Advocate, Emera clash as Muskrat Falls hearings

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Nova Scotia’s consumer advocate and Emera clashed today on whether Muskrat Falls is the cheapest way for the province to get electricity at the opening of a regulatory hearing on the hydro project.

Nancy Tower, CEO of Emera Newfoundland and Labrador Holdings, told the Nova Scotia Utility and Review Board that the $1.5-billion subsea connection is the most affordable source of energy over the next four decades.

“We have a solution, and one that is not simply a solution, but also an opportunity,” she said.

“An opportunity to fundamentally change our electricity market for decades to come and to provide more stable priced energy for Nova Scotia customers.”

A spokesman for the provincial Department of Energy said the power from Muskrat Falls is the only alternative before the board that meets the government’s goals to reduce greenhouse gas emissions.

But John Merrick, the province’s consumer advocate, said Nova Scotia would be better off not locking into one project for 35 years.

He said the price for electricity from Muskrat Falls is largely based on the cost of constructing the 180-kilometre link, and it’s likely this will be more expensive than other sources of power.

“The consumer advocate has carefully considered the evidence and has come to the conclusion that the application should be dismissed,” he said.

“The ratepayers incur the risk of paying significantly in excess of market (prices).”

Merrick also said if the board dismisses the project, it doesn’t necessarily mean the development will die as it may still be attractive for Nalcor Energy, Newfoundland and Labrador’s Crown utility, to build the link.

Nelson Blackburn, the small business advocate, said it’s clear that the deal will benefit Emera but it hasn’t been proven to be the cheapest long-term source of energy for customers.

Both the Liberal and Progressive Conservative opposition parties also argued the proposal should be rejected due to uncertainties over the future availability of Muskrat Falls electricity at market rates, rather than rates based on the cost of the project.

However, Tower said Emera Newfoundland and Labrador has looked at other options, ranging from wind to importing power from Hydro-Quebec, and found they are not reliable or cheaper.

She said Emera does not believe Hydro-Quebec would provide a long-term, fixed price for energy, nor does it think a firm contract for surplus energy from Nalcor is necessary because Nova Scotia can purchase power from a variety of sources.

“When surplus energy, beyond Nalcor’s domestic needs, is flowing across the province and through New Brunswick to the New England market, we can purchase energy from New Brunswick or Hydro-Quebec or Nalcor,” she said.

“Being located in the middle of the energy market instead of at the end of it is a clear benefit of the Maritime Link project.”

The hearings are scheduled for the next two weeks.

Construction of Muskrat Falls is underway in Labrador and proponents of the $7.7-billion venture are aiming to generate power by 2017.

•••

(Earlier story)

HALIFAX — A regulatory hearing in Nova Scotia considering an undersea hydro cable from the Muskrat Falls project started today with proponents and critics clashing on whether it is the cheapest alternative for electricity.

James Smellie, the lawyer for the Emera (TSX:EMA) subsidiary, Nova Scotia Power Maritime Link Inc., told the Nova Scotia Utility and Review Board that the $1.5-billion subsea connection is the most affordable source of energy over the next four decades.

A spokesman for the provincial Department of Energy said the power from Muskrat Falls is the only alternative before the board that meets the government’s goals to reduce greenhouse gas emissions.

But John Merrick, the province’s consumer advocate, said Nova Scotia would be better off not locking into one project for 35 years.

He said the price for electricity from Muskrat Falls is largely based on the cost of constructing the 180-kilometre link, and it’s likely this will be more costly than other sources of power.

Nelson Blackburn, the small business advocate, said in his presentation that it’s clear the deal will benefit Emera but it hasn’t been proven to be the cheapest long-term source of energy for customers.

The hearings are scheduled for the next two weeks.

 

 

•••

Boris Mirtchev will watch warily as regulatory hearings begin today on a proposed undersea hydro cable to Nova Scotia that’s being touted as a green and reliable solution to the province’s energy woes.

The Nova Scotia Utility and Review Board will consider whether the Emera Inc. project, called the Maritime Link, is the province’s lowest-cost alternative for electricity over the next four decades.

Mirtchev said he’s looking for a clear answer to that question as he cites rising rates over the past four years as a contributing factor in the recent closure of his Japanese restaurant in Halifax.

“If the result is stable rates but we don’t know what they’ll be, that’s not good enough,” he said of the 35-year deal that would see Nalcor Energy, Newfoundland and Labrador’s Crown utility, provide power to Nova Scotia from Muskrat Falls.

The review board says overall residential rates in Nova Scotia have gone up 67 per cent since 2005, making them among the highest in the country.

However, the province’s NDP government has argued the

$1.5-billion undersea link — which would provide a minimum of eight to 10 per cent of the province’s electricity — would help end sharp price hikes for Nova Scotia Power’s 490,000 customers.

Emera spokeswoman Sasha Irving said the link only creates a one per cent rate hike per year for five years beginning in 2017, and then rates would be steady or decline afterwards.

Irving said the link would put Nova Scotia in the middle of a transmission system that allows it to buy surplus energy at market prices from various vendors.

But consumer advocate John Merrick says ratepayers have justified fears.

“What I know and what I’ve seen is that I’m not satisfied this is the best deal for Nova Scotians,” he said in an interview.

He said the utility’s customers are taking too much of the risk in a project that will run a cable the width of a two-litre pop bottle across 180 kilometres of seabed.

The deal sees Emera pay for 20 per cent of the $7.7-billion Muskrat Falls project in return for a guarantee of 20 per cent of its power output.

In addition to that basic block of guaranteed supply, Nova Scotia would also be able to purchase surplus energy at market prices.

Merrick says this system of blended pricing lacks a firm guarantee that the market-priced energy will be available at a reasonable cost.

“We’re locked into paying too high a figure,” said Merrick, a lawyer who has a formal role in the hearings on behalf of consumers.

He says the Newfoundland utility could build the link and then have the Nova Scotia utility purchase the power at market prices as needed.

Premier Darrell Dexter says he remains a firm supporter of the proposal, adding it has won the crucial support of a federal loan guarantee.

“I think this is a visionary project,” he said. “I believe that if, for some reason, this project does not go forward then in the years to come, people ... will say ‘Why is it the government of the day didn’t have the vision to follow through on this kind of a project?’”

 

Dexter said the province has a rare chance to create steady, long-term rates, rather than to continue to rely on monthly shifts in prices for imported natural gas and coal.

“In the past we tied ourselves to fossil fuel prices that were completely unpredictable,” he said.

Still, both the opposition Liberals and Conservatives say the province should have allowed a wider review of the project’s merits by the review board.

In his opening statement to the board released last week, Conservative Leader Jamie Baillie says “this may be a good project, but it is a bad deal, arrived at by a very flawed evaluation process.”

He argues legislation limits the board’s review and it should allow for other proposals to be considered, as well as look at whether power from Muskrat Falls will be needed in a province that faces a decreasing and aging population.

Liberal Leader Stephen McNeil said Emera’s price estimates are too general.

“No one ... can tell us what the base cost for that energy will be,” he said. “What is the starting point for energy coming from Muskrat Falls?”

All options should be considered by the province, he said, ranging from nuclear power to a mix of wind and natural gas to importing power from Hydro Quebec.

As the debate unfolds, Mirtchev said he intends to keep track of the hearings, and hopes board members remember the bills faced by small business owners.

“I’ll be keeping an eye on what comes out of it for sure. It has an impact on my business every day,” he said. “At this point, power rates are not bearable.”

The review board is expected to release its decision on the project before the end of July.

 

 

 

Organizations: Emera Inc., Maritime Link, Nova Scotia Utility and Review Board Nalcor Energy Nova Scotia Power

Geographic location: Nova Scotia, Newfoundland and Labrador, Halifax Muskrat Falls

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Recent comments

  • Tony Rockel
    June 04, 2013 - 00:51

    This is a Stone Age concept, promoted by dinosaurs. Anyone who has a clue about what's coming should know that DER (distributed energy resources) is the way to go. Long transmission lines and big generators belong to the past. They are highly vulnerable and needlessly expensive.

  • H JEFFORD
    May 31, 2013 - 21:43

    The power created by harnessing the force of a water falls, which ran for millions of years, and will run for millions of years longer at no cost, turning generating turbines creating millions of HOURS OF POWER, With No Smoke as it is with The Holy Rood Generating plant that consumes millions of Barrels of oil each year, and that lists it as one of the top ten AIR smog or dirty air producers in the world. Wind Power is Not Reliable, OIL prices will continue to rise as the supply decreases, But The Power Of Water Will Run OLD Saying ( For As Long As Water Runs And Grass Grows} FOR EVER. Water Power Is Reliable,Dependable,and Consistent for as the old saying Goes ( For as long as water runs and grass grows) FOREVER It Is The Only Sure Supply Of Power, One of the Cheapest To Operate, Cleanest, Most Reliable source of power in the World.

    • Tony Rockel
      June 04, 2013 - 00:55

      There you go again, spouting your usual nonsense. You call $10 billion free power? Where is your head?

  • No Doubt
    May 29, 2013 - 11:28

    There are almost twice as many Nova Scotians as there are Newfoundland and Labradorians. The money they're asked to pay is less than a quarter of the 50-year loan we all have to pay back. Not to mention that they will get our electricity cheaper than we will. They might think they got it bad but it really sucks to be us.

  • Corey Manyletters
    May 29, 2013 - 09:54

    This is starting to sound like Dunderdale's the first cost over-run on the path to MRF was the fake , EXPENSIVE PARTY she threw for the loan guarantee. Way to go torys.

  • Corporate Psycho
    May 28, 2013 - 21:38

    I hope the people of NS come to their senses and stop this whole debacle.

  • DON II
    May 28, 2013 - 13:45

    In Newfoundland the Public Utilities Board was muzzled, pushed around, kept in the dark and obstructed in every way by the Government of Newfoundland and no public hearing was permitted into the Muskrat Falls project. The Government of Nova Scotia allowed the Public Utilities Board in Nova Scotia to conduct a public hearing into the Muskrat Falls project that may last for 3 weeks or more. That is the difference between living in a Province with a democracy and living in a Province run by a Dictator! It appears that the Government of Newfoundland would prefer that Nova Scotia not hold a public hearing into Muskrat Falls. Why is that, I wonder?

  • John Smith
    May 28, 2013 - 07:31

    Great to see that it's politics as usual...in NS as well as in NL. These career politicians don't care about muskrat falls, or how much people pay for power...all they care about is getting their face in the media. They don't come up with any serious alternatives....just the usual crap about wind and nuclear power....really? LOL Give me a break. The bottom line is that we need additional power here on the island, and in Labrador. Even without the maritime link we will still need the power. Politicains here and in NS trying to make a name for themselves by opposing the project, yet where are the viable alternatives? More coal? Nuclear waste? Buying from Hydro Quebec? Are they better options then simply paying two billion for a cable across the gulf? The answer is no....and those opposing know the answer is no, but hey...why let the truth and facts get in the way of smearing a great project for your own gain?

  • jim
    May 28, 2013 - 07:28

    Sounds like the same questions Newfoundlanders have about the project as we don't have any answers as to what it will cost us either.