N.S. Power accused of overcharging by $6M

A consulting company hired to audit Nova Scotia Power says the utility may have overcharged customers for fuel costs over the last two years by $6 million.

Pennsylvania-based Liberty Consulting Group is critical of how Nova Scotia Power hedged natural gas prices last year and why it doesn't get a lower price now that its parent company — Emera Inc. — owns a pipeline in New Brunswick.

The 263-page report from Liberty Consulting Group — a consultant for the Nova Scotia Utility and Review Board — contains several blacked out portions.

Rene Gallant, the vice-president of regulatory affairs for Nova Scotia Power, told reporters the company considers the audit a serious matter.

"They have said that our failure to aggressively pursue the lowest possible natural gas prices from all suppliers has meant that customers have paid $6 million more than they should," he said Wednesday.

"It's a very serious assertion on Liberty's behalf and we do not agree. We think that the evidence will show, at the end of the day, that we have the lowest reasonable gas prices and the best contracts that we can get in the market in Atlantic Canada."

If the Nova Scotia Utility and Review Board accepts the Liberty Consulting Group's audit, Nova Scotia Power may be forced to lower power bills by $21 million or 1.5 per cent next year.

"The board is going to have to make a decision about whether Nova Scotia Power and its employees were doing the best possible job to keep the lowest price for all customers or whether Liberty's accusations are correct," said Gallant.

"We just don't think they are."

Even if Nova Scotia Power ratepayers get a break, it will be short-lived. The utility is on a negative credit watch and Gallant said if it has to pay customers back, that could spook bond rating agencies which would then raise its borrowing costs, driving rates up again.

Nova Scotia Power has asked the province's Utility and Review Board for a rate hike of three per cent in each of the next two years for residential customers. The utility said the increase will add about $3.50 a month to an average household's power bill in both 2013 and 2014.

If the increase is approved, residential customers will pay Nova Scotia Power an additional $37.6 million over the next two years — $18.6 million in 2013 and about $19 million in 2014.

A public hearing on the proposed rate hike is planned for September.