Public hearings begin as Emera seeks $1.7B from ratepayers for Maritime Link

Halifax-based Emera is before the Nova Scotia Utility and Review Board Monday as public hearings begin on its application to recover $1.7 billion from Nova Scotia Power customers.

It is the final bill for the Maritime Link — the subsea and overhead transmission system Emera built to carry clean, green electricity from the Muskrat Fall hydro project in Labrador into Nova Scotia for the next 35 years.

But the company is being challenged by advocates for Nova Scotia Power customer groups who say full recovery is premature given that only a fraction of the contracted electricity from Muskrat Falls is being delivered.

"There's a real question whether or not that condition has been met," said lawyer Bill Mahody, who represents Nova Scotia Power's 400,000 residential customers.

Ratepayers have shelled out $450 million for the Maritime Link since it was completed in 2018 by Emera subsidiary Nova Scotia Power Maritime Link.

It is the corporate entity before regulators.

On time, on budget

Unlike Nalcor, its Newfoundland and Labrador partner in the Muskrat Falls hydro development, Emera built the Maritime Link on time and on budget.

Emera is guaranteed 20 per cent of hydro from Muskrat Falls, known as the Nova Scotia Block.

In August, Nalcor and Emera signed a so-called acceleration agreement where Nalcor agreed to deliver small amounts of the Nova Scotia Block, even though Muskrat Falls is still not fully operational.

No electricity was delivered in October. Still, the first shipment of the Nova Scotia Block was enough for Emera to submit its final bill.

Emera is seeking $169 million from ratepayers in 2022. That has already been factored into rates. It's also asking for $12 million in bonuses paid to executives on the project and $1.4 million in charitable donations and sponsorships.

"Clearly the Maritime Link has been constructed and has been operational since 2018, that's not the end of the project. The end of the project and the goal of the project was the delivery of that Muskrat energy to Nova Scotia. And frankly, that just has not occurred on any timely basis," said Mahody.

'A bitter pill'

Mahody calls the attempt to recover bonuses from ratepayers "a bitter pill."

Emera said it paid the bonuses between 2012 and 2020 as an incentive to retain executives on the project.

If that was the case, it was a failure, said a consultant for the small business advocate in evidence submitted ahead of the hearing.

"Of the 20 management team members in the list who received incentive payments, only eight are listed as still active, and 11 have departed [Nova Scotia Power Maritime Link]," noted John Athas.

In an opening statement filed before the hearing, the lawyer for Nova Scotia Power's industrial customers said there was a "mismatch" between 100 per cent cost recovery when less is being delivered.

"It is clear that as yet, the 'original bargain' — delivery of the N.S. Block, including supplemental energy and the capacity to transact Nalcor market-priced energy — has not been fulfilled," said Nancy Rubin.

Prudent decision

The company said securing advance delivery of the Nova Scotia Block before Muskrat Falls was fully commissioned was a prudent decision.

While the generating turbines in Labrador are working, the Labrador Island Link (LIL) where electricity makes landfall on Newfoundland, has been plagued with software problems.

"The wisdom and benefits of this decision have since been proven," Nova Scotia Power Maritime Link said in evidence filed before the hearing.

"On Oct. 7, 2021, Nalcor announced that it no longer expected to achieve commercial operation of the LIL in November 2021 … Nalcor continues to work towards that schedule but has recently indicated that LIL commissioning by late March 2022 is a reasonably possible outcome."

50-year lifespan questioned

It said Nalcor is obligated to make up shortfalls as soon as possible and in the meantime, low emissions electricity is flowing. Emera is also rebutting evidence challenging the expected 50-year service life of the Maritime Link subsea cable carrying electricity across the Cabot Strait to landfall in Cape Breton.

In his statement submitted ahead of the hearing, Mahody cited a consultant hired by the regulator who said there is no evidence for the expected service life of 50 years; the components of the cables are more likely to have a lifetime of 40 years and the fibre optic cable is to have a lifetime of 25 years.

"Those design parameters are important because the delivery of the energy over the length of the term depends on the performance of that cable," Mahody said.

Nova Scotia Power Maritime Link said in its evidence that it is confident in its claims and has provided additional information to support them.

Five days have been set aside for the hearings.