Ottawa still mulling province's bailout request over growing Nova Scotia Power debt
Regulator says 'reckoning is looming' as electric utility's debt continues to grow
Nearly five months after Nova Scotia asked Ottawa to help cover hundreds of millions of dollars in debt accrued by the electric utility, the federal government is still mulling the request.
A spokesperson for Jonathan Wilkinson, federal minister of energy and natural resources, told CBC News that the request requires further due diligence to better understand the impact on Nova Scotia's electricity rates.
When asked for more details about the due-diligence work, they said they could not provide any "due to confidentiality provisions."
In the meantime, the province is shouldering about one third of Nova Scotia Power's $395 million in unrecovered fuel costs.
Nova Scotia Power (NSP) is carrying the remainder, but the utility could decide to recover the money from ratepayers as soon as this fall. NSP calculated a seven per cent rate hike would be needed to cover the fuel debt it's carrying.
Tory Rushton, Nova Scotia's minister of natural resources and renewables, said the province needs the conversation with Ottawa to move "as quickly as possible."
"The piper's come to get paid, if you will," Rushton said in an interview.
"We know that Nova Scotians cannot afford any more rate hikes."
Rushton said talks with Ottawa have been positive and he's hoping the federal government will offer a solution to Nova Scotia over the summer.
Regulator concerned
The agreement for Nova Scotia to take on some of NSP's debt went before the Nova Scotia Utility and Review Board (UARB) earlier this year.
Documents filed through that process show NSP's debt is growing, and the board said it's concerned about the consequences for Nova Scotians.
The UARB approved the province to take on $117 million of NSP's fuel debt to stave off rate hikes and save the company from a disastrous credit-rating downgrade. According to a financial statement from NSP's parent company, Emera, that transaction happened at the end of April.
NSP will pay the money back, with interest, over 10 years. Customers will see small annual rate increases to cover the cost, starting with one per cent in the first year.
'A day of reckoning is looming'
The board approved the deal with some wariness. In its written decision, it said deferring payment, "although helpful from an affordability perspective in the short term, risks serious harm to intergenerational equity."
"This is by no means a permanent or adequate solution to the serious problem of managing the recovery of the outstanding fuel costs," said the board.
The decision said NSP projects an additional $222 million in unrecovered fuel costs for 2024/2025, which would require a rate hike of close to seven per cent over those years.
This would be on top of the rate increases that might be needed to cover the existing $395 million in unrecovered costs.
"As such, a day of reckoning is looming," the board said.
Average energy rates have already risen 14 per cent over the past two years, and energy poverty is prevalent in Nova Scotia.
Rushton said conversations with Ottawa are not limited to NSP's existing debt. Additional projected unrecovered fuel costs are being discussed, too.
"If the need arises that we need to protect the ratepayers [again], then I certainly expect as a federal partner that they be at the table as well," said Rushton.
Rushton would not say exactly how much money Nova Scotia is looking for Ottawa to provide.
"There's been different numbers played around with," he said.
NSP declined to answer questions from CBC News about the request for a federal bailout. Instead, the utility sent the same statement it shared several months ago.
"This is an important issue for our customers. There have been ongoing discussions with both provincial and federal partners on ways to help lower these costs for our customers and we appreciate the collaborative efforts of both levels of government," the statement read, in part.
Rushton said he expects the transition to renewable energy will help mitigate this problem in the future. NSP's fuel debt is at least partly a result of price volatility of imported fossil fuels.
About 40 per cent of the energy on Nova Scotia's grid comes from renewable sources, and that's supposed to grow to 80 per cent by 2030.
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