Nova Scotia Power may face competition from renewable energy companies
Renewable energy companies may be allowed to sell directly to customers
The end looms for Nova Scotia Power's monopoly on the province's electricity system.
On Monday, the Nova Scotia Utility and Review Board will open public hearings to set rates and rules to allow renewable energy producers to sell directly to customers for the first time.
"We are in uncharted waters," said John Merrick, who represents the interests of Nova Scotia Power residential customers in regulatory hearings.
"There's never been an attempt to break up the electric generation, transmission and sale business in the way that is being proposed here."
Paying the toll to get on the grid
The issue before regulators revolves around what costs Nova Scotia Power can recover from independent producers to get on its grid.
Nova Scotia Power has proposed multiple tariffs to cover a wide range of costs.
That includes "distribution" to "energy balancing" tariffs that kick in when developers produce too much — and must sell to their "spill over" to NSP, or too little electricity — and NSP "top ups" the difference.
Renewable energy companies won't make a buck if NSP gets the rates it wants, said Dan Roscoe, chief operating officer of SWEB Development, which produces wind energy.
"We do not see providing a commercially-competitive product based on what is proposed," Roscoe said.
Residential customers pay about 15 cents a kilowatt hour, he said, but NSP wants to charge independents between nine and 11 cents in tariffs.
"That leaves us three, four, five cents to produce electricity — which is not very much," Roscoe said.
A charge for 'no service'
Roscoe called many of the tariffs reasonable, but said he objects to the renewable transition tariff. That would allow the utility to recover costs of building the province's electricity system.
"There is no service provided under the tariff," Roscoe said. "It's simply to recoup costs of fossil fuel assets they currently have and will no longer need or be used not as much as a result of customers leaving NSP."
NSP and its shareholders should bear the costs of writing off those assets, he said.
"The people leaving Nova Scotia Power will have to pay for their portion of Nova Scotia Power's assets," Roscoe said. "It's kind of like you sell your GM and buy a Honda, but you still have to pay GM for their loss of profit on the car."
NSP protecting customers who stay
Nova Scotia Power declined an interview, but in its evidence, the company said it is respecting principles set out by the Liberal government when it passed renewable to retail legislation allowing competition.
Nova Scotia Power is obligated to ensure that existing customers not subsidize new entrants and that the cost of opening the retail market should be borne by the participants in that market, vice president Mark Sidebottom said in a filed opening statement for Monday's hearing.
"The tariffs proposed are cost‐based and will operate to ensure that those customers, who choose to continue to take regulated bundled service, do not unfairly bear the cost of providing this new service," Sidebottom said.
Port Hawkesbury Paper weighs in
Concerns are being raised about the potential of application of renewable to retail tariffs on so-called "behind the meter" transactions, where customers do not use any Nova Scotia Power infrastructure.
Port Hawkesbury Paper argues that was never intended by the provinicial government, and so the new tariffs should not apply.
"If NSPI's current interpretation is correct," the company said in a filed statement, "then electricity customers in Nova Scotia that may wish to take alternative electricity service behind the meter would actually be in a worse position than they would have been absent the introduction of the RtR legislation."
Developer promises immediate 10% discount
One wind developer said he intends to avoid NSP's distribution system because he says it has not been adequately upgraded.
Luciano Lisi of CBEX Group said he should not have to pay for any of it.
"We want to deliver behind the meter," Lisi said.
"We want to deliver directly to the consumer and we guarantee a 10 per cent discount from the moment they sign and if they sign longer term, 20 per cent cheaper than anything they can buy from Nova Scotia Power."
Nova Scotia consumer advocate John Merrick says regulators will have to be careful.
"It's complicated by the fact that this is basically a pretty small electricity marketplace, which makes it all the more difficult to break it into pieces and yet have each piece being profitable on its own," Merrick said.
"There isn't enough surplus, if you will, to go around comfortably."
Hearing the case will be utility and review board chairman Peter Gurnham, as well as Kulvinder Dhillon and Roland Deveau.
Five days of hearings are scheduled.