The Utility and Review Board is set to hear about a controversial audit claiming Nova Scotia Power overcharged its customers by $21.8 million over two years. (CBC)

A public hearing studying a controversial audit that says Nova Scotia Power overcharged customers for fuel costs by $21.8 million is set to begin Monday.

The week-long hearing at the Nova Scotia Utility and Review Board is set to review an audit report by Liberty Consulting Group, which accused the utility of overcharging millions of dollars over the last two years because of poor fuel purchasing.

Nova Scotia Power has been vigorously objecting to the report and its conclusions, calling the claims false and defamatory and spending $2 million to refute the findings.

Don Regan, head of the Berwick Electric Commission, said he's noticed the strident tone used by Nova Scotia Power.

"It's quite unusual for a company such as Nova Scotia power to impugn the motives and the competence of an auditor hired by the regulator," he told CBC News.

"I found that quite remarkable."

Pennsylvania-based Liberty Consulting Group was critical of how Nova Scotia Power hedged natural gas prices last year and why it didn't get a lower price now that its parent company — Emera Inc. — owns a pipeline in New Brunswick.

If the Utility and Review Board accepts the audit, Nova Scotia Power may be forced to lower power bills by $21.8 million or 1.5 per cent next year.

Portions of audit blacked out

Several portions of the 263-page report were blacked out, which prompted a months-long battle between the utility and members of the public, who argued they had a right to see the full audit.

In September, Nova Scotia Power lost its bid to suppress the audit and Liberty Consulting Group was ordered to provide an unredacted version of its report.

Regan said he's interested in whether the consultant can support its claim that because Nova Scotia Power's parent company profits from natural gas, it may have prevented the power company from negotiating a better price for the fuel.

"Big things are at stake," he said.

"I think that the issue of imprudent transactions, particularly on affiliate transactions, is something Nova Scotia Power is very sensitive to."

Nova Scotia Power has also asked the Utility and Review Board for a rate hike of three per cent in each of the next two years for residential customers. The utility said the increase will add about $3.50 a month to an average household's power bill in both 2013 and 2014.

If the increase is approved, residential customers will pay Nova Scotia Power an additional $37.6 million over the next two years — $18.6 million in 2013 and about $19 million in 2014.