Nova Scotia utility paid $205 million for replacement fuel after Muskrat Falls delays

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HALIFAX — Nova Scotia's power utility has released figures indicating $205.5 million was spent on replacement fuels over the past four years because of delays to Newfoundland and Labrador's Muskrat Falls hydro project.

The hydroelectricity project in Labrador was supposed to deliver power to Nova Scotia starting in 2018, but it has been plagued by a series of setbacks.

Nova Scotia Power, a subsidiary of Emera Inc., told regulators in late December that replacement energy costs totalled $49.2 million in 2018, $52 million in 2019, $57 million in 2020 and $47.3 million from January to October last year.

Bill Mahody, the lawyer who represents residential ratepayers during Utility and Review Board hearings,said in an interview Mondaythat the replacement energy costs have been paid for by Nova Scotians.

The Utility and Review Board, the independent body mandated to regulate utilities in the province, is currently considering an application from Emera to recover from Nova Scotia Power ratepayers the approximately $1.7 billion in costs of the Maritime Link — the transmission line from Newfoundland to Nova Scotia.

Mahody said if Muskrat Falls delays continue, there should be a mechanism permitting fuel replacement costs to be shared between Nova Scotia taxpayers and shareholders of the publicly traded Emera.

"There needs to be some way for ratepayers to get some sharing of the costs here," he said.

In an emailed comment, Nova Scotia Power spokeswoman Jacqueline Foster noted that the Muskrat Falls energy is expected to flow, and the Newfoundland and Labrador utility, Nalcor, will make up for the energy lost to earlier delays.

"It is a 35-year source of clean energy that Nova Scotians will benefit from as we move off coal and increase renewables," she wrote.

"Nalcor (Newfoundland and Labrador's utility) will replace the energy in co-ordination with Nova Scotia Power Inc. at a later date. Nova Scotia Power has contracted for 35 years of energy and this is what Nova Scotians will receive," Foster said.

Nova Scotia has committed to phasing out coal-based power generation to reduce greenhouse gas emissions. Mahody raised concerns about the costs to taxpayers of finding alternative renewable energy sources if Muskrat Falls continues to fall behind schedule.

The original agreement for the creation of the Maritime Link was for Emera to finance and construct the line in return for a fixed block of electricity from Muskrat Falls, Mahody said.

"If things had been going according to the original plan, ratepayers would have been paying approximately $160-170 million annually, and receiving Muskrat energy that amounts to about 10 per cent of the power needed by Nova Scotia," he explained.

Instead, Mahody said, ratepayers have been paying the cost of building of the link, but they haven't been receiving the expected energy — leading to the annual added costs for replacement fuels.

The province's climate change targets include commitments to phase out coal-fired electricity generation by 2030, to reduce greenhouse gas emissions to at least 53 per cent below 2005 levels by 2030, and to achieve net-zero emissions by 2050.

"Moving forward, the problem of Muskrat delays are compounding, and with the environmental constraints it becomes a more pressing point to ensure we get the energy we should be getting from Muskrat," Mahody said.

The various submissions to that Utility and Review Board hearing will close on Friday, with rulings expected this winter.

This report by The Canadian Press was first published Jan. 10, 2022.

Michael Tutton, The Canadian Press

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