Premier Tim Houston is unhappy with an agreement between Nova Scotia Power and advocates representing consumers, businesses, an environmental group, and low-income people that would see power rates rise almost 14% over the next two years.
Nova Scotia Power has declined a request by the Halifax Examiner to estimate how much the monthly bill will increase in January but calculations based on information that has been filed suggest the average residential consumer will see an increase in the neighbourhood of $11-12 each month.
Writes Houston in a letter to the Utility and Review Board (UARB), which regulates Nova Scotia Power:
I do not believe, based on what I know, that the proposed agreement is in the best interest of ratepayers. As such, on behalf of the Province of Nova Scotia, I would respectfully ask that the UARB set the agreement aside and reach its own conclusion on the aforementioned application…
I see standing up for Nova Scotians as my responsibility as Premier. The UARB mandate places a similar obligation on you:
“The Board’s role is to ensure customers receive safe and reliable service at just and reasonable rates.”
It is our shared responsibility to protect ratepayers and I can’t state strongly enough how concerned I am that the agreement before you does not do that.
The provincial government, although it was an intervenor in the power rate application process, was not a participant in the discussions that led to a settlement proposal submitted to the UARB last week. By then the Houston government had disrupted the regulatory process by passing legislation limiting Nova Scotia Power profits and limiting power rate increases on non-fuel costs to 1.8% over two years.
Houston repeatedly said his only objective was to “protect ratepayers.” However, at the time Bill 212 was introduced, he also acknowledged fuel costs have to be paid.
What he didn’t say but must have known is that fuel costs require more than half the revenue raised from power rates. And if that’s not enough, the unpaid balance gets pushed down the road to be paid later.
As Natural Resources Minister Tory Rushton said when he introduced the bill for final reading, “ we did what we could to control the expenses we could control.”
A 1.8% increase in power rates was only ever going to represent a portion of the total increase, regardless of posturing by Conservative politicians.
Nova Scotia Power filed evidence in September showing fuel costs for 2023 and 2024 were projected to be over $600 million, up one-third since the spring estimate. The settlement agreement reached by other participants in the rate hearing spreads out that pain over a longer time period. It will be up to the independent regulator, the Utility and Review Board, to decide whether to accept or reject that proposal.
In his letter to the UARB, Houston also objects to the inclusion of a new mechanism that would allow Nova Scotia Power to recover from consumers damages for large storms that drive costs above $10.4 million annually.
“As a result, a major storm could raise rates by another 2%,” writes Houston. “This storm rider does not encourage proper maintenance of the distribution grid and seems to allow Nova Scotia Power to push climate change risk onto ratepayers, with the result that it could continue to underperform, without taking accountability.”
Yesterday, Natural Resources Minister Rushton declined to offer any indication of what the province may do if the UARB approves a rate increase of 7% a year. A decision by the UARB is likely to come in the dying days of this year.
The UARB has another big decision to make. Nancy Rubin, the lawyer for the Industrial Group, which includes some of the largest businesses in the province (Irving Shipbuilding, Michelin, Oxford Frozen Foods), is asking the UARB to make Emera shareholders pay a larger portion of the costs associated with the Maritime Link.
Last year, the UARB ruled Emera couldn’t recover $24 million of its cost from ratepayers. This year, Rubin is requesting that $36 million, or $3 million a month, be charged to Emera because ratepayers are still not getting the full value of the underwater transmission cable as advertised in 2013.
The Maritime Link began operating in 2018 to bring renewable hydroelectricity from Muskrat Falls in Labrador to Nova Scotia. At $1.6 billion it was on time and on budget.
But problems with the transmission system between Labrador and Newfoundland known as the Labrador Island Link (LIL) delayed deliveries until August 2021. Since that time, ongoing technical difficulties with the software controlling the flow of electricity has resulted in under-deliveries.
Although Nova Scotia Power is now getting nearly all of the energy promised in its 35-year contract, it has yet to receive any of the market-priced energy that is equivalent to 10% of the electricity needed to run the Nova Scotia grid.
In the nearly five years since the Maritime Link has been operating, Nova Scotia Power has had to purchase replacement fuel such as coal and natural gas to make up for late or anticipated amounts of renewable energy.
Nova Scotia Power estimates delays in receiving market-priced energy from Muskrat Falls this year and next will cost ratepayers about $100 million to buy replacement fuel. And that’s just for two years. What about the three years prior to that? In her letter to the UARB, lawyer Rubin noted:
The costs borne by ratepayers due to the mismatch between commissioning the full project and the in-service date of the Maritime Link have been staggering — in the hundreds of millions of dollars.
Complicating the problem further is the fact that the same parent company that owns the Maritime Link is also a partner and investor in the troubled Labrador Island Link. Emera’s ownership of the LIL fluctuates between one-third and 49% with Newfoundland & Labrador Hydro owning the majority of that transmission system.
Houston is also upset that so far, ratepayers have been bearing the brunt of disappointments with Muskrat Falls. In his letter to the UARB asking for relief for ratepayers, Houston also raises the issue of who should be held accountable for costs associated with the Maritime Link project:
The fact that Nova Scotians have paid over $500 million for this project with minimal benefit, and no one has been held accountable, is wrong. It was this Board of the day that approved the contracts and entered the final project into rates. I find it remarkable that those contracts did not include different risk sharing mechanisms; they should have had provisions for issues in oversight of project management. Nevertheless, it was approved, and is causing significant harm to ratepayers in the form of increased rates. I would ask whom the Board feels should be held responsible for this mess and while it appears that they didn’t adequately protect Nova Scotians with foresight in thought, will they step up to protect ratepayers now?
Houston’s frustration is palpable. As is ratepayers’. A mess indeed.