The Nova Scotia government is taking decisive action to lower power rates in the province by purchasing a significant portion of NS Power’s fuel debt. This move aims to provide relief to ratepayers in the face of mounting costs. The utility’s balance currently stands at approximately $395 million, and the government is proposing to buy $117 million of that debt at a preferred interest rate. By doing so, rate increases for this year can be limited to just 1.1 percent, compared to the 7 percent increase that would have been imposed without government intervention.
N.S. Minister of Natural Resources and Renewables Tory Rushton emphasized the challenging nature of the situation, stating that the current fuel bill is too hard to swallow. The accumulated fuel costs are primarily due to record-high fuel prices and delays in obtaining renewable energy from Muskrat Falls since 2018. In order to mitigate the potential impact on ratepayers, the government is stepping in to cover a portion of NS Power’s fuel costs.
David Miller, the Electricity Projects executive lead in the department, explained that the government’s investment would not negatively impact taxpayers. Instead, it would result in significant savings for ratepayers, effectively decreasing the rate increase from a projected 7 percent to approximately 1 percent for most customers. Miller clarified that the funds to cover the cost of the loan made by the government would be collected by NS Power, with a portion of the funds going to the province.
The proposal to address the mounting fuel debt was met with support from Nova Scotia’s Consumer Advocate, David Roberts. He believes this solution offers the best way forward, especially in terms of lessening the burden on ratepayers, particularly residential customers. Roberts expressed confidence in the government’s use of public money to purchase the debt, asserting that it serves the best interests of the public.
However, not everyone agrees with the government’s decision. Business professor Ed McHugh raised concerns about borrowing money for future expenses and called for a review of Nova Scotia Power’s cost infrastructure to prevent similar situations in the future. McHugh acknowledged the dilemma faced by the government but emphasized the importance of understanding the underlying causes and finding ways to avoid similar challenges in the future.
NS Power President and CEO Peter Gregg highlighted the unprecedented volatility in fuel costs due to global events. He cited the example of natural gas costs in 2022, which were 47 percent higher than forecasted due to the war in Ukraine and resulting disruptions to natural gas markets. Gregg emphasized that NS Power diligently oversees and approves all costs, including fuel costs, to deliver electricity efficiently.
While no timeline has been set for the proceedings, the executive director of the NS Utility and Review Board confirmed that information regarding the process would be provided later. The board assures the public that this issue is being handled transparently, with the details available on their website.
The Nova Scotia government’s decision to purchase a significant portion of NS Power’s fuel debt reflects a strategic move aimed at mitigating the impact on ratepayers. By stepping in and utilizing their financial muscle, the government aims to keep power rates low and protect consumers from significant increases. This initiative, although met with some skepticism, demonstrates a commitment to addressing the mounting debt while ensuring the stability and affordability of power in the long term.
