Nova Scotia’s top court has thrown a wrench in Nova Scotia Power’s involvement in a $200-million Lunenburg County wind farm.
The Nova Scotia Court of Appeal quashed an earlier Utility and Review Board decision that approved a $93-million capital project for the utility’s share of the South Canoe project.
That means the power company can’t put its portion of the 34-turbine wind farm into rates and has to fund it another way.
The 103-megawatt venture is under construction near New Ross. South Canoe is majority owned by Oxford Frozen Foods and Minas Energy, previously Minas Basin Pulp & Paper, of Hantsport.
Nova Scotia Power owns a 49 per cent interest in the venture.
The provincial regulator approved the capital project in 2013. But a Glace Bay wind developer, Cape Breton Explorations, challenged that ruling in the courts.
In a decision released Friday, the appeal court said the provincial regulator was wrong to decide that Nova Scotia Power’s involvement in a private wind venture qualified as a utility service under provincial law.
“The (board’s) conclusion that (Nova Scotia Power’s) investment in the South Canoe wind project is properly included in the rate base is unreasonable,” Justice David Farrar wrote on behalf of the hearing panel.
The appeal court said it didn’t have the authority to overturn the 2012 decision that awarded South Canoe a 20-year supply contract with the utility. The decision was made by an independent renewable electricity administrator hired by the province.
But the court did raise questions about the utility’s involvement in a process aimed at independent producers.
“The arrangement of Oxford/Minas and (Nova Scotia Power) certainly stretches the definition of (independent power producer) to a breaking point,” Justice David Farrar wrote on behalf of the hearing panel.
Farrar said Nova Scotia Power may have qualified as an independent under previous renewable energy laws but less so under changes made in 2010.
A Nova Scotia Power spokeswoman said the decision is“disappointing” because it means the project will have less value for ratepayers in the long term. Sasha Irving said the ruling means the company now has to fund its share of South Canoe from a portion of the revenues the wind farm will receive for its electricity.
“Industry norm would say it’s about 50 per cent of our project value would now be lost for customers,” she said in an interview.
Irving couldn’t put a pricetag on the difference, saying the amount depends on how much power the project generates once it’s operational.
The wind farm, which was slated to be operational Jan. 1, is now aiming for a May launch.
Irving couldn’t say what steps, if any, Nova Scotia Power will take in response to the decision because time is needed to review it. She did say the court ruling doesn’t change the project’s construction schedule.
Luciano Lisi, president of Cape Breton Explorations, said the power company would rather have the capital project in rates, where it earns a roughly nine per cent return on the investment.
“All we know for sure is that this is good for ratepayers. They will be paying less,” he said.
Lisi also said the decision means Nova Scotia Power can’t be part of any future tendering process meant for independent producers.
South Canoe is being built to help the province meet its 25 per cent renewable target, which takes effect this year.
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