Nova Scotia Power confirmed Thursday that it will once again fail to meet the provincial standard for renewable electricity, but suggested shareholders should not have to pay a $10 million penalty.
The company blamed delayed hydropower deliveries from Muskrat Falls for missing the mark. The requirement was imposed to reduce greenhouse gas emissions.
Nova Scotia Power was supposed to get 40% of its electricity from renewable sources by the end of 2020.
This deadline was extended when the troubled Muskrat Falls hydroelectric project in Newfoundland and Labrador failed to deliver electricity from the contracted “Nova Scotia block” through the Cabot Strait in Nova Scotia.
The province changed rules allowing the company to provide a three-year average of 40% renewable energy by the end of 2022.
Roland Deveau, vice-chairman of the Nova Scotia Utility and Review Board, questioned Nova Scotia Power vice-chairman David Landrigan about the matter Thursday during hearings on the company’s request to raise rates by 11 .6%.
“We expect to be over 40% for the year 2022, but not for the three-year average. So no,” Landrigan said.
“So he wouldn’t comply with the alternate compliance plan?” asked Deveau.
“It wouldn’t,” Landrigan replied.
Nova Scotia Power now faces a heavy financial penalty. But the regulations say that shareholders – not customers – must pay.
Since Nova Scotia only began receiving hydroelectricity from Muskrat Falls in any volume this year, Landrigan suggested the company may not be liable for the penalty of $10 million.
“Delivering the Nova Scotia block was a critical part and it’s actually written into the Renewable Electricity Standard,” he said. “We think it’s out of our control where it has been.”
Beyond their impact on meeting renewable energy standards, the problems at the Muskrat Falls megaproject have also contributed to Nova Scotia Power’s skyrocketing fuel bill.
Fuel costs are now expected to be $516 million higher than the amount recovered in 2023 and 2024 from ratepayers. Approximately 20% is attributed to Muskrat Falls.
In addition to a deficit from the Nova Scotia block, the company failed to secure 2,700 gigawatt hours of additional, market-priced, cheaper hydropower it had counted on from Muskrat Falls.
She had to buy more expensive energy elsewhere.
“You had to go get some replacement power in the middle of a Ukrainian-Russian crisis, didn’t you?” Deveau asked.
Brendan Chard, director of portfolio optimization at Nova Scotia Power, said coal prices have risen from US$70 per tonne to US$200 per tonne in his 2024 fuel cost forecast. coal sells for US$500 a ton.
“So this is really an unprecedented increase in global commodity prices,” Chard said.
On Thursday, Nova Scotia Power said it was in talks with Nalcor, the owner of Muskrat Falls, about the “fairness” of being forced to buy at full price due to delivery delays.