Financial hit from faulty wind farm turbines expected to deepen in P.E.I.

Profits at the P.E.I. Energy Corporation were slashed by more than half last year, with auditors warning revenues will drop even further as the Crown enterprise tries to fix one of the province's biggest wind farms.

In its annual report released last week, the P.E.I. Energy Corporation recorded a profit of $3.5 million. That's less than half of what the utility has posted in any fiscal year since 2014-15, the first full year the Hermanville wind farm in eastern P.E.I. was in operation.

As a government business enterprise, the corporation's profits go into the P.E.I. government's general revenues, the same pot of money that pays for health care, education, and all other provincial operating expenses.

In 2021-22, the Energy Corporation contributed $7.6 million to general revenues, even as maintenance problems at Hermanville began to cut into proceeds from electricity generation.

Last year, Hermanville operated at a financial loss for the first time ever, as electricity production dropped to roughly a third of what it was when the wind farm first opened.

Auditors warn production has fallen off even more since the start of the current fiscal year, and that they will continue to fall, leading to a further loss of revenue.

On top of that, compensatory payments from the company under contract to maintain the wind farm have almost run out.

That company, Nordex, guaranteed an availability rate for the turbines of 98 per cent. In other words, it said the turbines would be functional and able to generate electricity any time there is wind to power them. 

Below 97 per cent availability, the company is required to pay damages to the province. But there are both annual caps on the amounts and a cumulative cap on that compensation.

In its annual report, the Energy Corporation said the annual cap on damages was exceeded by about $100,000 in 2021-22 and by $1.5 million in 2022-23.

Availability for the turbines in 2022-23 was rated at 58 per cent.

Meanwhile, the corporation says the cumulative cap on damages will be reached in 2024-25, four years before Nordex's maintenance contract with the province runs out.

The annual report said once the overall cap is reached, "all turbine downtime will have financial impacts for the corporation."

Last month, Environment, Energy and Climate Action Minister Steven Myers said the Energy Corporation is moving forward with a plan to repair the turbines, pegging the cost to the province at $10 million.