Nova Scotia Power warned by consultant of Muskrat Falls delays

Nova Scotia should expect a delay of at least one year before the arrival of hydroelectricity from the troubled Muskrat Falls megaproject in Labrador.

"The April 2018 target for energy delivery will not be met, and may slip considerably," warns Liberty Consulting in evidence filed with the Nova Scotia Utility and Review Board this week.

The consultants were hired by regulators to examine an application by Nova Scotia Power to raise rates by 4.5 per cent over the next three years to cover its fuel costs.

By law, Nova Scotia Power fuel costs are automatically passed on to ratepayers. The application was a response to legislation passed by Nova Scotia's Liberal government imposing three years of "rate stability."

Liberty Consulting says the NSP application has not factored in the deteriorating situation at Muskrat Falls, which is over budget and behind schedule.

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'Customers would pay twice'

Nova Scotia Power has a long-term contract to buy 20 per cent of electricity produced at Muskrat Falls.

"NS Power has assumed it will start paying for the Maritime Link and its associated energy on Jan. 1, 2018, regardless of the amount of energy actually provided at that time," the Liberty report says.

"NS Power would have to provide replacement energy for deliveries not made due to Muskrat Falls delay, in effect therefore NS Power and its customers would pay twice for that energy until deliveries over the link commence."

Liberty is urging regulators to incorporate a one-year delay into the overall fuel costs. The consultants did not estimate that cost, saying only that it "might add slightly to rate increases."

Premier dismisses concerns

Nova Scotia Power declined to be interviewed on Liberty's warnings.

"We will respond in our evidence through the regulatory process, working with our stakeholders and with the board," Bev Ware, a spokesperson for Nova Scotia Power, said in an email. Regulatory hearings are set for June 13.

Premier Stephen McNeil dismissed the Liberty assertions.

"We don't believe this will impact ratepayers at all," he told CBC News.

'Our piece is locked in'

McNeil says overhead costs associated with the $1.5-billion Maritime Link subsea cable project to bring Muskrat Falls electricity into Nova Scotia are already incorporated into the rate application and no additional electricity will be generated.

"Our piece is locked in. The only question is when will the energy flow into the province. We don't think it will have any impact on commitments made by Nova Scotia on rate stability," McNeil said.

The Premier also maintains delays will have no impact on Nova Scotia's commitment to reduce its greenhouse gas emissions.

An updated assessment of timelines and cost estimates is expected next month.

In a background briefing, the Department of Energy noted Nova Scotia Power's application is a forecast only.

Legislation a sham

The current Nova Scotia Power application projects a possible 6.4 per cent rate increase in 2020 to cover fuel costs. At that point additional costs associated with Muskrat Falls would also be recovered.

A related company, NSP Maritime Link, must go before regulators to charge ratepayers for the actual costs associated with the infrastructure needed to bring electricity across the Cabot Strait and into Nova Scotia.

No application has been made.

Progressive Conservative Leader Jamie Baillie says Muskrat Falls delays will end up on ratepayers' bills and is further proof the Liberal "rate stability" legislation was a sham.

"We said it's meaningless. The reality is, rates are going up," Baillie said.