Houston defends decision to cap power rates , says Nova Scotia Power should manage business

Premier Tim Houston remains unapologetic for his government’s decision to intervene and set limits on how much power rates can rise outside of fuel costs. Those fuel costs, if not deferred by the Nova Scotia Utility and Review Board (NSUARB), could still add 10% to power bills.  

The intervention by the Houston government was the reason cited by the Standard & Poor bond rating service for downgrading Nova Scotia Power’s credit rating by two full notches.  

Nova Scotia Power Chief Financial Office Greg Blunden said this will make the cost of borrowing money, particularly long-term bonds used to finance capital projects such as wind farms and new transmission lines, more expensive for ratepayers in the long-term.  

Houston isn’t buying it. During a question-and-answer session on Thursday, reporters asked Houston whether the government’s decision to cap power rates now may have traded short-term gain for long-term pain. 

“Not in my mind,” Houston said. “Because the 13% rate increase was not something Nova Scotian ratepayers deserved. We made sure that’s not happening. The UARB will make their decision based on some guard rails we’ve put in place to protect the ratepayers.” 

Houston points out the legislation capping power rate increases at 1.8% for expenses outside fuel costs is specifically for two years. He said ratepayers have been good to Nova Scotia Power in the past — profits have been more than $125 million in each of the past dozen years — and Houston expects Nova Scotia Power and its parent company, Emera, to find ways to manage their business. Emera’s credit rating has not been downgraded.  

‘It’s not frigging rocket science’ 

Bedford Basin MLA Kelly Regan stood in for Liberal leader Zach Churchill who was absent on Thursday. The Liberal MLA said she was astonished that Houston, who is an accountant by training, was not more concerned that higher borrowing costs would lead to higher power rates for Nova Scotians in the long run. 

“As an accountant, he had to know that,” Regan said.“I knew that. I have a degree in English and legal studies. It’s not frigging rocket science.” 

NDP leader Claudia Chender suggested the downgrading of Nova Scotia Power’s credit rating might have been avoided had the government supported NDP legislation last spring. That legislation proposed changing the regulatory structure to tie earnings by Nova Scotia Power to performance standards around affordability and environmental targets. 

“We heard the Premier say, ‘Nova Scotia Power should think about Nova Scotians,’” Chender said. “They aren’t going to do that. They’re a company and their sole reason to exist is to make money. We actually can influence that. We have a regulatory structure that we design. We can make it so that they need to think about our affordability and our environmental needs. That doesn’t just come from hopes and wishes. It comes from difficult legislative work that this government refused to do.” 

Still at odds over carbon tax

Houston said while the province and the federal government continue to have productive discussions on many subjects, the introduction next July 1 of a federal carbon tax is one file where they will agree to disagree. 

“On this particular file, we are at odds,” Houston said. “A carbon tax will not help the planet and it will punish Nova Scotians.” 

Houston said the quarterly rebate cheques Ottawa will send to Nova Scotians to offset price increases will “not be the money maker for Nova Scotia families Ottawa suggests.” He said a carbon tax will still leave most households behind and that despite $1,000 a year in federal rebate cheques for a family of four, the carbon tax will still cost most households an additional $1,000 a year.  

It’s not easy to fact-check that claim without being privy to the inputs each level of government used to calculate the size of the rebate, which include household size and heating fuel source. In Nova Scotia, an analysis was done for the province that included over $1,000 for “indirect costs” based on the assumption prices for goods and services would rise once Nova Scotia businesses began paying a price for carbon.  

Out-of-province companies that supply goods and services have been paying for four years. Although Nova Scotians will begin paying for carbon on fuel starting July 1, Environment Minister Tim Halman said discussions continue with Ottawa to determine how the quarterly $248 rebate amount was calculated and whether the feds might be coaxed into beefing up that amount. 

Houston, however, said the amount is based on the fact that 41% of the people in Nova Scotia live in rural areas where they rely on a vehicle to get to work. The federal carbon tax is “designed to change behaviour and reduce consumption,” Houston said.  

In real life, though, Houston said that won’t change behaviour in a place like Nova Scotia where public transit is non-existent outside urban areas and where people spend a lot of time on the road. Meanwhile, the price of electric vehicles remains out of reach and the province has not done much to improve the availability of fast-charging stations.  

MacMaster on hot seat

Finance Minister Allan MacMaster found himself on the hot seat over remarks he made a couple of weeks ago explaining why Nova Scotia wasn’t giving consumers a break by either lowering its slice of the tax at the pumps or distributing an extra $20 million accruing because of higher commodity prices. Ontario, Newfoundland and Labrador, and Alberta have all given drivers in those provinces a break.   

Two weeks ago, MacMaster claimed the federal government had warned provinces against reducing their portion of the tax because it would send the wrong signal or cancel out the action being taken by Ottawa to change behaviour by increasing the price. Federal Liberal Members of Parliament said that wasn’t the case; that Nova Scotia and every other province has jurisdiction over its own revenues accruing from the provincial portion of HST on gasoline and diesel, and can use them as a tool to reduce inflation. 

On Thursday, MacMaster read from a March 2021 news article quoting former federal Environment Minister Jonathan Wilkinson warning provinces not to drop gas taxes because it would defeat the purpose of the federal carbon tax and advising stronger measures would be taken “post 2022.” The article helped clarify why MacMaster said what he did two weeks ago. But it fails to answer whether the province of Nova Scotia plans to give up any of the money collected at the gas pumps to give consumers a break. 

MacMaster seemed to say “no” when he spoke of the need to continue to use revenue from the gas tax to pay for road repairs and improvements. (Motive fuel tax revenues go into general funds and can also be used to pay for other services, such as health care).  

MacMaster said unlike Alberta and Newfoundland and Labrador, Nova Scotia no longer has offshore royalties it can call upon if it gives up revenues from gasoline and diesel. Instead of helping drivers — the same people Houston said get punished by a carbon tax — MacMaster said the province is considering another approach. 

“We would prefer to use targeted supports to help people,” MacMaster said. “That’s what we have been doing all along. I know right now we are looking at the Heating Assistance Rebate, to expand that, to help people with the cost of heating.” 

Liberal MLA Kelly Regan said there is nothing in the way stopping Nova Scotia from doing as some other provinces have and distributing a portion of the gas tax to help citizens. 

“We certainly have been calling for it all along as a measure to help with affordability,” Regan said. “They have a windfall on the HST because gas prices are so high. ”