A consulting group conducting a review of Newfoundland's power system following island-wide outages in January warns of similar outages through to 2017.

The Liberty Consulting Group was commissioned by the Public Utilities Board after power was knocked out to hundreds of thousands of customers across Newfoundland in early January — in some cases for up to a week.

According to the group's report released Thursday, a "continuing and unacceptably" high risk of outages remain for the 2015-2017 winter seasons.

Liberty's report said an insufficient amount of generating resources, coupled with operating issues of key transmission equipment, led to the mass outages.

In the report, Liberty stated that Newfoundland and Labrador Hydro needs to better prepare for extreme winter weather conditions than it has to date.

The number and nature of the failures that occurred within this compressed time frame is very unusual, and raises questions about Hydro's operation and maintenance of equipment. - Liberty Consulting Group report

The report said the outage was "exacerbated by a failure to complete planned outage work" on Hydro's part to make sure the full range of generating capabilities was possible through the winter season.

Liberty said Hydro needs to revisit its long-used planning criteria for adding generation capacity, which has been in use for decades.

The report added this standard "provides lower reliability" than the group has noted in other North American regions.

Nature of failures 'very unusual'

Liberty reviewed the power failures that occurred between Jan. 2-8, and found outages were mostly caused by equipment failures during the second half of that period.

"The number and nature of the failures that occurred within this compressed time frame is very unusual, and raises questions about Hydro's operation and maintenance of equipment," said the report.

Hydro experienced a series of major equipment failures at three terminal stations, including a transformer malfunction at the Sunnyside substation which caused a fire.

Liberty found Hydro did not complete "recommended maintenance activities" on the equipment that experienced failures, and protective relay schemes — and insufficient operator knowledge of the relay scheme — also contributed to the failures.

According to the report, aging infrastructure is an issue across the continent, and immediate replacement isn't feasible for utilities.

Liberty recommended Hydro identify special cases of equipment requiring the most repair, and ensure operators understand the limitations on that equipment.

Report lines up with Hydro findings

Nalcor CEO Ed Martin said on Thursday the findings in Liberty's report match up with internal results found by Newfoundland and Labrador Hydro.

Nalcor CEO Ed Martin says NL Hydro's findings match with the interim report released Thursday by the Liberty Consulting Group. (CBC) "On a first flipthrough, we generally agree with the recommendations and we're pleased to say that they do align with the recommendations that Hydro ourselves came out with several weeks ago after we completed our internal report," said Martin.

"We've recognized the fact that between now and Muskrat Falls coming online, we always knew we needed more generation, and based upon the events of this winter, based upon our discussions with Liberty, and internal to ourselves, we've already expedited the purchase of another 100 MW of generation."

Hydro has submitted an application to the PUB for $119 million to purchase and install a 100 MW generation turbine to get online for next winter.

The utility said in a release that it also expects to invest approximately $160-million in capital upgrades to the province's electricity system in 2014.

Martin said the recommended upgrades to aging equipment is an ongoing process, and one that's already underway.

"We've had a plan around this for five years, we've doubled our capital expenditures over the past five years, we know that we have older assets that need more resources, and what we're finding is that we need even more resources to keep up," he said.

No easy solutions to complex problems

According to Martin, Liberty's recommendation to survey customers has been forced onto the back burner for the time being, but will be re-examined in the near future.

"We want to know — we've done some survey work … it's all focused on the customer, because what we're trying to do is make sure what we're doing now is getting us even more ready for next winter for the customer."

Martin added that Hydro is trying to find the right balance between being prepared and being over-prepared to avoid an unnecessary increase of cost to the customers.

He said investing a huge amount of resources into upgrades and technology is not the solution to solving the utility's complex issues.

"We can't overspend just because we may want to have a very relaxing winter because it's costing consumers so much. We're saying we've got to find that right balance."