By ROGER TAYLOR, Business Columnist | The Chronicle Herald | February 22, 2013 | thechronicleherald.ca
The provincial Utility and Review Board may be signalling a change in how it deals with Nova Scotia Power Inc.
The regulated power monopoly has had a knack for getting what it wants from the provincial regulator, but it may have gone too far this week.
Nova Scotia Power is pushing the review board to allow it to charge ratepayers for an estimated $93 million in capital costs, its share of building the 102-megawatt South Canoe wind project in Lunenburg County.
It has been generally expected that the board will allow the company to charge ratepayers, especially since the provincial government has been travelling Nova Scotia touting the project as part of its plan to create more renewable energy.
But not so fast.
The South Canoe project and a Guysborough County one that Nova Scotia Power is also a partner in were approved by the provincial renewable energy administrator in September. However, the utility did not file a board application until December.
Robin McAdam, the utility’s executive vice-president, told the board Thursday that unless the regulator makes a decision by the end of March, it could result in performance fines for Nova Scotia Power.
Board member Murray Doehler asked company officials to explain why it delayed filing its application and is now pressuring the tribunal to come up with a quick decision.
“You’re making us hurry hard to get the thing out and done by the end of March,” Doehler was quoted as saying at Thursday’s hearing.
“To quote Queen Victoria, ‘We’re not amused.’”
The South Canoe partners have contracted with the utility to have the wind farm operating by the end of next year. Oxford Frozen Foods and Minas Basin Pulp and Power Co. Ltd. are the lead partners on the $196-million project, with Nova Scotia Power holding a 49 per cent interest.
Using penalties to get the work completed on time sounds somewhat reasonable, but that would mean Nova Scotia Power would fine itself for not delivering wind-generated electricity from South Canoe by the Jan. 1, 2015, deadline.
A draft version of the contract, released last year, indicated the South Canoe partners would pay a $15,300 fine for every day the project is late.
Oxford and Minas Basin would pay $7,803 per day and Nova Scotia Power would take $7,497 from one pocket and put it in its other pocket.
That scenario is hard to believe, and even Roberta Clarke, chairwoman of the tribunal hearing the application, pressed McAdam to come up with a reasonable explanation for how the penalty provision would work.
“Nova Scotia Power can’t be excused from penalties because it’s contracted with itself,” McAdam told the hearing.
That is just one more twist in the province’s plan to gain more wind-generated electricity.
Nova Scotia Power’s conflict was created once the government allowed the utility to compete against independent power producers vying for the right to build wind projects.
Proponents of the competing projects were required to include their construction costs in the price for the electricity over a 20-year contract. Although Nova Scotia Power was allowed to participate in the process, it doesn’t believe it has the same construction costs restrictions.
No other applicant, including the utility’s partners in South Canoe, could apply to have their construction costs picked up by ratepayers.
Earlier in the hearing, some of the other bidders contented that Nova Scotia Power had an unfair advantage that allowed it to undercut the competing bids by reducing the cost of generating electricity at South Canoe.
Originally, South Canoe was two projects: a 78-megawatt wind farm 51 per cent owned by Oxford Frozen Foods, with 49 per cent held by Nova Scotia Power; and a 24-megawatt project on a neighbouring property that was 51 per cent owned by Minas Basin Pulp and Power and the other 49 per cent owned by the utility.
The size of South Canoe was another complaint of the competitors. They were required to create small wind projects, but now the two neighbouring projects are allowed to merge into South Canoe, which gives that project an even greater advantage.
This is a troubling process for everyone, since it calls into question Nova Scotia’s reputation as a fair place to do business.
One has to wonder if Nova Scotia Power is allowed to pass along the cost of construction to ratepayers whether it could add the late fines to that expense.
URL to article: https://www.wind-watch.org/news/2013/02/23/taylor-nsp-may-be-going-too-far-on-wind-bid/