Nova Scotia Power and its largest customer want UARB to OK unusual deal

The Nova Scotia Utility and Review Board is being asked to consider a unique tariff agreement between Nova Scotia Power and its largest customer, Port Hawkesbury Paper, that would see the utility have control over when the paper mill operates.

Port Hawkesbury Paper consumes about a million megawatts of power a year, roughly 10 per cent of all electricity produced by Nova Scotia Power. Under the current scheme, the company is paying a tariff of between $2 and $4 per megawatt hour on top of fuel costs.

Under the proposed new tariff, the mill would pay a minimum of $4 for each megawatt hour of power it consumes, on top of fuel costs. Peter MacDonald of Port Hawkesbury Paper said he expects the tariff would likely be closer to $9 to $10. When combined with fuel costs, the mill is forecast to pay around $60-$65 per megawatt hour over the next four years if approved. 

Under other pricing methodologies, according to documents submitted to the board, prices would be in excess of $80/MWh, which are "not financially viable for the mill."

"We've designed this rate so that it does two things," MacDonald told CBC News. "One, it keeps the mill running at a sustainable level and it also provides a greater contribution to the other ratepayers."

The proposed agreement would replace one that expires at the end of this year.

Nova Scotia Power and Port Hawkesbury Paper are asking the UARB to set a hearing date for their proposal. On Tuesday, the board approved their request to use the new tariff on an interim basis if the deal can't be approved by the time the old tariff expires at the end of December.

MacDonald said while other utilities have similar deals involving small amounts of power, he said this is the first one on this scale anywhere on the continent.

"Nova Scotia Power would essentially send us dispatches on an hourly basis as to where they want to position our load," said MacDonald.

"We have a highly flexible load as well as being a large load, we can move it up and down as high as 210 megawatts and as low as five megawatts."