April 14, 2015
Nova Scotia

Rate ruling may hike South Canoe wind farm cost

JOANN ALBERSTAT, BUSINESS EDITOR | The Chronicle Herald | Published April 13, 2015 | thechronicleherald.ca

Ratepayers may end up paying more than expected for the South Canoe wind farm because of an Appeal Court ruling last week, says the consumer advocate.

John Merrick said Monday he agrees with Nova Scotia Power that the decision could increase the price that customers pay for electricity from the Lunenburg County project. But the Halifax lawyer said it’s too soon to say how much the difference would be, although he expects it to be less than the 50 per cent estimate the utility has given.

“What this court action has done is said the way Nova Scotia Power purported to calculate the rates was invalid,” Merrick said in an interview. “If that means they have to go back to setting rates based on market (price) for the whole of the output of the wind farm, that has the potential to be more expensive for ratepayers.”

In its ruling, the province’s top court struck down a Utility and Review Board decision in 2013 that approved a $93-million capital project for Nova Scotia Power’s share of South Canoe.

The power company has a 49 per cent interest in the $200-million wind farm, which is under construction. The 34-turbine project is led by Oxford Frozen Foods and Minas Energy, formerly Minas Basin Pulp & Power, of Hantsport.

The plan had called for the cost of 17 project turbines owned by Nova Scotia Power to be added into rates. That capital cost would be factored into the payments South Canoe will receive for its energy, resulting in a lower energy price.

But the Nova Scotia Court of Appeal ruled that ratepayers shouldn’t fund the turbines because the power company is involved in a private wind venture.

The court challenge was launched by Cape Breton Explorations, a Glace Bay wind developer that lost out during a competitive bid process, overseen by a consultant hired by the province, that saw South Canoe land a 20-year supply contract with Nova Scotia Power.

While Luciano Lisi, president of Cape Breton Explorations, has said ratepayers are better off not having to fund the utility’s roughly nine per cent return on the South Canoe investment, Merrick said he disagrees.

The consumer advocate had expressed concern during the board hearing about the way the South Canoe consortium was structured but agreed it could save ratepayers money.

Nova Scotia Power has said it’s still studying the decision and deciding how to respond. In the meantime, the ruling doesn’t have an impact on South Canoe construction, almost five months behind schedule due to a separate appeal.

Energy Minister Michel Samson said his department is also reviewing the Appeal Court ruling.

“The fact that we’re undertaking an electricity review right now of our whole system, this will certainly play into what the final outcome is.”

Samson said it’s too soon to say what impact the decision may have on 103-megawatt South Canoe or Nova Scotia Power’s role in future renewable projects.

Merrick said the ruling could have implications for other private wind ventures backed by the utility. They include the smaller Sable Wind project, near Canso, Guysborough County, and the Point Tupper wind farm in Cape Breton, he said.