The Houston government has imposed a $10 million penalty on Nova Scotia Power for failing to meet legislated renewable energy standards under the Electricity Act.
The fine will be paid by Nova Scotia Power shareholders, not ratepayers.
Under the regulations, 2020 was the deadline by which Nova Scotia Power was supposed to be generating 40% of electricity from renewable sources such as hydro, wind, and solar. But a nearly four-year delay in the flow of renewable electricity from Muskrat Falls made that target unachievable.
“It’s not a proud moment anytime that somebody has to impose a fine on anything,” Natural Resources and Renewables minister Tory Rushton told the CBC. “But I also need Nova Scotia Power to understand we’re standing up for the ratepayers of Nova Scotia and this is us being very serious about this process.”
Nova Scotia Power is not happy with the decision and senior communications advisor Jacqueline Foster issued this statement:
We respectfully disagree with the penalty and intend to appeal the decision of the provincial government to the NS Utility and Review Board.
We know greening the grid and making cleaner energy is a priority for everyone in Nova Scotia. We remain committed to achieving 80% renewable energy by 2030 and to continuing to work with government, our customers and stakeholders to address the impacts and costs involved in the transition of the energy grid in Nova Scotia.
Why Nova Scotia Power failed to meet the target
Hydroelectricty from Muskrat Falls transmitted over two cables — the Labrador Island Link between Labrador and Newfoundland and the Maritime Link between Newfoundland and Cape Breton — was supposed to displace 20% of the coal and other fossil fuels burned by Nova Scotia Power.
In May 2020, the McNeil government extended the original “40% by 2020” deadline based on the assumption renewable energy from Muskrat Falls would soon arrive.
The terms contained in the “alternative compliance agreement” required Nova Scotia Power to generate 40% of electricity on average from renewable sources for each of the years 2020, 2021, and 2022. Failure to do so meant the company could face a fine of up to $10 million, although the government also had the option of waiving the fine if it determined Nova Scotia Power had exercised “due diligence” in trying to meet the targets.
As the Halifax Examiner has been reporting for months, Emera chair Scott Balfour had expressed doubt Nova Scotia Power would be able to comply with the 40% average because of ongoing delays in commissioning the Labrador Island Link.
It wasn’t until 2022 that hydro from Muskrat Falls was being consistently delivered to Nova Scotia and even those volumes were below what was anticipated when the Maritime Link was approved in 2013.
In 2020 and 2021, Nova Scotia Power reported that 30% of electricity was coming from renewable energy sources. In 2022, that percentage improved to 32.8% — still far below the 40% average required for each calendar year. Those numbers were flagged for Emera shareholders by Emera chair Scott Balfour on February 23, when he wrote:
With delivery of the NS Block commencing later than anticipated, as well as further interruptions in supply due to delays in the Labrador Island Link, NSPI did not achieve the requirements of the alternative compliance plan. The Renewable Energy Regulations require NS Power to have acted in a duly diligent manner. If NS Power is found not to have acted in a duly diligent manner, it could be subject to a maximum penalty of $10 million.
Nova Scotia Power will no doubt to try to convince the regulator (the UARB) it acted with all due diligence and the fine is unjust. That’s a fight for another day.
Yesterday, after a meeting of the premier and cabinet ministers, Rushton confirmed the $10 million fine would be levied to show Nova Scotia Power that the government is serious about holding the company to account when it comes to meeting legislated environmental commitments, including closing coal-fired plants by 2030.
Do all the out-to-lunch rate increases, (my fixed income does not move greater than COLA), allowed by the UARB in the past few years were to compensate for the $10M they now have to pay out without changing the shareholder dividend to much year to year? Are the guaranteed 9% folks still going to get 9% or will they get 9% of the leftovers after 10M is taken off? We are still being fleeced either way.