The Nova Scotia government says it hopes to stave off steep electricity rate hikes by handing Nova Scotia Power (NSP) $117 million for fuel costs the utility was set to recover from customers this year
Minister of Natural Resources and Renewables Tory Rushton said Monday that customers will still have to pay the entire amount, but it will be spread out over a 10-year period, limiting bill increases to just 1.1 per cent in 2024, instead of 7 per cent if the government had not acted.
"Now is not the time for another significant increase of power rates," he said. "We needed to find a way to protect ratepayers."
The proposal is still pending approval from the Nova Scotia Utility Review Board.
In its application to the board Monday, NSP said it must recover at least $117 million of roughly $395 million in unrecovered fuel costs in 2024 or risk having its credit rating further downgraded.
Plan needs approval from regulator
The utility told regulators its plan has the general support of stakeholders, including consumer and small business advocates.
But even if its approved, that doesn't mean customers are necessarily safe from seeing their power bills increase further in the coming years.
Roughly two-thirds of NSP's fuel costs are still unrecovered, something that will need to be addressed in the near future, according to the utility. The costs are the amount NSP paid for fossil fuels it burned to generate electricity. Those costs jumped because of international events like the Ukraine War, and more fuel was needed because NSP did not receive the expected amounts of renewable energy from the troubled Muskrat Falls hydroelectric project in Labrador.
Rushton said he hopes the federal government will offer Nova Scotia a similar bailout plan to the one Newfoundland and Labrador was given over the Muskrat Falls hydro project to help stave off further increases.
Global issues at play, says NSP
"We're looking at the federal government and having positive conversations of what the remaining part of this mechanism could look like for 2025."
NSP president and CEO Peter Gregg said in a statement that changes in global markets have hit the company hard. NSP is owned by Halifax-based Emera, a publicly traded company.
"We have seen unprecedented volatility in fuel costs in recent years due to global events. For example, in 2022 the actual cost of natural gas was 47 per cent higher than forecasted due to impacts from the war in Ukraine and the resulting disruption to natural gas markets. NS Power uses purchased fuel as part of our overall supply to deliver electricity to our customers."
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