Nova Scotia Power says it wants to increase power rates next year to offset the cost of clean-burning coal.

The utility wants to hike residential rates by 12 per cent and industrial rates by as much as 18 per cent.

Cleaner coal is required to meet the province's emission controls, but it costs more, the company said.

"It is a very difficult challenge for many of our customers to see rate increases at all, and certainly this is a large number that we're talking about," said Rene Gallant, the company's general manager of regulatory affairs.

Consumer advocate John Merrick said the announcement was expected, but he was surprised by the size of the hike.

"I think we have to accept if Nova Scotia Power is going to be asked to meet emission controls, and they say that they have to buy more expensive coal to do that, then there will have to be some sort of an adjustment on rates," he said. "What needs to be looked at very carefully is whether the costs that they say they're incurring are, in fact, legitimate costs to meet that goal."

Gallant said Nova Scotia Power has done everything it can to keep costs at a minimum, including investing in renewable energy sources to keep costs from going up too much in the future.

The Nova Scotia Utility and Review Board will hold a hearing in October and make the final decision on whether the January 2011 increase will be allowed.