Regulator told utility wouldn’t be immune from any penalties on South Canoe project
Nova Scotia Power would have to pay itself a penalty if the South Canoe wind farm doesn’t begin operating on schedule, the provincial regulator was told Thursday.
A utility executive vice-president testified that the power company would have to pay its share of any liquidated damages that the Lunenburg County project would owe if the project is delayed. South Canoe has a 20-year contract to begin selling electricity to Nova Scotia Power by Jan. 1, 2015.
“Nova Scotia Power can’t be excused from penalties because it’s contracted with itself,” Robin McAdam said during a Nova Scotia Utility and Review Board hearing on the wind farm.
Oxford Frozen Foods and Hantsport’s Minas Basin Pulp and Power are the lead partners on the $200-million project.
Nova Scotia Power owns a 49 per cent share of the New Ross-area venture.
The 102-megawatt project was approved last August by the province’s renewable electricity administrator, beating out 16 other proposed wind farms across the province.
The utility is asking the board to allow its $93-million share of the capital cost of South Canoe to be included in rates.
Board member Roberta Clarke, who is chairing the three-member panel hearing the case, pressed McAdam for details about the penalty provision, which is a standard part of power purchase agreements, but she didn’t receive many answers.
“I’m just trying to think logistically how that would work,” Clarke remarked.
McAdam, who leads the utility’s strategic business and customer services, said the South Canoe partners plan to have the wind farm operating by the end of 2014 to avoid any penalties.
“I’m a big fan of on-time completion of construction,” he told the hearing.
According to a draft version of the contract made public in June, the South Canoe owners would have to pay a $15,300 fine for every day that the project is late. Nova Scotia Power’s share would be $7,497 while Oxford and Minas Basin would cover the remaining $7,803.
The hearing, which began Wednesday, continued in camera Thursday afternoon.
Nova Scotia Power has asked the board for a decision by March 31, saying turbines need to be ordered soon to meet the Jan. 1, 2015, deadline.
South Canoe’s owners have a supply agreement with Acciona Windpower North America to provide 34 three-megawatt turbines. Service and warranty agreements have also been negotiated with Acciona, a subsidiary of a Spanish renewable energy company.
Panel member Murray Doehler asked Nova Scotia Power officials why the project wasn’t filed with the board until December, four months after South Canoe was approved by the administrator.
“You’re making us hurry hard to get the thing out and done by the end of March,” Doehler said. “To quote Queen Victoria, we’re not amused.”
McAdam said contracts took longer to negotiate than expected.
“We felt it was important to nail those down to support the application.”
Other wind developers have cried foul over Nova Scotia Power’s bid to include the project in rates. A group of six developers, whose bids were rejected by the administrator, have told the board that the utility, not ratepayers, should bear the risk of any cost overruns or unforeseen expenses related to South Canoe.
Besides the $93-million capital cost, Nova Scotia Power will also be asking the regulator to approve $23 million in transmission and system upgrades needed for the wind farm.
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