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Untendered contract draws criticism for NSP

Nova Scotia Power came in for more criticism Friday as a group of its biggest customers strongly objected to an untendered $25-million construction contract and $1-million bonus awarded to an affiliate company in a wind farm deal last year.

The Avon Group doesn’t want Nova Scotia Power’s customers to have to pay for the million-dollar bonus to Emera Utility Services Inc., and it also wants to disallow $1.5 million of the construction contract for the Digby wind farm, the group states in a submission to the Nova Scotia Utility and Review Board.

“The deal smacks of preferential treatment,” Halifax lawyer Nancy Rubin, representing the Avon Group, wrote in a seven-page letter filed Friday.

Last year, Nova Scotia Power purchased the 20-turbine Digby wind farm from another affiliate, 3240384 Nova Scotia Ltd., and is now seeking review board approval to pass along the $82.7-million cost of buying the assets and development rights.

The original developer of the Digby wind farm, Sky Power, went into creditor protection in August 2009, and then the numbered company, set up by Nova Scotia Power’s parent company Emera Inc., took over the project.

Subsequently, Emera Utility Services, another subsidiary of Emera Inc., was given the untendered $25-million construction contract and was later handed a $1-million bonus for completing the wind farm last month. The wind farm is now generating electricity.

Rubin argued that Nova Scotia Power broke the code of conduct it adopted in June 2009. That code was intended to ensure that Nova Scotia Power’s transactions with its affiliates were “designed and carried out to produce demonstrable benefit to Nova Scotia Power customers.”

Rubin wrote: “It is extremely difficult to be satisfied that the Emera Utility Services lump-sum price is the best price for Nova Scotia Power customers.”

Nova Scotia Power has defended its awarding of the untendered contract and the bonus, arguing that its customers received the “best value” because stopping work on the project would have prevented it from being completed on time. And if a substantial amount of the work had not been finished by last March, federal government incentives totalling almost $10 million over the life of the project would have been lost, the utility said.

“The transactions between Nova Scotia Power and its affiliates have served to preserve benefits to customers and demonstrate that Nova Scotia Power proceeded with the best option available at the time,” the company said.

The review board can approve, reject or place conditions on the utility’s request to recover the $82.7 million in project costs from its customers.