Regulator asks Emera to cut shareholder returns for 'grossly overestimated' Maritime Link benefits
Nova Scotia Power customers getting 'considerably less than they bargained for,' says consumer advocate
Nova Scotia Power customers will shell out $172 million in 2021 to pay for the Maritime Link, the transmission system built to bring electricity from the Muskrat Falls hydro project in Labrador across the Cabot Strait into Nova Scotia.
Regulators approved the charge Monday, but in an unusual move asked NSP's parent company, Emera, to reduce shareholder returns because benefits from the Maritime Link have been "grossly overestimated."
The cost recovery approved by the Nova Scotia Utility and Review Board will not raise customer bills because it has been factored into rates.
The $1.5-billion link was completed in 2017 but has not carried a single kilowatt of electricity from Muskrat Falls into the province because of delays and overruns at the hydro dam site in Labrador and a receiving station in Newfoundland.
Nova Scotia ratepayers, however, have been paying for the Maritime Link since it became operational in 2018.
The link is owned by a subsidiary of Emera, Nova Scotia Power Maritime Link. The company had assured the utility and review board the project would be a net benefit for ratepayers in Nova Scotia since the link can carry electricity the other way into Newfoundland.
Nova Scotia Power Maritime Link estimated those benefits at $120 million per year. In reality, the line has made just $5 million a year.
"Customers have gotten considerably less than they bargained for," said Bill Mahody, consumer advocate representing NSP's 444,000 residential customers.
Mahody and lawyers representing NSP's industrial customers asked the review board to reduce the rate of return Emera earns on its investment in the link from nine per cent to 8.75 percent.
"I appreciate the Maritime Link offers a long-term benefit for customers. There's no question about that. And once the Nova Scotia block is flowing, we'll be in a much better position. But until that flows, it would be appropriate for this utility to consider taking less of an equity return for a period of time," Mahody said.
"It is somewhat unique, but it is a fair balance, I would suggest, between the risks that ratepayers have been burying now for several years."
The company objected, and on Monday the regulator said it did not have evidence before it to unilaterally cut the return, costing shareholders $1.4 million in 2021. But it asked the company to voluntarily lower its rate of return.
"NSPML and NS Power grossly overestimated the value the Maritime Link would provide, even absent the Nova Scotia Block," the board wrote.
"Given the gross overestimation of the benefits of the Maritime Link versus the actual benefits as noted above, and given the costs of the further delays caused by COVID-19, which are being entirely borne by ratepayers, the Board believes it very reasonable to ask NSPML to reconsider its position."
On Monday, the review board approved a cost to be recovered in 2021 from NSP ratepayers, pending a response in one week to its request that the company voluntarily reduce its rate of return.
The company did not provide a response to CBC News for this story.