Emera is pausing the Atlantic Loop in the wake of power rate cap legislation
The company says the business climate in N.S. has changed as a result of the imposed rate cap
The parent company of Nova Scotia Power says it is pausing spending on the Atlantic Loop, claiming the business climate in its home province changed this week when the Houston government imposed a rate cap and other earning limits on its subsidiary.
Emera CEO Scott Balfour told CBC News the company is now rethinking capital spending, starting with the Atlantic Loop — a multi-billion dollar proposed energy corridor to connect the four Atlantic provinces to hydroelectricity from Quebec and Labrador.
The Atlantic Loop is a key part of the strategy to wean Nova Scotia off its reliance on burning fossil fuels to generate electricity.
"That's one of the first projects that we've said to the team that, you know, we have to push pause on for now," Balfour said. "There isn't enough money in order to continue to pursue that, let alone the ability for us to go to the investment community and say, you know, please invest more money in Nova Scotia in order to enable that kind of project of that kind of scale."
Emera is responding to amendments to the provincial Public Utilities Act introduced this week by Nova Scotia's Progessive Conservative government.
The legislation imposes a 1.8 per cent cap on electricity rate increases for two years — money that must be spent on operation and maintenance.
Fuel costs will continue to flow through to customers.
The amendments also cap the guaranteed rate of return at 9.25 per cent, ensure all excess profits be returned to ratepayers to lower their costs and limit the interest that Nova Scotia Power can charge ratepayers.
The amendments pre-empt — or "kneecap," in Balfour's view — an ongoing Nova Scotia Utility and Review Board hearing into Nova Scotia Power's first general rate application in a decade.
The company is seeking a 13.7 per cent increase over two years, with skyrocketing fuel costs still yet to be determined for 2024 and 2025.
'Very new territory'
Board members were set to deliver a decision on the complex case in the new year.
"This is very new territory in North America for a government to intervene in an independent regulatory process and one I'm deeply concerned about," Balfour said.
In a release this week, Emera said the amendments will result in "a material reduction" in the approximately $1 billion in capital spending planned by Nova Scotia Power in 2023 and 2024.
"The reductions imposed by this legislation will impede Emera and NS Power's ability to advance clean energy investments in the province which were specifically required to meet shared 2030 decarbonization goals. This includes planned investments such as wind generation, grid scale batteries, and enhancements to the interprovincial transmission system," Emera said.
Exactly where Emera plans to cut will become clear on Nov. 11, when the company releases its three-year capital spending plan in a call with investors.
To cut costs immediately, the company cancelled 60 new reliability-related jobs outlined in Nova Scotia Power's 2022 general rate application.
Government response to Atlantic Loop pause
The government was asked on Friday about Emera's decision to press pause on the Atlantic Loop and downplayed its significance.
"I'm not too worried about it to be honest," said Natural Resources and Renewables Minister Tory Rushton, who introduced the rate cap legislation.
"I'm disappointed that Emera and Nova Scotia Power would state that, to be quite honest. But there's many other conversations that can take place with other stakeholders that could be interested in that as well. But it's early days and there's still conversations going on," he said.
Nova Scotia Premier Tim Houston acknowledged the importance of the Atlantic Loop saying it "would make it easier" to achieve the province's requirement that all electricity be from renewable sources by 2030.
"The Loop discussions have been dragging on. There's always been lots of questions. The federal government has been cagey on whether they'll fund it, how much they'll fund it.," he said.
"That's why we've always been focused on other ways to help us meet our targets: wind, solar, hydrogen."
Opposition parties that support the rate cap questioned whether the government was prepared for Emera's reaction.
"We've had questions about the Atlantic Loop for years and we have several times asked this government what's Plan B? And we've heard, 'Oh, there's Plan B, there's Plan B.' We've never heard what it is. Obviously it's concerning. We need to meet our targets," said NDP Leader Claudia Chender.
"It's clear that the government moved on a piece of legislation without thinking about what the consequences would be on that front," said Liberal Leader Zach Churchill.
Jacob Thompson with the Halifax-based environmental group Ecology Action Centre said the rate cap may help with affordability in the short term but at a price.
"The risk of lowering the increase over the next two years is that we potentially put off our climate plans for two years or more," he said.
Emera shares dropped nearly five per cent Wednesday when the rate cap was announced. The stock was down another three per cent Thursday, closing at $49.99 a share
Emera's future in Halifax
Headquartered in Halifax, Nova Scotia Power generates just 15 per cent of Emera earnings.
Balfour would not answer directly when asked if Emera will remain in the province.
"It's impossible not to look through the lens of our continued investment and growth in Nova Scotia differently today than we did," he said.
"Nova Scotia remains home, but our focus in terms of future growth and job creation and all those things, by necessity out of this legislation will increasingly focus elsewhere."
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