N.S. Power loses 1st bid to get $27M from ratepayers for idled Annapolis plant

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Nova Scotia Power is permanently retiring its Annapolis Royal, N.S., generating station, which has been shut down since 2019. (Patrick Callaghan/CBC - image credit)
Nova Scotia Power is permanently retiring its Annapolis Royal, N.S., generating station, which has been shut down since 2019. (Patrick Callaghan/CBC - image credit)

Regulators have denied an application from Nova Scotia Power to make customers pay it $27.7 million over the next decade to write off the idle Annapolis tidal generating station.

At least for now.

In a decision released Thursday, the Nova Scotia Utility and Review said the accounting treatment should be part of an application to decommission the station. It gave the power company one year to present its plans.

"The board has determined that it has insufficient evidence at this time to find that decommissioning of the generating station is the least-cost option for ratepayers," the ruling said.

"The board believes the best way of proceeding is to reconsider the application for accounting treatment approval along with a decommissioning application."

From pioneer to powerless

The tidal generating station at Annapolis Royal was a North American first when its prototype seven-metre wide Straflo turbine started turning in the mid-1980s. It produced enough electricity to power 4,500 homes.

But it hasn't generated any electricity since January 2019, when a generator component failed.

Two and a half months later, the Department Fisheries and Oceans notified the company it is required to provide safer fish passage at the site.

Nova Scotia Power said both events were significant factors in its decision to retire a facility that was already increasingly expensive to maintain, while generating less electricity.

A company analysis concluded decommissioning was cheaper than a life-extension modernization or introducing new technology.

But the regulators were not convinced.

They noted the company "did not take any action whatsoever in relation to DFO's notice." The company also presented the lowest cost estimate for decommissioning the plant — but redacted the amount in public documents. Regulators said it was well below a $200 million estimate provided by the company in 2018.

They also said the life-extension and new technology options were less thoroughly investigated.

"Given the magnitude and scope of the unaddressed issues, the board concludes approval of the accounting treatment at this point is premature."

Explore other options

It suggested Nova Scotia Power provide "more fulsome" assessments of the life-extension and new technology options, environmental studies on all scenarios and a "detailed explanation of why capital cost estimates for the decommissioning option have decreased so dramatically" from the estimates presented in 2018.

The three-member panel also called for "engagement with DFO personnel on if NS Power can satisfactorily present alternative studies or data on fish migratory periods and fish mortality for the site, short of returning the generating station into operation, including potentially modifying its operation to reduce or mitigate the potential impacts on fish so as to avoid the requirement for a DFO authorization."

The decision gives the Town of Annapolis Royal some breathing room.

In 2021, Nova Scotia Power paid it $380,000 in grants in lieu of taxes, accounting for 18 percent of town revenues.

To make up for the pending loss, the town is pursuing its own tidal power project. The plan needs the capacity on the electrical grid that's already assigned to the 20-megawatt tidal station.

"It's future revenues we have to think about, it's revenues in perpetuity. We have to replace as close as we can get to that 18 percent. So yes, we are pursuing that application actively," said Mayor Amery Boyer.

Nova Scotia Power spokesperson Jaqueline Foster said the company will review the decision.

"As we stated at the time of the initial filing, our focus is always looking at what is the best interest of our customers and what is the lowest cost option in relation to the future of the Annapolis tidal generating station," Foster said.

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