New Page sale hinges on biomass, power costs

Not only will the mill in Port Hawkesbury get a big break on power if it reopens, but running the biomass generator at the plant could cost taxpayers more than they will gain from having the mill reopen.

Nova Scotia Power built a $200-million boiler to supply renewable electricity to the grid and steam for the mill, which was formerly owned by NewPage. That burner remains a crucial part of Pacific West Commercial Corporation's plans to reopen the mill, because it provides cheap steam to power the paper-making process.

But when the Bowater mill in Queens County closed, it greatly reduced the need for power in the province. It will be three more years before Nova Scotia Power needs biomass to meet its renewable energy requirements. The province passed a law requiring the power corporation to draw 25 per cent of its power from renewable sources by 2015.

Nonetheless, ratepayers will have to pay for the mill to operate, the Utility and Review Board heard Wednesday at hearings into Pacific West's application for a reduced power rate. NSP has been busy weighing the cost of the plant against the amount the mill will contribute toward the project.

"It's clear that the additional fuel costs that other customers may pay could easily swamp the $2 million contribution, or the $20 million over five years," UARB lawyer Bruce Outhouse said at the hearing.

NSP president Rob Bennett agreed with his assessment.

"That's essentially the issue, if the biomass plant is not required to meet (renewable energy source) targets," he said.

Bennett said he wants to make the deal work, but not if ratepayers have to subsidize the mill. The prospective buyer, Ron Stern, hopes that won't happen. He is looking to the province for a fix, so the biomass boiler can operate.

"That's what makes most sense in terms of economics," he said. "It makes the most sense in terms of forestry and environmental policy. I would expect there would be a way to do it on that basis; anything else would be just incomprehensible."

Stern's offer to buy the mill depends on the boiler operating. The Utility and Review Board must decide if it would be a good deal for ratepayers.