Nova Scotia Power is arguing that Efficiency One's $121-million energy savings program will end up costing rate payers more. The power utility is before a hearing of the Nova Scotia Utility and Review Board this week. (CBC)

Efficiency One has agreed to lower its application for its energy saving program by $7 million during behind-the-scenes bargaining Monday, as hearings opened into its contentious plan.

The newly created utility is seeking regulatory approval to deliver energy savings programs over the next three years to Nova Scotia Power. It originally pegged that at a cost of $121 million, roughly what is currently spent.

It is now willing to change the price tag on its application to about $114 million, still far more than what Nova Scotia Power wants to pay.

During the hearing Efficiency One told the Nova Scotia Utility and Review Board there was agreement between it, Nova Scotia Power and a number of electricity customer groups on performance targets and how to measure the impact of energy efficiency programs.

It then withdrew a request to create a $7 million reserve fund.

The groups, which also includes the consumer advocate, small business advocate and a representative for large industrial customers, have agreed to submit a new cost allocation and recovery model by October 2015.

There is still no agreement on how much should be spent on efficiency programs, what board chairman Peter Gurnham called "the number."

Nova Scotia Power wants to cut the efficiency programs in half arguing they are not necessary or affordable. It says it's willing to pay $66 million from 2016 to 2018.

Rate impact disputed

Greg Blunden, the executive vice-president of customer, business and financial services for Nova Scotia Power, said the E1 program is unnecessary and unaffordable and will be rolled into rates.

"Our plan, on its own, will not impact rates," Efficiency One CEO Allan Crandlemire said in his opening statement.

The board hearing was packed on Monday.

Nova Scotia Power's largest customers, including Michelin, want the E1 proposal sharply reduced.

"They have an efficiency industry to sustain, that is their agenda," said their lawyer Nancy Rubin.

The consumer advocate largely supported Efficiency One, while the Ecology Action Centre said it did not go far enough.

'Draconian cuts'

The environmental group denounced what it calls the "draconian cuts" proposed by Nova Scotia Power, saying they would gut residential services.

The province passed the legislation, forcing Nova Scotia Power and E1 into the arrangement. Representatives from the provincial government appeared at the hearing but did not take a stand on the dispute.

"The province does not have a firm position," said Stephen McGrath, a lawyer for the provincial Environment Department.

The three-member utility and review board panel will have to settle the dispute. Neither side can agree on how the program will be rolled into rates nor how to measure the economic benefit of energy savings.

There are 22 people who have asked to speak about the issue at a public session Monday night.