Brian Gifford, a founding member of the Affordable Energy Coalition, told the politicians at the Law Amendments Committee on Monday his group is “beyond frustrated” that the amendments the government is proposing in Bill 212 did not include a change to provide “systemic rate relief” to low-income ratepayers.
For decades the coalition has been advocating for the Public Utilities Act to be changed to give the Nova Scotia Utility and Review Board the flexibility to establish a separate power rate for low-income residential consumers who face a choice “between heating and eating.”
“Here we are in Nova Scotia, with the highest rates of energy poverty in the country … and the proposal for a 25% increase in Nova Scotia Power rates trimmed by this bill to something closer to 12 to 15%. If now is not the time to create a regulated, low-income rate relief program when will there ever be a time?” Gifford said.
The current law says all domestic consumers must be treated equally, even though the prospect of rising power rates in a period of high inflation will hit the poor harder than the rich. A ruling by a Nova Scotia court more than 10 years ago said the Public Utilities Act would require an amendment to create a separate program for low-income ratepayers, like one established in Ontario and some US states.
News last month that the Houston government is intervening in the regulatory process to limit power rates to 1.8% over two years, plus what Nova Scotia Power pays for fuel — which continues to skyrocket because of the war in Ukraine and delays in receiving the anticipated amount of hydro from Muskrat Falls — proved the government can make changes to the law when it sees fit. They are included in Bill 212 that was the subject of discussion at Law Amendments Committee on Monday. The power company had requested an increase that worked out to 13.7% over two years, but that proposal did not include paying anything for fuel.
Fuel costs alone — which tripled above forecast in 2022 — could raise power rates by as much as 10% a year, depending on what the regulator decides customers should pay now or pay later.
The Affordable Energy Coalition asked all three political parties to put partisan interests aside and support an additional amendment to the Public Utilities Act proposed by NDP MLA Gary Burrill. That amendment would at least allow the UARB to research and establish a pilot program for low-income consumers. That amendment failed to pass when the Progressive Conservatives, which have the majority of members on the Committee, voted against it.
Nova Scotia Power Warns of Dire Consequences
The Houston government’s decision to cap one portion of power rates at a certain level will reduce the amount of money Nova Scotia Power can obtain from ratepayers. By the company’s estimate, the cap means it will do with $150 million less over the next two years. That’s less than the $240 million the company made in profit last year. It’s also less than the $263 million it estimates it would spend over two years if Ottawa rejects the Houston government’s made-in-Nova Scotia carbon price for big polluters and imposes the federal carbon tax.
The power company will also need to make big investments in wind farms and grid-size battery systems to transition away from coal and toward renewable sources of energy to meet legislated targets by 2030.
“You can support Bill 212 or you can support the 2030 climate goals, but you can’t logically support both,” Nova Scotia Power president Peter Gregg told members of the Law Amendments Committee on Monday.
“This legislation forces difficult and damaging changes to plans to Nova Scotia’s grid that inhibits the ability to deliver a more reliable, storm-hardened and greener system for customers. Bill 212 will remove $500 million of investment over 2023-2024 with significant negative impacts on local suppliers and direct impact on hundreds of jobs,” Gregg said.
(Gregg’s $2 million salary is paid mostly by Emera; legislation passed by a previous government limits ratepayers’ salary contribution to approximately $280K.)
Concerns that the Houston government’s proposed legislation will slow urgently required investments to get off coal and green the grid won Nova Scotia Power support from an unlikely ally.
Ecology Action Centre shares NSP concerns
“We are concerned that with a rate increase restricted to 1.8 % over two years, the money needed in investments in renewable technology, storage solutions such as batteries, work to both strengthen existing and build new transmission infrastructure, which will be needed as other sectors decarbonize, will not be available,” said Jacob Thompson, the Ecology Action Centre’s energy coordinator.
Nova Scotia Power has the means to borrow money to make those necessary and big-ticket investments. But the company is chafing at other proposed amendments to the Public Utilities Act that will cap Nova Scotia Power profits at their current 9.25% and prevent them from holding on to “over earnings” or excess profits, as the company had proposed. Gregg said if the company can’t get more money out of ratepayers and isn’t allowed to generate higher profits, it will face higher borrowing costs.
Two major bond-rating agencies have indicated they are watching Nova Scotia Power and Emera to see what happens and if we get into the-sky-is-falling-Chicken-Little scenario, their credit rating may slip a notch. Emphasis on the “may.” If the credit rating slips, higher borrowing costs could come back to haunt ratepayers.
Gregg likened the government’s proposed legislation to short-term gain that could result in long-term pain. And it looks as if that’s where we are.
Bill 212 will return to the House of Assembly, unchanged, despite pleas from Nova Scotia Power and the Affordable Energy Coalition among others, including the two consumer advocates appointed to appear before the UARB representing residential consumers and small businesses.
Both Nelson Blackburn, who represents small businesses, and Bill Mahody, who represents residential consumers, said they are terrified the Houston government’s decision to intervene in the UARB process essentially puts ratepayers at the mercy of politicians who lack the expertise to set power rates. The experts, they argued, talk it out before an independent and impartial board of three adjudicators familiar with the task, who then sift through thousands of pages of evidence from analysts. An independent regulatory process is worth keeping, both advocates said, and Bill 212 sets a dangerous precedent.
“The fear is by setting electricity rates on the floor of the legislature, we will be paying for a long time,” Mahody said. “This legislation presents a substantial long-term risk to the setting of electricity rates moving forward.”
Power rates in Nova Scotia have always been political. It was Premier John Buchanan’s government that unwisely decreed new power plants would run on coal. And Premier Donald Cameron privatized Nova Scotia Power in 1992. Here we are on the cusp of another change 40 years later, crossing fingers and toes.