If Nova Scotia Power wants to recover a larger portion of the $1.6 billion cost of the construction of the Maritime Link from ratepayers, it’s going to have to be patient.
The Utility and Review Board has ruled that NSP cannot bill the full amount requested from ratepayers until after electricity begins to flow from Muskrat Falls through the subsea cable — estimated to happen some time after 2020. Meanwhile, the Board has made an interim decision the power company can begin charging ratepayers for two-thirds of their share to build the transmission system known as the Maritime Link.
“The issue of how much of the cost of the Link to assess against ratepayers is important and is not settled yet,” consumer advocate John Merrick told the Halifax Examiner. “At some point in the not too distant future the Board will have to have a hearing and set the final assessment. The story is not over yet.”
The dam being built at Muskrat Falls on the Lower Churchill River in Labrador is more than two years behind schedule and billions of dollars over budget. The agreement between Emera (the parent company of Nova Scotia Power) and Nalcor Energy of Newfoundland & Labrador (a provincial Crown corporation) means ratepayers here in Nova Scotia are not on the hook for any of these ballooning costs; Newfoundlanders are.
The Maritime Link is scheduled to go into operation during the first part of 2018. Link construction costs of $221-million over the next two years have already been assigned to ratepayers and factored into our power rates, so rates won’t go up because of the recent interim decision. The fact that the UARB has chosen to kick down the road an additional $105-million related to the Link’s depreciation and financing costs means consumers (depending on their electricity usage) will actually receive a small credit on their power bill in each of the next three Aprils. NSP has been given until October 16 to figure out how that will work.
The Board deferred that $105 million, in part, because it said the ongoing delay in the Muskrat Falls project means consumers “are not getting what they bargained for.” The project was approved by the Board in July 2013 because it was deemed to be the lowest cost, long-term supply of renewable energy. Nova Scotians are to receive 20 per cent of Muskrat Falls hydro power at a fixed price for 35 years, plus a smaller block of energy at the going market rate.
In evidence before the Board, Rick Janega, the president of Emera Newfoundland and CEO of Nova Scotia Power Maritime Link, said the decision was made to complete the construction of the transmission cable — despite the announcement in June 2016 of significant delays at Muskrat Falls — to avoid adding anywhere from $398 to $533 million to construction costs that could bite ratepayers. The Board was told that starting in 2018, Nova Scotia Power plans to use the new transmission cable to import power from elsewhere in Newfoundland — or possibly Quebec — until Muskrat Falls is ready to go.
The megaproject is supposed to supply eight to 10 per cent of the electricity used in Nova Scotia. How much it will cost to buy replacement power until Muskrat Falls comes online isn’t being made public because of “commercial confidentiality provisions,” which the Board allows Nova Scotia Power to negotiate with suppliers.
In its written decision, the UARB says until Nova Scotia Power can prove the new transmission loop physically connecting Quebec, Newfoundland, Nova Scotia, and New Brunswick is actually benefitting electricity users here, it will be NS Power shareholders, rather than ratepayers, on the hook for $20 million in other Maritime Link costs over the next two years.
Last but not least, the UARB expressed “concerns” about ongoing delays associated with the Muskrat Falls megaproject and what it called the “lack of insight” regarding those delays by Nova Scotia Power executives, some of whom sit on joint committees with Nalcor Energy but appear to be in the dark with regards to changes or setbacks affecting the generation component. The Board says it still believes Nova Scotia consumers will derive benefits from the massive hydro project in Labrador, especially with respect to a new pathway for supply.
The UARB will hold a further hearing to update and assign costs associated with the Maritime Link early in 2019.