Homeowners in Nova Scotia will pay about $9 more a month for electricity starting in January.

The Nova Scotia Utility and Review Board announced Wednesday it has approved a deal to hike Nova Scotia Power customers' rates by an average of 9.3 per cent.

The power company negotiated the agreement after discussions with its largest customers and consumer advocate John Merrick.

"No question about it, it's going to be a significant increase for people to take," Merrick told CBC News.

"But in light of fact that Nova Scotia Power has and will incur [cost] increases, unfortunately the reality is that has to be passed through."

The hike means an average monthly increase of about $9 for residential customers, as of Jan. 1. The last rate hike was in April 2007.

Merrick said NSP is facing rising costs in the long term for the fossil fuels it needs to generate electricity, so after a thorough review, the board found the rate hike was reasonable and justified.

"I think the public should be reassured the result was as low as could have been accommodated even if it was a contested hearing running for weeks," said Merrick.

The Affordable Energy Coalition disagrees.

Legal aid lawyer Claire McNeil, spokeswoman for the umbrella group of non-profit organizations that advocate on behalf of low-income Nova Scotians, said power rates keep going up, but minimum wage and social assistance rates haven't kept pace.

"People are still being faced with the choice to heat or eat. Despite programs being offered around heating costs, those are not going to address the problem for the most vulnerable consumers who have energy burdens that just aren't sustainable," she said.

McNeil is calling on the government to review the decision made in the early 1990s to privatize the power company, saying Nova Scotians may not be able to afford a utility that makes a profit off electricity.

Premier doesn't like hike

Premier Rodney MacDonald said the province can't afford to make the utility a Crown corporation again.

He's not a fan of the rate hike either.

"No one wants to see this rate increase," he said. "I certainly don't. The government doesn't agree with it, but you know we have to deal with the realities of what's an arm's-length process, even if we're on the record against it."

Before reaching its deal, Nova Scotia Power had asked for an average rate hike of 11.9 per cent.

The review board also approved a fuel adjustment mechanism for 2010, which will allow Nova Scotia Power to change rates based on changing energy costs without going through a public hearing process.

Merrick said the system will be closely monitored in the first few years to ensure the pricing formula is working properly.