The Houston government is asking the Utility and Review Board (UARB) to increase the $2 million a month penalty imposed on Nova Scotia Power in 2022 for failing to deliver at least 90% of the contracted hydroelectricity from Muskrat Falls.
The penalty is known as a “holdback” against the yearly amount ratepayers are charged to cover the cost of building the Maritime Link cable to bring hydroelectricity from Newfoundland to Nova Scotia.
In a letter to the regulator written April 6 by Natural Resources and Renewables Minister Tory Rushton, the province makes the following request:
It is clear that this monthly maximum of $2 million did not, does not, and cannot adequately cover the full and actual costs of the replacement energy purchased, or the under-delivery of the other contracted components of the agreement. As the Board is undertaking a process to review the holdback funds (M11009), I am requesting the monthly holdback be equivalent to the full and comprehensive costs of this ongoing underperformance; or, at a minimum, be doubled to $4 million per month.
For nearly four years, Nova Scotia received no hydro power from Muskrat Falls and had to replace it with more expensive coal and oil.
The cost of that is still in dispute but the Consumer Advocate estimated replacement energy in those years cost ratepayers at least $200 million.
The NS Block from Muskrat Falls represents 10% of the supply to the provincial grid.
Another 10% of supply was supposed to come from a deal that gave Nova Scotia Power first dibs to purchase an additional amount of energy from Muskrat Falls at market prices.
That supply has yet to materialize mostly due to ongoing technical difficulties with a General Electric software program that controls the flow along a transmission cable known as the Labrador Island Link, of which Emera owns a sizeable portion.
Nova Scotia Power has told the regulator that although it did not meet the 90% threshold in 2022, the Maritime Link has been delivering 90% of the NS Block since April of 2022.
The troubled Labrador Island Link was declared “fully commissioned” by Newfoundland & Labrador Hydro last week but the GE software still has to replaced and more testing is planned for this year.
That doesn’t impress the Houston government, which is going after compensation for years of under-deliveries as well as the $165 million taxpayers paid when Nova Scotia Power failed to meet GHG emission targets.
If the UARB consents to raising the size of the penalty levied on Nova Scotia Power, those millions of dollars would be put into an account to offset fuel costs paid by ratepayers.
In his letter to the UARB, Rushton argues that amount could be as much as a billion dollars:
The Maritime Link’s approval has ultimately led to bills being imposed on Nova Scotia’s ratepayers of over $150 Million annually. Planned to be fully operational by 2018, it has only provided limited, varying and intermittent amounts of electricity to Nova Scotians, as a result of an extended series of setbacks.
These setbacks were initially related to the Muskrat Falls hydro project itself, but in recent years have grown to include a number of failures – hardware and software, lines and stations, as well as human error – now extending through the Labrador Island Link (LIL.)
As a result of the extent, number and duration of these failures, Nova Scotia’s ratepayers have already had to pay more than $1 Billion in costs, in multiple forms. These costs include annual payments for the Link, the cost of replacement energy for the Nova Scotia and Supplementary Blocks, the cost of associated greenhouse gas emissions, the costs of having to replace the limited access to Market-priced energy, and from an inability to count on firm capacity.
If the UARB won’t force Nova Scotia Power to provide ratepayers with full compensation, Rushton asks that the monthly holdback penalty be increased from $2 million to $4 million.
The UARB has also received a similar submission from a group representing some of the largest businesses in the province that want the holdback increased to $3 million a month.
The UARB will makes it decision at a later date.
This request by the province to increase the penalty paid by Nova Scotia Power related to under-deliveries from Muskrat Falls comes on the heels of a decision to charge Nova Scotia Power shareholders $10 million for failing to comply with legislated renewable energy targets. Nova Scotia Power has indicated it will appeal the $10 million fine to the UARB.