Regulator says N.S. Power cannot demand security from would-be competitor

In a dispute between Nova Scotia Power and an emerging renewable energy company, the provincial energy regulator has sided with the little guy.

The Nova Scotia Energy Board says it will not order Renewall Energy to provide a letter of credit — a document from a financial institution guaranteeing payment — which Nova Scotia Power requested.

Renewall has a licence to sell wind energy directly to consumers using Nova Scotia Power's grid, although it has not begun producing any electricity yet. It's part of a program set up a decade ago by the provincial government and meant to break up Nova Scotia Power's monopoly and increase renewable energy use.

Renewall is so far the only participant in the program, called Renewable to Retail.

Upfront costs estimated at $6.4M

Nova Scotia Power is supposed to recover costs for tying new energy providers to the grid through tariffs, but last year the utility said the upfront costs were proving too much. It asked Renewall for a letter of credit to ensure it would be able to recover some of the estimated $6.4 million it anticipates spending.

Renewall refused, so the utility took the issue to the regulator, which issued a decision on the matter this week.

In a letter to Nova Scotia Power, the board said requiring a letter of credit could discourage participation in the program. It said it could force small renewable energy companies to put cash into financial institutions who provide letters of credit.

"That would tie up capital and impact a proponent's business case," the board said. 

"On the other hand, the implementation costs to date, although significant, do not have the same impact on NS Power's financial situation."

Part of Nova Scotia Power's argument for the letter of credit was that it was worried Renewable to Retail would never come to fruition, and it would never get to recover the money it put in.

Renewall has twice blown past deadlines to start making use of its licence. The most recent deadline was Dec. 31, 2024. The board granted an extension to the licence to Dec. 31, 2026. It told Nova Scotia Power that it believes the company "has a realistic prospect" of making good on its plans.

The company did not immediately respond to CBC's request for comment. Its website says it expects to start producing wind energy from its Mersey River project south of Milton, N.S., in 2026.

Costs could fall to ratepayers

However, should Renewall fail to launch and no other players enter the program, Nova Scotia Power could look to recoup costs another way.

The board said the utility "is not precluded" from recovering the money it puts into implementing Renewable to Retail from its own ratepayers.

Should it come to that, a mechanism would be developed through the usual rate-setting process that happens before the board. The board said recovery would be contingent on the costs being "prudently incurred."