Nova Scotia Power begs Ottawa: 'We need help' to stabilize rates
Nova Scotia Power joined the Houston government Wednesday calling for financial assistance from Ottawa to stabilize power rates in a province where they have jumped 14 per cent in two years — with further increases to come as the electrical system transitions from its reliance on fossil fuels.
"We've been pleading with the federal government," Nova Scotia Power president and CEO Peter Gregg told a business luncheon in Halifax. "We need help."
The most immediate pressure is the company's outstanding fuel bill, which stood at $343 million at the end of September and has since grown to $395 million, according to the province.
Fuel costs are automatically passed onto ratepayers.
Gregg cited the 2021 bailout for Newfoundland and Labrador ratepayers facing a huge increase because of delays in the Muskrat Falls hydro project.
The ill-fated mega project was partially responsible for Nova Scotia Power's fuel predicament.
The Muskrat Falls hydro project was partially responsible for Nova Scotia Power's fuel predicament, according to Gregg. (CBC)
The company was forced to buy additional fossil fuel because it did not receive contracted deliveries from Muskrat Falls just as world prices soared because of the Russian war on Ukraine.
"Muskrat Falls was one of the challenges of why we had more fuel costs. We weren't getting that clean electricity supplied to us because of their delays," Gregg told reporters later.
"The federal government helped Newfoundland in terms of the cost of the delays there and we, as well as the province, think that the federal government has a role to play here," he said Wednesday.
Gregg spoke at a Halifax Chamber of Commerce Luncheon on Wednesday, Jan. 31, 2024. (Paul Withers/CBC)
This week the provincial government did its part to help ratepayers and Nova Scotia Power's credit rating.
A provincial Crown corporation proposes to assume $117 million of Nova Scotia Power's fuel bill, to be paid back by ratepayers over 10 years, adding one per cent to rates.
The $117 million figure is no coincidence.
It is the amount of money Nova Scotia Power says it needs to collect from its fuel bill in 2024 to avoid the real risk of a credit rating downgrade to "non investment grade" or junk bond status.
"This would be unprecedented for NS Power and Canadian utilities in general and would significantly magnify the access to, and cost of, capital issues resulting from the 2022 credit downgrades," the company said in an application to the Nova Scotia and Utility and Review Board this week.
The application contains the provincial government proposal to assume $117 million of the fuel cost and requires approval by the board.
Credit metrics 'ongoing issue'
Ironically, the Houston government is to blame for the 2022 credit rating downgrade because of a rate cap on non-fuel costs it imposed through legislation in the middle of a rate hearing.
Bond ratings agencies reacted negatively to what they said was interference with an independent regulatory body.
Earlier this week, the provincial government said it wants the federal government to help pay off the remaining unrecovered fuel bill.
The Nova Scotia Power application uses figures as of September 2023. If approved, the company says it still has $226 million it must recover from ratepayers.
"As credit metrics are likely to be an ongoing issue in the near term, this deferred amount will also need to be addressed in the coming years and additional rate increases will be required to avoid future under-recoveries beyond 2024," reads the application.
In a statement, Natural Resources Canada said it is following the deal between the province and Nova Scotia Power closely — but representatives did not answer a question from CBC News about providing a bailout.
Cost of transitioning from fossil fuels unknown
The biggest threat to rates remains unresolved: the cost of transitioning from a reliance on burning fossil fuels to generate electricity.
Coal still provides 47 per cent of Nova Scotia Power's own generation. The company buys wind power from private producers.
By 2030, Nova Scotia Power must close its coal-fired plants and get 80 per cent of electricity from renewable sources.
This week, it is halfway to reaching that target. Gregg told the Halifax Chamber of Commerce 43 per cent of Nova Scotia Power electricity is from renewables.
Uncertainty remains
"We know we have to get off coal and support that, but really what it takes for Canada to say we're 100 per cent off coal-fired generation, 55 per cent of that burden is on Nova Scotia with three per cent of the national population," Gregg said.
Gregg has repeatedly declined to say what the transition to a green grid will cost ratepayers — taking refuge in uncertainty over the federal government contribution.
"There's so many different pieces of it and it'll be done at different times as well. So I can't sit here today and give you the magic number that it's gonna cost," Gregg told the chamber audience.
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