Nova Scotia Power board approves biomass deal with NewPage

Nova Scotia Power Inc.'s boardof directors approved a resolution to proceed witha Cape Breton pulp mill biomass project Monday night just hours after the provincial regulatory body slapped the company's wrist.

Theapproval is conditional upon the Nova Scotia Utility and Review Boardaccepting the power company's request to declare the project financially sound.

The hearing over whether to proceed withthe large-scale project to generate renewable electricity from wood waste from a NewPage PortHawkesbury Ltd.mill was nearly cancelled Monday when review board chairman Peter Gurnham learned that Nova Scotia Powers board of directors had not yet approved the energy project.

"Why should this hearing proceed in circumstances where the NSPI board has not approved the transaction?

"The secondary question that concerns me, but perhaps not as much, is much of the due diligence appears left to be done," Gurnham said.

Untendered deal

The power corporation and NewPage Port Hawkesbury Ltd.havean untendered deal to go ahead with the project and they are before thereview boardrequesting approval for a 25-year biomass project.

Nova Scotia Powers energy purchases normally go through an open bidding competition.

The power corporationwants approval from theutility and review boardin order for the electricity generated to count under new provincial renewable energy regulations.

Nova Scotia Powerexecutive Robin McAdam said Monday that the power company doesn't need permission from thereview boardto sign a contract to buy green power from the NewPage mill, but new government ruleson renewables means ratepayers must share the risk with its shareholders.

"Given the magnitude of this commitment, over $1 billion, and the fact that the opportunity has arisen outside NSPI's normal process for procurement, it isappropriate that the companyconfirm that is has the approval of the [review board]before proceeding," McAdam said.

"NewPage is as sensitive as any NSPI ratepayer to the vital importance of ensuring competitively priced purchases by the utility."

Boiler burns waste wood

The mill in Point Tupper already burns wood shavings and junk logs to save on its power bill. Since it has more room in the boiler, it's offering to sell electricity from waste wood to the power corporation to help meet its targets for renewable energy.

That would mean electricity for 50,000 homes and account for more than 10 per cent of the annual provincial harvest of wood. It would also mean a 50 per cent increase in the amount of wood harvested from the forest.

David MacDougall, a lawyer for NewPage, said Monday that the pulp mill is offeringto sell the electricity from scrap wood enough to meet its renewable targets.

NewPage wants thereview boardto approve the deal, he said,because it would cost $1 billion over 25 years to buy this biomass energy.

"We cannot finalizeequity financing, nor can we finalize debt financing for the project without a power purchase agreement. We need a power purchase agreement," MacDougall said.

The review board continued to hear arguments Tuesday.