Some wary as Nova Scotia hearings into undersea hydro link set to begin

The Canadian Press
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HALIFAX — Boris Mirtchev will watch warily as regulatory hearings begin Tuesday 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. (TSX:EMA) 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?’ ”

He 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., Nova Scotia Utility and Review Board, TSX Maritime Link Nalcor Energy Nova Scotia Power

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

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