35-year hydro electricity supply set to flow into Nova Scotia
Emera announced milestone supply of green electricity but also applied for ratepayers to pay for bonuses
First delivery of the so-called Nova Scotia block of electricity from the Muskrat Falls hydro project will arrive in Nova Scotia by Sunday, triggering a 35-year supply agreement that will help lower the province's greenhouse gas emissions by increasing the use of renewable energy.
The electricity will arrive over an ambitious overland and subsea transmission system built by Nova Scotia Power Maritime Link, a subsidiary of Halifax-based Emera.
"This transformative project will deliver clean, renewable energy to customers for generations to come and it is the first step in the regional transmission interconnections that will move us toward achieving net zero CO2 emissions by 2050 in Nova Scotia," Rick Janega, Emera's chief operating officer for Canada and the Caribbean, said Monday in a news release.
The company declined to be interviewed.
"With the arrival of the N.S. Block, we are on track to generate approximately 60 per cent of our electricity from renewable sources by 2022 and this will help us achieve our shared goal of 80 per cent renewable by 2030," said Peter Gregg, president of Nova Scotia Power, in the release.
Emera wants ratepayers to pay for bonuses
Muskrat Falls hydro has been delivered to Nova Scotia on a piecemeal basis, but it was not considered part of the long-term supply agreement.
The same day it announced the commercial milestone, Emera also submitted the final bill for the Maritime Link — $1.7 billion — to Nova Scotia regulators. That amount is $1.57 billion for capital costs and an additional $208 million as an allowance for funds used during construction.
Emera wants to recover the cost from customers of another subsidiary, Nova Scotia Power, including millions of dollars in salaries and incentive bonuses paid to Emera managers who completed the Maritime Link on time and on budget.
Longest marine transmission cable in North America
The Maritime Link was completed in late 2017. It can carry 500 megawatts of high-voltage direct current.
The project included more than 300 kilometres of overland transmission on the island of Newfoundland, two 170-kilometre subsea cables across the Cabot Strait and 50 kilometres of overland transmission in Nova Scotia.
As part of the original agreement to start Muskrat Falls, Emera agreed to put up 20 per cent of the original cost in return for 20 per cent of the power generated.
That deal insulated ratepayers in Nova Scotia from the disastrous cost overruns and delays in Newfoundland and Labrador, where the hydro development is years behind schedule and billions of dollars over budget.
While turbines at the big hydro dam at Muskrat Falls are generating electricity, the transmission system in Newfoundland — the Labrador-Island Link — is still not fully commissioned. That is not expected until Nov. 27.
In its filing Monday, Nova Scotia Power Maritime Link (NSPML) told regulators that Emera's Newfoundland partner, Nalcor, agreed to accelerate delivery of the Nova Scotia block while the Labrador-Island Link is undergoing final commissioning.
"Starting the N.S. block Aug. 15, 2021, is important for Nova Scotia customers since it accelerates the reduction in coal-fired generation and associated costs and marks a significant step towards the province's environmental and energy goals of 2030 and beyond," NSPML said.
Ratepayers on the hook since 2018
The Nova Scotia Utility and Review Board will scrutinize the application to recover the final costs of the Maritime Link.
Nova Scotia Power customers have been paying for it in rates since completion, shelling out $109 million in 2018, $115 million in 2019, $144 million in 2020 and $172 million this year.
The application seeks $169 million in 2022. It's not clear what impact it will have on rates.
The company, and experts it hired, said management of the mega project was "in all respects reasonable and prudent, and met or exceeded industry norms," especially given setbacks. It budgeted $139 million for contingencies, which helped offset extra costs for construction delays in Newfoundland.
Will ratepayers pay full salaries, bonuses?
Under the Public Utilities Act, ratepayers cannot be charged for Nova Scotia Power executive salaries above a provincial government deputy minister.
Emera said those limits should not apply to Nova Scotia Power Maritime Link.
"If the legal and regulatory limitations respecting compensation that are placed upon N.S. Power were placed on NSPML, the impact from the beginning of the development of the project in 2012 through to the end of 2020, would approximate $12.3 million ... $13 million by the end of the 2021."
The company also wants ratepayers to pay for incentives paid to NSPML — something consultant John Reed of Boston-based Concentric Consulting said should be approved.
"There is a direct link between achieving the goals that trigger incentive compensation and benefits flowing to customers," Reed said in evidence.
The amount of money paid in bonuses is redacted in the application and Emera spokesperson Jennifer Parker declined to release the information.
"We are requesting recovery of these costs given the unique nature of the Maritime Link project (these employees were dedicated to the Maritime Link project and not involved in the operations of N.S. Power)," Parker said in a statement.
"Compensation paid to the project team was entirely focused on the successful completion of the Maritime Link on time and on budget. It was essential to the success of the project that senior project management be retained despite significant competition for large utility project resources."