As fossil fuel costs soar, Nova Scotia Power is looking to secure a domestic supply of coal from the recently-reopened Donkin mine in Cape Breton—and pushing to pass the cost on to ratepayers.
News of the coal negotiations might come as a surprise, given NSPC’s pledge to phase out this dirtiest of fossil fuels and shift the grid to 80% renewables by 2030, CBC News reports.
The utility disclosed the coal negotiations with West Virginia-owned Donkin—which recently restarted in the face of considerable opposition—during a Nova Scotia Utility and Review Board hearing into its application for an 11.6% rate increase by 2024, up from the 10% it applied for in May.
NSPC is seeking the additional rate hike even after the province agreed to waive carbon emissions penalties worth C$165 million, to help prevent “rate shock” after the privately-owned utility pegged its fuel cost $681 million higher than its original May, 2021 forecast.
“Under your proposal, ratepayers will finish paying for 2022 fuel costs in December of 2025, is that correct?” consumer advocate Bill Mahody, representing residential customers, asked Michael Willett, Nova Scotia Power’s director of regulatory finance.
“That is the proposal, correct,” Willet replied.
But the rising price of fossil fuels is not the only reason for Nova Scotia Power’s aggressive recalibration. Another contributing factor: “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,” CBC says.
Nova Scotia Power also felt some heat over its request for a “storm rider,” which would allow it to add up to 2% per year to consumer power rates to cover storm response and damages if those costs breach the $10 million the company has set aside.
Board counsel Bruce Outhouse asked NSPC if it would still seek the rider if it managed to earn the 9% rate of return currently allowed by the regulator. “Surely you wouldn’t expect the board to consider an application to get extra money for storm costs, would you?” Outhouse asked.
The answer is yes, they would. “If the board denies the storm rider, the company wants permission to charge ratepayers $20 million per year to cover severe storms,” writes CBC.
The figure included the cost of responding to Hurricane Dorian in 2019, the most expensive storm it has had to weather. But board member Steven Murphy said Nova Scotia Power had been granted permission to exclude Dorian from its performance evaluation that year.
“Why do you think it would be appropriate to include Hurricane Dorian costs when Nova Scotia Power applied for and received board approval to have Hurricane Dorian removed from any metrics related to calculating Nova Scotia Power’s performance standards?” Murphy asked.