When the new premier and cabinet are sworn in today, one item on their agenda should be a return visit to a directive the McNeil government gave to Nova Scotia Power last May.
The directive has led to increased burning of biomass (aka “trees”). According to a decision released by the Utilities and Review Board last week, this could cost ratepayers anywhere from $7-$10 million. And it’s unclear whether the regulator will be able to spare consumers that expense down the road, if — as Nova Scotia Power maintains — it is merely following a government order (or, as the late comedian Flip Wilson would say, “The Devil made me do it”).
Any time after today’s swearing-in ceremony would seem to be a good time to change the order.
First, some background, as reported in the Halifax Examiner January 4.
It may come as a surprise to many Nova Scotians who’ve seen all those wind turbines sprout around the province that according to NS Power, coal and petroleum coke still account for more than 53% of the electricity it generates. Last May, NS Power requested a two-year extension in meeting a legislated target of generating 40% of electricity from renewable sources. It blamed the ongoing delay (more than two years and counting) in receiving hydro power from Muskrat Falls in Labrador. The 35-year contract will reduce the province’s dependence on coal by at least 10%, and even more if additional imports from Muskrat Falls can be purchased at market price.
Energy Minister Derek Mombourquette agreed to NS Power’s request to extend the deadline to meet that 40% Renewable Energy Standard (RES) until 2022. The most recent estimate for the arrival of Muskrat Falls hydro to Nova Scotia is the end of 2021. But that is a moving target, with commissioning issues still arising, and an updated timeline expected at the end of this month. At any rate, on May 11 of 2020, NS Power told the government it was “confident” it could comply by 2022.
Then the Department of Energy went a step further.
Fire ‘em up
In a letter to NS Power dated May 15, Mombourquette added:
“Nova Scotia Power shall also maximize the use of dispatchable renewable electricity from its own facilities, as well as those of renewable electricity power producers in Nova Scotia (excluding COMFIT generation sources).”
By definition, “dispatchable” excludes wind and hydro sources, which are not available 24/7. NS Power claims the only “dispatchable renewable electricity power producer” in the province is Brooklyn Energy, the 35 MW biomass plant near Liverpool.
It is owned by Emera, NS Power’s parent company.
Coming hot on the heels of the closure of Northern Pulp’s Pictou County mill a few months earlier, this Cabinet decision deftly dialled down the political heat it was feeling over the loss of associated jobs and created a steady market for sawmills and forestry companies (with lots of woodchips and bark on their hands) until 2022.
Appearing before the legislature’s standing committee on Natural Resources and Economic Development last September, Kelliann Dean (chair of the Forestry Transition Team and also deputy minister of Intergovernmental Affairs) underlined the economic imperative. “The change to Renewable Energy Standards (May 2020) is enabling NS Power to generate more electricity from wood chips and sawmill residuals by operating two biomass plants at capacity until electricity from Muskrat Falls comes onstream,” she said. “We are using all the policy levers at our disposal to support the sector.”
Operating both biomass plants at capacity appears to be good for the forestry industry. Again, NS Power owns the Point Tupper biomass plant; the one in Brooklyn is owned by its parent company, Emera. Figures provided by NS Power to the regulator show that the amount of electricity generated from biomass at Point Tupper during the last three months (November, December, and January) is double the amount generated over the same period a year ago.
Considering the Point Tupper plant was offline last November (2020), the fact NS Power is producing twice as much electricity from biomass is even more notable.
Environmentalists argue biomass should not even be classified as “renewable” unless trees are harvested in a sustainable way that allows them to store more carbon than the amount of carbon released when they go up in smoke.
The Brooklyn plant
How much electricity is being generated from burning biomass at the Brooklyn facility in Queens County? Unlike the data on Point Tupper, this is not public information. As mentioned, NS Power doesn’t own the plant, and therefore buys electricity under a purchase agreement with the producer (its parent, Emera).
Regardless of the scale of the operation, purchase agreements with independent power producers such as wind farms and small hydro or solar power installations are classified as private and “commercially sensitive.” While that might arguably be true for price, it’s hard to figure what harm would come from disclosing the amount of megawatt hours generated — apart from stoking further debate over whether it’s smart to burn more of the province’s forests to make electricity. Last month, 3% of the province’s electricity was generated from biomass.
What we do know about Brooklyn comes from an audit of NS Power’s fuel costs in 2018-2019. According to auditor Bates White:
“The Brooklyn biomass facility remains an expensive source of energy for ratepayers that is the product of a Power Purchase agreement signed in 1992. As we noted in our last Audit Report, given its high cost, it is not clear to us that, if proposed today, the contract would be in the interest of customers.”
Fast forward to May 2020 when the McNeil cabinet passed an Order-in-Council essentially empowering the Energy Minister to direct NS Power to maximize the use of biomass in its own, and in one other, facility. The subsequent directive to the power company put a limit of $7 million on how much more NS Power could pay Emera to operate the already expensive Brooklyn facility. A spokesperson for the Energy Department suggested this was related to “wear and tear” on the facility and “additional labour costs.”
All of which brings us back to last week’s UARB decision. Given that this extra cost could be borne by ratepayers, consumer advocate Bill Mahody and the UARB’s auditor Bates White had both made submissions challenging whether running Brooklyn was even necessary. Here’s how the UARB decision summarized those points (with our emphasis):
“Both the Consumer Advocate and Bates White submitted that NS Power is able to meet the 40% Renewable Energy Standards (RES) compliance objective for 2020 to 2022 without any output from the Brooklyn Facility. In Bates White’s view, the Brooklyn Facility is not forecast to have any impact on NS Power’s ability to meet the RES requirements or the Alternative Compliance Plan and is only a minor percentage of its RES percentage over the 2020 to 2022 period.”
Because the regulator was dealing with another issue — the relationship between Emera affiliate NS Power and another Emera affiliate, Brooklyn — the UARB didn’t make any ruling on whether customers will get stuck with a bill for generating more electricity from biomass as a result of a hasty government decision or perhaps undisclosed discussions between the power company and their political masters.
In the written decision, the tangled ball of corporate/government yarn did get an eye-roll from the Board:
“The Board is not obliged to make a finding on the need issue but does observe it would be odd if NS Power is obliged to purchase dispatchable renewable electricity it does not need to meet Renewable Energy Standard requirements and pay $7 million, or perhaps an additional $10 million, for it and charge it to ratepayers.”
Odd, indeed. And expensive on two fronts: the potential cost to electricity users and to the environment. The UARB says it expects it will review the biomass issue as part of the next Fuel Adjustment process in a year or two.
But that may be too late for those worried about the impact on the forests. The new premier, Iain Rankin, knows the related portfolios (and competing interests) well. As the ultimate voice in cabinet, it will be significant to see how he deals with last year’s government directive to burn more biomass — especially since the UARB isn’t buying NS Power’s claim it needed to fire up the Brooklyn facility to help it meet its renewable energy goal.
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