A deal being sought by wind developers and the province, against the better judgment of Nova Scotia Power Inc. and an advocate for consumers, will be cold comfort for ratepayers.
They could get stuck paying premium rates for unnecessary wind power for years on end if developers and the province have their way.
A contract drafted by the province on behalf of the utility, and subject to approval by the Nova Scotia Utility and Review Board, sparked a flurry of arguments from developers this week.
They want the latitude to provide more wind than the utility requires at any given time and still receive a premium rate for the excess power supplied under the community feed-in tariff.
Given the unpredictable nature of wind, developers want to be free to deliver up to 20 per cent more power than agreed upon, smoothed over a three-year period, before accepting a lower rate for any excess power they generate.
The province and the utility agree there needs to be a limit on how much excess power should be acquired at the premium rate, called a community feed-in tariff.
But while the utility wants a reduced rate to kick in as soon as supply exceeds demand, the province wants to decide if and when any limit should be imposed.
John Merrick, the consumer advocate who represents ratepayers in this discussion, warned the government’s laid-back approach could leave ratepayers “overpaying for years” before costs for surplus wind power were brought under control.
The community feed-in tariff is a subsidy for power produced under the auspices of non-profit organizations or companies that raise capital through community investment funds. Even though it is a regional economic development scheme mandated by the government, the program is delivered through the power utility.
Wind procured from projects under non-profit management costs up to six times as much as commercial wind production, reflecting relative risk and costs, especially financing.
Under this long-term tariff, developers qualify for premium rates on wind power they sell to the utility: 49.9 cents per kilowatt hour for small projects and 13.1 cents per kilowatt hour for larger projects.
By contrast, according to figures supplied by Nova Scotia Power, wind power from utility-owned turbines costs less than eight cents per kilowatt hour.
Wind power contracted from large-scale independent producers can cost a little more, but is well below the tariff fixed for so-called “community” wind projects.
To qualify for the premium tariff, non-profit power producers are only required to invest 20 per cent debt or equity in those energy projects. The rest is sourced from the capital market at rates that far exceed the costs at which large projects can be financed.
“Community-owned” wind projects are subsidized at such a heavy rate to create local investment opportunities in rural areas and to stimulate the economy.
The tragedy, as it grows colder, is that many residents on fixed or low incomes would be better off if the province relied on cheap, commercial wind power instead puffing up the price for “local” wind.
Rachel Brighton, a freelance journalist and former magazine publisher, writes on industry, ethics, economics and the environment.
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