Taxpayer could end up paying mill's power bill

Nova Scotia's consumer advocate has asked the Utility and Review Board to dismiss an application for a reduced power rate for the Port Hawkesbury paper mill that formerly belonged to NewPage.

The rate would give Pacific West Commercial Corp. among the lowest power costs in North America, if not the lowest. But the seven-year deal would also leave consumers on the hook if the mill's owners, Pacific West and Nova Scotia Power, have underestimated what it would cost to supply the mill with electricity.

"In our assessment, there is a greater than reasonable risk that taxpayers will be subsidizing the power costs of the mill," said consumer advocate Bill Mahody.

Pacific West CEO Ron Stern said the rate was designed to cut the mill's former power bill in half, without requiring any subsidy from the taxpayer.

Stern said he would walk away from the mill if the rate is not approved "as is."

"Unless the Port Hawkesbury mill can become a very low-cost operation, it simply will not succeed," said Stern.

In his submission, Stern also requested a decision by mid-August, so he can start the mill by September. It is costing the province $100,000 a day to keep the plant idle, he said, and if the mill doesn't start by September, it will lose orders for next year.

Hearings continue all week. In order to proceed, the deal must be approved not only by the Utility and Review Board, but also the Canada Revenue Agency. That's because Nova Scotia Power, as part-owner, is hoping to claim a tax write-off for the mill's losses, as compensation for its reduction in power costs.