Nova Scotia Power defends pace of going green at rate increase hearing

During the second day of hearings into Nova Scotia Power's rate increase hearing, the company brushed aside suggestions that it was slow to move away from its reliance on coal and other fossil fuels to generate electricity.

Greening the grid is a big part of the company's application to raise rates by 11.6 per cent, currently before the Nova Scotia Utility and Review Board (UARB). The utility states it will cost hundreds of millions of dollars to shut down coal plants, add wind power and improve transmission lines.

To pay for it, the application includes the creation of a so-called "decarbonization deferral account" (DDA) that would collect money to add renewables and write off coal plant shutdowns before the end of their useful life.

Ratepayers would be asked to pay down the costs in future rate cases.

In its messaging, Nova Scotia Power has repeatedly referred to provincial legislation as a driver in its decision to raise rates. The law passed in 2021 requires it to close its coal plants and produce 80 per cent of electricity from renewable sources.

A lawyer for the provincial government challenged that narrative Tuesday.

Company's narrative challenged

"The federal government in 2016 was signalling the end of coal-fired generation by 2030," said Daniel Boyle, a lawyer representing the Department of Natural Resources and Renewables.

Boyle referred to the joint federal and provincial Pan Canadian Plan to Address Climate Change, published in 2016.

The government document noted the federal government announced in November 2016 that it would amend existing coal-fired electricity regulations to "accelerate the phase out of traditional coal-fired electricity by 2030."

"The intention of the questioning is to say that there were options available that could have, should have, could have been pursued which may have offered a plan that could have done away with the need for DDA at this time," Boyle told the UARB.

Nova Scotia Power president Peter Gregg, who joined the company in 2020, said six years ago it still had a deal to defer closing coal plants.

"At this time, there was an equivalency agreement in place with the province of Nova Scotia that would seek to eliminate coal from our resource mix by 2040 and not the 2030 date here," he said. "We knew directionally the federal government was signaling that would be there, but we did have that equivalency agreement in place."

Gregg said Nova Scotia Power has been "on the decarbonization journey" since 2005 and repeated company messaging that it is balancing reducing emissions with affordability.

At the beginning of Tuesday's hearing, Nova Scotia Power lawyer Blake Williams announced a settlement has been reached with telecom companies fighting the company's request to nearly triple the fees it charges to use its power poles.

The terms were not disclosed.

Inflation impact

Nova Scotia Power has made much of the costly impact of inflation on its operations -— especially fuel costs.

On Tuesday, the company acknowledged that rising interest rates will reduce pension costs between 30 to 50 per cent, saving the company between $6.6 million and $11.7 million per year from 2022 to 2024.

The savings are based on interest rate increases from 1.8 per cent to 2.4 per cent.

For the first time, Nova Scotia Power has asked to amortize the cost it pays for consultants and third-party lawyers employed in the rate hearing. The cost includes fees paid to the consumer advocate, the small business advocate and UARB counsel.