Planned cap on Nova Scotia Power's rate increases would create more problems, MLAs told

A bill before the Nova Scotia legislature would limit the rate increase the Utility and Review Board can award Nova Scotia Power for the next two years. (Nova Scotia Power/Twitter - image credit)
A bill before the Nova Scotia legislature would limit the rate increase the Utility and Review Board can award Nova Scotia Power for the next two years. (Nova Scotia Power/Twitter - image credit)

A proposed bill to cap rate increases for Nova Scotia Power for the next two years may bring short-term satisfaction for ratepayers, but would create a number of long-term problems, according to business and consumer advocates and the company alike.

Speakers appeared before a legislative committee to discuss Bill 212 on Monday, a proposed law that would prevent the Nova Scotia Utility and Review Board from granting Nova Scotia Power a rate increase of more than 1.8 per cent over the next two years.

The bill would have no effect on a separate potential rate increase the company is also seeking that is tied to rising fuel costs.

Natural Resources Minister Tory Rushton tabled the bill earlier this month after the company's general rate application hearing at the UARB. Rushton previously said he wanted to allow that process to play out, but tabled the bill before the board delivered its decision.

Bill Mahody, the province's consumer advocate, said Bill 212 is problematic because it threatens the independence of the UARB.

CBC
CBC

Mahody told reporters rates are often set below what NSP has requested after an extensive review that cannot be replicated on the floor of the legislature.

"The fear is, that if you take a holiday from the type of diligent regulation we've had, that may substantially drive up your other costs that traditionally we've benefited from," he said.

"This bill, in a single piece of legislation, undoes a track record of regulator performance that's extensive."

For instance, Mahody said, ratepayers benefit from investor confidence in Nova Scotia's regulatory environment which keeps NSP's debt costs down.

That potentially goes out the window if rates can be set at the whim of a given government, he said.

Michael Gorman/CBC
Michael Gorman/CBC

Nova Scotia Power president Peter Gregg put the consequences of the bill in stark terms for MLAs: they could support  the temporary cap on rates, or they could support the 2030 climate goals that call for the company to end its use of coal to generate electricity and require the use of more renewables.

"You cannot logically support both."

Gregg said the climate action everyone wants from NSP costs money. He said the cap the Tories introduced would mean the reduction of about $150 million in revenue in the next two years compared to what was submitted in the company's rate application.

The company has said the increase it was seeking would amount to about $15 per month more for the average household by 2024.

"I'm not saying that $15 per month is pocket change, but what we are saying is that we need to have a clear conversation of what we're actually saving here."

No viable Plan B to Atlantic Loop

Gregg said a rate cap would force the company to cut capital spending and the proposed Atlantic loop, which would bring hydro power from Quebec into this province, has already been paused.

Gregg said the Atlantic Loop is the best shot for Nova Scotia Power to get off coal by 2030 and he does not see a viable Plan B that would achieve a similar result.

"While there may be technical solutions that could get us there, we're really focused on what is the most affordable and achievable solution, and it's very much at risk today."

Brian Gifford of the Affordable Energy Coalition said the UARB needs to consider a reduced energy rate for low-income customers, yet the proposed bill doesn't address that.

Michael Gorman/CBC
Michael Gorman/CBC

Gifford, who has called for the change in the past, noted that the province has the highest rates of energy poverty in the country and that about half of households are heated by fossil fuels.

"If now is not the time to create a regulated low-income rate relief program, when will there ever be a time," he asked MLAs, saying his group "could not be more frustrated."

Gifford was also unhappy that the government brought forward legislation without allowing the UARB to conclude its work, thus interfering with a process that is supposed to be independent.

The best long-term way to deal with energy poverty is through the electrification of transit and the greening of the power grid, said Gifford. He's worried the cap on rate increases will prevent NSP from hitting its efficiency targets by 2030.

"This is the opposite of long-term thinking," he said.

Halifax Chamber of Commerce Patrick Sullivan said he has members who will welcome the short-term break the legislation will create, but he and many other members worry what the temporary pause means for the future. He also questioned the point of having an independent regulator if the government can sideline it at will.

"By the end of the two-year restriction period, will the current provincial government allow a significant rate hike approximately seven months before the 2025 provincial election?"

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