Ratepayers shouldn’t be covering Nova Scotia Power’s $93-million share of the cost of building a Lunenburg County wind farm, says an energy expert hired by a rival Cape Breton developer.
John Todd, a consultant with Elenchus Research Associates Inc. of Toronto, is telling the regulator that ratepayers should only cover the cost of buying electricity from the 102-megawatt South Canoe wind project.
“The costs to be recovered in rates should be limited to the amounts paid for the power under the (power-purchase agreements),” Todd, working for Cape Breton Explorations Ltd., said in a filing made public Wednesday.
Nova Scotia Power asked the Utility and Review Board last month to pass its share of the $196-million overall project cost on to ratepayers.
Besides the $93 million in capital costs, the project will require $23 million in spending related to transmission and system upgrades.
The utility owns a 49 per cent stake in South Canoe, which includes two wind farms.
Oxford Frozen Foods is developing a 78-megawatt project, while Minas Basin Pulp and Power has a 24-megawatt venture on a neighbouring property.
The projects, slated to be operational by Jan. 1, 2015, were awarded contracts by the province’s renewable electricity administrator last August.
Nova Scotia Power is also a minority partner in the third winning bidder, Sable Wind, led by the Municipality of the District of Guysborough.
The three projects beat out 16 other proposed wind farms, including ones proposed by Cape Breton Explorations.
The developer’s consultant said South Canoe should be treated like any other independent power producer that supplies electricity to the grid.
“In essence, regardless of the actual legal status of any IPP that includes (Nova Scotia Power) as a partner, the partnership that wins competitive bids would be treated as a distinct entity, exactly as the winning bidder would be treated if (Nova Scotia Power) was not a partner in the winning bid,” Todd said in his report.
He also said having such a policy would protect ratepayers from cost overruns. The board would also be ensuring that any future competitive bidding process to award green-energy contracts is fair, he said.
Otherwise, Nova Scotia Power and its partners could potentially submit a low bid, win the contract and then seek to recover their actual higher costs in rates, Todd said.
Financial details of the contracts haven’t been made public. But the renewable electricity administrator, Massachusetts consultant John Dalton, has said the average purchase price is in the mid-$70 per megawatt range.
Other consultants expressed similar concerns about escalating costs, risks to ratepayers and Nova Scotia Power being in a perceived conflict of interest.
A consultant for the consumer advocate said the power corporation has underestimated some project costs, including administrative overhead and financing.
Paul Chernick, president of Resources Insight Inc. of Massachusetts, also said ratepayers should be the ones to benefit from the tax breaks the utility will receive next year because of the project, although rates have already been set for that year.
John Athas, a consultant for the small-business advocate, said the regulator should investigate potential changes to any future bidding process.
Athas, of La Capra Associates of Boston, said the board should have more oversight over the rules related to contract awards.
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