It’s a vote of (qualified) support. Nova Scotia’s Utility and Review Board (UARB), the equivalent of our Public Utilities Board, has given the Maritime Link the go-ahead, saying the project appears to be marginally better, in most scenarios, for Nova Scotia ratepayers.
But at the same time, the UARB has said more needs to be done to protect that province’s power consumers: “It is the board’s obligation to protect the interests of Nova Scotian ratepayers. … The board has considered how it should address this significant risk to the viability of the Maritime Link project as against the other alternatives. It could, under the Maritime Link Regulations, simply reject the application, but that would not be the responsible result and would not be a productive outcome of the regulatory process.”
What the board is concerned about is the fact that what makes Muskrat Falls power potentially the lowest-cost option for Nova Scotians is not only the power N.S. ratepayers will get in exchange for the costs of building the Maritime Link — it also depends on ratepayers in that province getting access to market-based power from this province to, on average, bring down costs.
“The fundamental assumption which underpins the application is that N.S. customers will enjoy a blended rate for electricity which is comprised of a weighted average of the costs reflecting the N.S. Block and the projected amounts and prices for market-priced energy over the 35-year term.”
So, the UARB has put a condition on the approval: that the project’s Nova Scotia partner, Emera, get a signed contract guarantee with Nalcor to offer up market-priced energy consistent with Emera’s cost projections.
“The board concludes that the availability of market-priced energy is crucial to the viability of the Maritime Link project proposal as against the other alternatives. More importantly, the board finds that without some enforceable covenant about the availability of the market-priced energy, the ML project does not represent the lowest long-term cost alternative for electricity for ratepayers in Nova Scotia. … Accordingly, the board directs as a condition to its approval of the ML project that Nova Scotia Power Maritime Link obtain from Nalcor the right to access Nalcor market-priced energy when needed to economically serve Nova Scotia Power and its ratepayers; or provide some other arrangement to ensure access to market-priced energy.”
It will be interesting to see how this all plays out, especially because the Nova Scotia board also bases its analysis on answers to questions about who’s responsible for addressing other risks in the project.
The board referenced, for example, a statement by the project’s Nova Scotia proponents: “The contractual arrangements between Emera and Nalcor do not allow for non-delivery of energy. If the energy is not delivered, Nalcor is liable to pay compensation damages to Emera. If the non-delivery is as a result of government action, the Government of Newfoundland and Labrador has guaranteed payment by Nalcor the compensation damages. Risks relating to Muskrat Falls are borne by Nalcor.”
And the board said it had been told that even a lack of water would be Nalcor’s problem. When asked about reduced water flow for the project — where “reduced water flow was described as being due to contractual water rights issues, climate change, or other reasons” — the Nova Scotia Power subsidiary responded: “Lack of precipitation is expressly not a force majeure event and is therefore not a forgivable event under the Energy and Capacity Agreement. The N.S. Block will not be curtailed for that reason.”
With HydroQuebec launching court action in Quebec over its contract rights and hydroelectricity in Labrador, things get even more complicated.
Well, well. Interesting times ahead.