Nova Scotia

Nova Scotia Power rates to rise between 2017 and 2019

Nova Scotia Power responds to the provincial government's new plan aimed at stabilizing the price of electricity.

Province plans to pass legislation allowing it to impose regulations and fines of up to $1M

The Nova Scotia government has released its 25-year plan for electricity in Nova Scotia, which includes some strict rules for Nova Scotia Power. The utility said Tuesday power rates will rise. (Colin Perkel/Canadian Press)

Nova Scotia Power predicts rates will rise between one per cent and 1.5 percent each year from 2017 to 2019 inclusive.

The raise is mostly related to fuel costs, which account for approximately 35 percent of power rates.

The utility made the announcement Tuesday after the province introduced its electricity plan on Monday, which mandates a three-year rate. There will be no rate increase for most customers in 2016 and there is even a possibility of a slight cut, NS Power confirmed Tuesday. 

Under the plan, NS Power must apply for a power-rate increase that will remain the same for 2017, 2018 and 2019.

"Rate increases will be small — less than inflation and they will be less than they have been historically," said Bob Hanf, president of NS Power. 

The utility's vice-president of operations, Wayne O'Connor, said commodity prices for coal, oil, and natural gas (which make up 75 percent of Nova Scotia's present fuel mix) are at historic lows and now is a good time to increase hedging.

50% of fuel costs 'locked in'

He compared that to homeowners choosing a fixed, rather than a floating, mortgage rate. O'Connor says with long-term contracts and greater reliance on hydro from Muskrat Falls and other renewables such as wind, 50 percent of NS Power's fuel costs are already "locked in."

O'Connor agreed no one can predict coal or oil prices four years from now, or what will happen to the other 50 percent of fuel costs, which remain volatile.

Spikes in fuel costs that aren't locked in have the potential to make a mockery of today's three-year forecast for power rate increases, 35 to 40 percent of which are tied to fuel.

Hanf says the company is striving for a zero increase in non-fuel cost items between 2017 and 2019. He noted NS Power's four-year labour agreement with its unions and cuts to staff and pension costs as measures the company has taken to bring its costs down.

Hanf also said the utility will meet whatever performance standards the province imposes on NS Power, as other Emera-owned utilities in Maine and the Caribbean already do.

On Monday, the province announced performance standards which include penalties of up to $1 million if the utility does not measure up in areas of reliability, storm response and customer service. 

No rate cut in plan

The province intends to pass legislation this fall that will set a framework for the standards, which will guide the Nova Scotia Utility and Review Board as it enforces the new rules. 

The plan calls for 40 per cent renewable electricity by 2020, and between 16 and 22 megawatts of electricity from in-stream tidal production near Parrsboro by the early 2020s. 

Hanf said the province's decision to move to more renewable energy gives NS Power "a position of strength" because renewables provide the utility with more flexibility and can act as a buffer against spikes in other commodities such as natural gas.

The plan also commits $1.5 million over next three years to research technologies related to energy storage, tidal and solar power.

Though the Liberals promised a power-rate cut during the 2013 provincial election, the plan does not include lower rates.

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