Nova Scotia's Utility and Review Board has approved a controversial rate deal that will give the idled pulp mill in Port Hawkesbury cheaper electricity.

Pacific West Commercial Corp. of British Columbia had said it would restart the mill, only if it's able to get the discounted power rate, known as a load retention rate (LRR).

In a decision released Monday morning, regulators approved the complicated arrangement that could see Nova Scotia Power become a shareholder in the mill and get paid for its electricity in dividends.

"The Board is satisfied that the evidence of PWCC establishes the need for a LRR to re-open the mill and afford it the prospect of long-term viability," read the decision.

"The Board considers that some contribution to fixed costs is better than the other ratepayers having to bear all of the costs."

The Utility and Review Board has attached some conditions to its approval.

Monday's ruling essentially approves the structure of the seven-year rate deal submitted by Pacific West and Nova Scotia Power, but the company's offer will not become a final deal without the approval of the federal government.

Nova Scotia Power wants to become a 30 per cent owner in the mill and receive payments for electricity in tax free dividends. That arrangement needs approval from the Canada Revenue Agency (CRA), which has been asked for an advanced ruling.

Pacific West also wants to use $1 billion of accumulated losses by the previous owner against its taxes. That, too, needs CRA approval.

The proposed sale will collapse if CRA rejects any aspect of the deal.

When contacted by CBC News, a representative of CRA says the agency will not comment, because of confidentiality.

Meanwhile, the utility regulator wants a guarantee that rate payers will not have to absorb additional costs from operating a biomass plant that supplies the mill with energy.

Nova Scotia Power says it "welcomes the news today."

"We are pleased the board has provided its approval. This decision provides new hopes for the community of Port Hawkesbury, and it's in the best interest of all other customers as well," said Neera Ritcey, a company spokesperson.

Pacific West Commercial Corp. bid to buy the mill for $33 million and creditors voted more than 85 per cent in favour of the deal Friday.

The mill has been closed since September 2011.