Questions surround SaskPower's $12M payout to Cenovus

Questions continued to be raised on Tuesday over the penalties SaskPower has had to pay Cenovus Energy thanks to the Boundary Dam carbon capture project.
 
On Monday, it was revealed SaskPower had breached part of its contract with Cenovus to provide CO2, and therefore had to pay $12 million.
 
Mike Marsh, CEO of SaskPower, explained that the project was delayed in 2014. It was supposed to open in April.
 
“We didn’t get started until the first part of October, and the commitments for CO2 volumes were just not able to me made up in the last three months of the year.”
 
News Talk Radio detailed some of the troubles which caused that delay in April.
 
The plant is still only operating at 40 per cent capacity.
 
“There’s a lot of systems on a first-of-its-kind, world-scale production facility that have to be tested, retested. We run through various operating regimes to prove out the systems, and our engineering teams are putting the unit through its paces every month of the year,” said Marsh.
 
Marsh also said there were a lot of deficiencies in the original design that they’ve had to ferret out and fix.
 
He said the project is currently undergoing its first annual overhaul.
 
“When we come out of this overhaul, we fully expect to move the dial up again, and run this plant at higher capacities and higher production.”
 
Marsh said he couldn’t reveal how much money Cenovus was paying for the CO2, saying it’s part of their contract.
 
Marsh wouldn’t say the project keeps losing money. He admitted that in 2014 the project was a net loss, but he is expected a net gain in 2015 of at least $10 million.
 
Saskatchewan’s Energy Minister Bill Boyd admitted on Tuesday that the facility isn’t going as well as planned. He said there could have been more disclosure about what he called normal start-up problems.
 
The province says the facility has removed 400,000 tonnes so far.
 
“We are on the leading edge here of something we should be very proud of. And it is working, and we will be producing more tonnes in 2016.”
 
When asked why this project is worthwhile for the province, Marsh responded that it makes a cheap and abundant source of power cleaner, pointing out that what coal use is down in Canada it is going up in other parts of the world.
 
The NDP revealed the penalty paid by SaskPower on Monday.
 
Cathy Sproule is the NDP’s critic for SaskPower. She said SaskPower having to pay penalties on this project is unacceptable, pointing out that another penalty may have to be paid this year.
 
She said the penalties should have been avoided when the contract renegotiations were happening last year.
 
“In our view, this is not a well-negotiated contract, and that Saskatchewan taxpayers who’ve already see an increase of 42 per cent in power rates since this government came into power, we’re going to be looking at more expenses, and that’s concerning.”
 
She said there’s never been much of a business case for the Boundary Dam project.
 
“We don’t own the technology, we can’t commercialize it, so our only way, as taxpayers, to get a return on this is to sell off this sequestered carbon … and now we’re finding out, despite what I think were optimistic projections by SaskPower, that not enough carbon is being produced, and we’re actually paying penalties.”
 
The NDP are all for reducing carbon emissions, but Sproule said carbon capture is too expensive. She said the technology has been looked at by other administrations and in other parts of the world, and was rejected.
 
Sproule said the province should look at more modern technology like hydro and solar.