria Pereira, then senior planning officer for the Department of Planning, saying her department had insufficient information to sign off on the planning application for Belco’s North Power Station (Copy of Pati documents)
Jeane Nikolai, Director of the Department of Energy, right, wrote to the Department of Planning in 2018 voicing concern that the planning application for the North Power Station could be premature. She is pictured here with Walter Roban, the Minister of Home Affairs and Deputy Premier (File photograph)

As Ms Nikolai feared could be the case, the legally binding IRP did not support Belco’s initial proposal to run the NPS on liquefied natural gas.

The IRP instead opted for a mix of fuel oils while paving the way for more renewable energy sources — an estimated 85 per cent of the island’s generation by 2035.

Belco procured engines optimised for LNG and when the final IRP was published rejecting LNG, on commissioning of the NPS in April 2020, the utility ran the engines on heavy fuel oil instead.

Wayne Caines, the president of Belco and parent company Liberty, said that burning HFO on engines optimised for LNG led to the pollution that continues to this day. MAN Energy Solutions, the engines’ manufacturer, said it was unsurprised about the challenges given they were optimised for LNG.

The Royal Gazette questioned the planning and energy departments about the processes and was given a joint statement by a spokesman for the Ministry of Home Affairs.

It said: “The Department of Planning is responsible for assessing a planning application in accordance with the relevant provisions and zonings as stipulated under the relevant development plan.

“The submitted application, including drawings and an environmental impact statement, was circulated to various government entities for feedback based on their varying areas of expertise. The comments received and the planning assessment were reviewed against the relevant planning policies.

“The Development Applications Board, as the decision-making authority, was later provided with all proposal details, including the environmental impact study, comments from government consultants and the Department of Planning’s recommendation of approval.

“The application processing followed all required protocols, the details of which are available to the public and accessible online at the Department of Planning.

“It is important to note that the Department of Energy and the Department of Planning play absolutely no role in the type of plant.

“To be clear, the decision to run the new engines on diesel, HFO, LNG or another fuel is not the remit of the Government. Questions regarding the approval of fuel type should be directed to the Regulatory Authority.”

The RA said in response to a Pati request that Belco did not disclose any documentation to the RA regarding its intention to optimise the NPS for LNG. It said: “The RA learnt of the optimisation through the media.”

As part of the IRP process under the Electricity Act 2016, Belco is mandated to produce an IRP proposal to the RA, which it did on May 2, 2018.

Under the Act, the RA must then publish the proposal as part of the consultation. The IRP document makes clear: “The publication of the IRP proposal, prepared by the TD&R [transmission, distribution and retail] Licensee [Belco], does not constitute an endorsement by the Authority of the IRP proposal.”

Victoria Pereira, then senior planning officer for the Department of Planning, sought input on the planning application for the North Power Station ahead of the publication of the final Integrated Resource Plan (Photograph supplied)

The RA must then request other submissions of proposals for bulk generation or demand side resources, including proposals from alternative prospective power producers, before it can finalise and approve a long-term energy plan for the island.

Belco submitted a proposal that had been prepared in conjunction with US engineering consultant Leidos, which preferred LNG.

Documents released and refused by the Regulatory Authority in response to Pati request

The Royal Gazette submitted a Pati request to the Regulatory Authority on January 17, 2023. It requested the release of documents relating to how Belco was able to optimise the North Power Station for an unapproved fuel and any actions taken by the RA in response to it having done so. The RA provided some documents, including an order it issued approving the replacement generation proposal by Belco.

The RA document said: “The Authority has issued the Approval Order on the basis of the Authority's responsibility to ensure the adequacy, safety, sustainability and reliability of electricity supply in Bermuda.

“Notwithstanding the issuance of the Approval Order, and for the avoidance of doubt, the Approval Order shall not affect the continuing obligations of Belco in its respective capacities as a Bulk Generation Licensee or as the Transmission, Distribution and Retail Licensee under the EA, nor does it relieve Belco of its obligation to act in accordance with its legislative obligations, including those related to the Integrated Resource Plan process …

“The Authority shall monitor the implementation of the Proposal in order to ensure efficient delivery of the replacement generation. This shall include, without limitation, monitoring of the financial expenditure, the technical specifications of the assets, and the timely delivery of the Proposal …

“To provide context in relation to the current state of delivery against the Proposal, Belco shall, as requested, supply documentary evidence for contractual and operational arrangements that have been entered into in relation to the Proposal, including any monies that have been disbursed, or are legally liable to be disbursed.

“So ordered this 23rd day of May 2018.”

The RA refused disclosure of some documents on the basis of commercial sensitivity, information received in confidence and deliberations of public authorities, pursuant to sections 25, 26 and 29 of the Pati Act.

The Royal Gazette has submitted a request for an internal review to be conducted into this decision pursuant to the same act, largely on the basis of public interest. A response is due from the RA in five weeks. Should the documents be refused again, The Royal Gazette will consider submitting a request for an investigation to be conducted into the decision by the Office of the Information Commissioner, pursuant to the Pati Act.

The IRP is designed to be a living document to be revisited every few years to take into account new technologies and changing circumstances. A new IRP proposal was requested of Belco and is due to be submitted by November 17 this year.

In accordance with Section 42 of the Electricity Act, 2016, the public will have opportunities to provide feedback during the IRP process.

Asked why Belco decided to optimise the NPS for LNG before the final IRP being published, a spokesman said: “The engines in the North Power Station are dual-fuel and can run on either liquid fuel or natural gas.

“As the IRP was still in the development stages as the NPS was being constructed, Belco was prepared for whichever fuel was chosen in the final IRP.”

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Published April 21, 2023 at 7:55 am (Updated April 21, 2023 at 8:04 am)

Energy department feared Belco planning application was ‘premature’

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