Green electricity transition could top $2B: Nova Scotia Power

Nova Scotia Power says the cost of closing its coal plants and transitioning to a greener electricity grid will likely cost more than $2 billion this decade, but how much of that will fall on ratepayers is not yet clear.

The estimate emerged Wednesday at the Nova Scotia Utility and Review Board (UARB) hearing on the company's application for an 11.6 per cent rate increase between now and 2024.The hearing is in its third day.

"Our focus has been on the $2 billion. I would say that's a figure we've been focused on for probably two years and I would say costs have gone up since that time," Nova Scotia Power president Peter Gregg told regulators hearing the company's application.

The company is in the midst of hearings dominated by rate shock looming overNova Scotia Power customers as the utility moves from burning coal and other fossil fuels to generate electricity to a grid supplied by 80 per cent renewables by 2030.

Nova Scotia Power and the Houston government are turning a hopeful eye to the federal government.

"From a national perspective, 55 per cent of the cost to eliminate coal for Canada rests in Nova Scotia. We're 2.9, or three per cent of the total Canadian population. It's a big burden for Nova Scotians and that's been the basis of our ask of the federal government," Gregg said.

More big numbers on third day of hearings

Part of the solution is the Atlantic Loop the proposed transmission corridor to connect Atlantic provinces to hydroelectricity from Labrador and Quebec.

The Nova Scotia Power president said the overall cost of $5 billion often used in media reports is probably an underestimate.

"It may be higher than that," Gregg said.

Gregg was repeatedly pressed for details on Nova Scotia Power's contribution to the Atlantic Loop.

Board vice-chair Roland Deveau wanted to know if there was anything more than a previously announced $350-million transmission line between Onslow, N.S. and Sussex N.B.

"Yes. primarily it would be a contribution to the remaining transmission elements of the Atlantic Loop a portion of the infrastructure to import the power," said Gregg.

"From outside the province?" asked Deveau.

"Right," replied Gregg.

Gregg said he did not know what that would cost.

Grim numbers

Negotiations between the company and federal government are ongoing, including talks between Gregg and officials planned Wednesday night.

In the meantime,the costs facing ratepayers are being examined at the UARB hearing, taking place in a large church hall in Halifax.

The numbers are grim.

Between 2022 and 2024, fuel burned to generate electricity is now forecast to cost nearly $700 million more than the May 2021 estimates used to prepare the Nova Scotia Power application which was for 10 per cent when first submitted earlier this year.

The unrecovered fuel costs for 2022 some $114 million will be collected in rates over several years.

Nova Scotia Power will submit its plan to recover the remaining fuel costs next fall.

Looming carbon tax

The company predicts that by 2029, ratepayers will be on the hook for $658 million in depreciation to write off its coal plants before their useful lives.

And then there is the federal carbon tax.

If Ottawa rejects Nova Scotia's proposal to collect the tax, it could impose the "federal backstop program" which Nova Scotia Power says would cost $243 million over the next two years

"I think ratepayers want to know how much bigger this is going to be and is there any relief on the way," said Deveau.

The company is proceeding with four projects costing $638 million in what's called the Eastern Clean Energy Initiative.

That includes $350 million for the new transmission intertie with New Brunswick, $32 million to convert coal plants to natural gas, $83 million for additional wind power and a $171 million battery storage project.

Federal funding

Ratepayers will not be on the hook for all this.

This summer Prime Minister Justin Trudeauwas in Enfield, N.S., to announce Ottawa will contribute up to $130 million to the Nova Scotia Power battery storage project under the Smart Renewables and Electrification Pathways Program.

Nova Scotia Power has applied to the program to pay for its wind project.

Indigenous wind power projects

At the same July event, Trudeau also announced $125 million in federal spending on Nova Scotia Indigenous participation in wind power projects.

On Wednesday, Gregg said that was part of the provincial government's big wind procurement announced last month.

FiveIndigenous-majority owned entities were awarded the right to develop a total of 372 megawatts of wind powered electricity.