Maritime Link too risky for power customers, hearing told

A revised agreement to proceed with the Maritime Link project should be rejected because it imposes too much risk on Nova Scotia ratepayers, the province's consumer advocate told the energy regulator on Thursday.

John Merrick said the agreement between Nova Scotia energy company Emera Inc. and Nalcor Energy — Newfoundland and Labrador's Crown-owned energy company — contains too many restrictions and qualifications.

"It clearly puts on ratepayers a risk that shouldn't be there," he said Thursday after taking part in the first day of the latest round of public hearings on the megaproject. "They shouldn't have to incur a risk of cost overruns for this $1.5-billion project."

Merrick said he reached that conclusion after posing questions at the Nova Scotia Utility and Review Board hearing to officials from both Emera and Nalcor.

The Maritime Link would see Emera build a subsea cable that would link Nova Scotia with Newfoundland and Labrador, allowing Nova Scotia Power to buy energy generated by the Muskrat Falls hydroelectric plant, under construction in Labrador.

Under the agreement, Nova Scotia ratepayers would pay for the Maritime Link through their electricity bills.

Nalcor has a 35-year deal with Emera to supply Nova Scotia with 20 per cent of the energy from Muskrat Falls in exchange for paying 20 per cent of the costs of the $7.7-billion project. However, Merrick and other critics of the project have questioned how much it would cost Nova Scotia Power to buy energy in excess of the 20-per-cent block.

The Utility and Review Board hearing is focusing on whether Emera has secured a commercial guarantee from Nalcor for access to cheaper market-priced power over and above Nova Scotia's 20 per cent block. Secure access to cheaper power would make the project the cheapest energy option for Nova Scotia, but just barely, the board has said.

'It just isn't a normal transaction'

Rick Janega, president of Emera Newfoundland and Labrador, told the hearing that Emera has met the board's key condition.

"This agreement goes well beyond creating confidence," he said. "We absolutely believe it creates a first choice for Nova Scotia."

But Merrick told the board that the agreement would not allow Nova Scotia Power to buy enough market-priced power.

Later, Merrick took an even dimmer view of the project, saying outside the hearing Emera is wrong to ask Nova Scotia ratepayers to foot the bill for the Maritime Link, mainly because it doesn't provide good value for their money.

"It just isn't a normal transaction," he said, adding that Nova Scotia Power, a subsidiary of Emera, shouldn't be involved in building energy megaprojects.

Merrick said the Maritime Link would likely be built even if the regulator rejected the deal, removing the risk for ratepayers.

Emera CEO Chris Huskilson said the Halifax-based company is assuming a great deal of risk in the project.

"It's a massive project," he said outside the hearing room. "Just getting the project up and running is something that will take some time, effort and risk."

'Both Emera and Nalcor have stepped up'

He said the project represents the cheapest, long-term energy solution for the province, and if the agreement is approved, Nova Scotia would get the market-priced energy it needs.

"Both Emera and Nalcor have stepped up and have said there is now contractual certainty that the energy will be there," he said.

Huskilson also said that even if there is an energy shortfall from Labrador, Emera has committed to building more wind turbines or other green energy projects to meet its commitments.

Premier Stephen McNeil said he is concerned by the unanswered questions about the deal.

"I think it's important that if you want ratepayers to take the risk, we need to ensure we know what that final deal looks like," he said after the weekly cabinet meeting. "We need to figure out what the board says, and what commitments are being made by the utility towards ratepayers and does it make sense. So we leave the option open for us as a government to continue being a part of this conversation."

Nelson Blackburn, the province's small business advocate, said the answers to his questions also led him to conclude Emera has not met the board's key condition on market-priced power.

"They haven't really complied at all," he said after appearing at the hearing.

He said Merrick's complaint about risks for ratepayers is valid but was addressed at an earlier hearing.