Cap on power rates approved by Nova Scotia Legislature

The Nova Scotia Legislature passed a government bill to cap power rate increases Tuesday, but opposition MLAs remain concerned that unintended consequences could lead to long-term pain for utility customers.

"I think that there's a lot of risk that people have brought up that the government has not responded to in any transparent way," Liberal environment critic Iain Rankin said in an interview.

The government bill restricts the size of the rate increase the Nova Scotia Utility and Review Board can award Nova Scotia Power to 1.8 per cent over the next two years. It follows hearings earlier this fall for the utility's first general rate increase application in a decade, but comes before the board could issue its ruling.

Since the bill was introduced, people who often find themselves on different sides of the power rate debate have been united in their concern about the government's approach.

Bill Mahody, the province's consumer advocate, has said that by essentially setting rates from the floor of the legislature, the government is jeopardizing the independence of the UARB. That has a practical effect of weakening investor confidence, which could lead to higher borrow costs and debt payments, Mahody has said.

Such an outcome could lead to higher costs for consumers, he said.

Meanwhile, Nova Scotia Power and its parent, Emera, have warned that without an adequate rate increase, it might not be possible to complete major projects required to meet legislated green energy targets, including no longer using coal to generate electricity by 2030.

Natural Resources and Renewables Minister Tory Rushton said he cannot predict what the future will hold, but said his government had to act in the short term to keep rates as affordable as possible. Rushton and Premier Tim Houston have not ruled out future interventions.

Rushton said he doesn't see the legislation as merely delaying inevitable rate increases.

"I think this is an opportunity that we can take a look at the whole spectrum of how power is delivered in Nova Scotia and I would hope that Nova Scotia Power is going to be at that table as we have conversations to move the whole province forward to a greener energy environment," he said in an interview.

Rushton said his government continues to pursue projects such as the Atlantic Loop, which would bring clean hydro power to Nova Scotia from Quebec and Labrador via an upgraded electricity grid. Emera, however, has raised questions about whether the project is possible with the rate cap.

NDP House leader Susan Leblanc said even with the cap on rate increases, power bills are going to go up by a notable margin. That's because aside from the general rate increase Nova Scotia Power was seeking, the utility is also applying for fuel adjustment costs for the next two years to cover the rising price of oil, gas and coal used to generate electricity.

The province is unable to lessen that expense for ratepayers and Nova Scotia Power has previously said the adjustment could see residential rates increase between 9.6 and 12 per cent.

"We need to make amendments to the Public Utilities Act so that the UARB can regulate Nova Scotia Power in such a way that it protects ratepayers, but at the same time allows Nova Scotia Power to get done what it needs to get done in terms of getting off coal," said Leblanc.

The NDP has previously proposed giving the UARB authority to set a low-income power rate for people who can least afford increases. Rushton has said that's something he wants a special committee to consider when it is established in the coming months.