Nova Scotia amends cap-and-trade rules to deliver $165M in power utility and ratepayer savings
The Houston government has amended provincial cap-and-trade regulations to exempt Nova Scotia Power and ratepayers from $165 million in pollution payments — the paperwork needed to deliver a promise it announced last year.
On Monday, the province said amendments to the cap-and-trade program regulations issued in a March 16 cabinet order effectively wipe 2.6 megatonnes of carbon emissions from Nova Scotia Power's account.
That represents emissions from fossil fuels the company was forced to buy and burn because clean hydro electricity from Muskrat Falls was not delivered in the amounts promised between 2019 and 2022.
Environment Minister Tim Halman says under the cap-and-trade system, Nova Scotia Power would be forced to buy emission credits or allowances, as they are called, with ratepayers on the hook.
"We're looking at 2.6 megatonnes, which is calculated at a value out of $165 million. Obviously, having that downloaded onto the ratepayers, we can't let that happen," Halman told CBC News on Monday.
"We feel that this is responsible. It's fair."
In a background briefing, the province said the regulatory change is a paper transaction and no money is changing hands
The province's "made in Nova Scotia" cap-and-trade system is being wound down after the federal government said it did not meet its requirements for putting a price on greenhouse gas emissions, mainly carbon dioxide, which create climate change.
Nova Scotia Power says it still has to figure out how to meet emission targets.
"While the order ... assists in making these compliance costs more affordable for customers in the near term, it does not relieve N.S. Power of its ongoing responsibility to meet its emissions targets in the longer term," Nova Scotia Power spokesperson Jackie Foster said in an email to CBC News.
Nova Scotia Power says the $165 million is not a penalty, but the equivalent of what it would cost customers to offset the additional approximately 2,600 kilotonnes of greenhouse gas emissions. The province granted this additional allocation of greenhouse gas credits to avoid the purchase of reserve carbon credits, the company said.
Foster said Nova Scotia Power is verifying 2022 emissions and will report to Nova Scotia Environment and Climate Change by June 1, 2023.
Ratepayers on the hook for fuel purchases
Nova Scotia Power and ratepayers are on the hook for fuel purchased because of Muskrat Falls under deliveries.
During rate hearings last fall, Nova Scotia Power said the company did not get 2,700 gigawatt hours of additional market-priced, and cheaper, hydroelectricity it had counted on from the Muskrat Falls hydro project in Labrador.
That loss makes up some of $516 million in higher fuel costs it will present to regulators for recovery later this year.
"Our estimate is it would be under 20 per cent of that total…. But we don't have it refined to how much," Nova Scotia Power's vice-president commercial, David Landrigan, told the Nova Scotia Utility and Review Board (UARB).
In the meantime, a two-year, 14 per cent rate increase went into effect in January.
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