Nova Scotia Power spent $205 million to replace electricity expected — but not received — from the Muskrat Falls hydro project in Labrador over the past four years.
The “replacement energy cost” is a calculation of the fuel purchase needed to generate the makeup electricity.
It was $49 million in 2018, $52 million in 2019, $57 million in 2020, and $47 million from January through October 2021, according to information the provincial regulator ordered Emera to release publicly last month.
Nova Scotia Power’s parent company tried to keep the amount hidden, citing commercial confidentiality, but the claim was rejected by the utility and review board, which said the disclosure was of “significant public interest.”
“It is a substantial amount of money,” said consumer advocate Bill Mahody, a lawyer who represents residential ratepayers in regulatory hearings.
It is another consequence of the failure of Muskrat Falls to deliver contracted amounts of hydro into Nova Scotia via Emera’s Maritime Link transmission system.
Mega-project behind schedule
“When they don’t receive that 10 per cent of energy over the Maritime Link, they need to go and purchase that 10 per cent of energy somewhere else. Those are the replacement fuel costs that have built up to $205 million over that period since 2018,” said Mahody.
The Nova Scotia Utility and Review Board is hearing an application from Emera to recover $1.7 billion from Nova Scotia Power ratepayers for the Maritime Link.
It was built by Emera on time and on budget to carry Muskrat Falls hydroelectricity into Nova Scotia from Newfoundland via a 177-kilometre subsea cable.
However, the Muskrat Falls hydro mega-project is years behind schedule. It was supposed to send 20 per cent of its output and some supplemental electricity — dubbed the Nova Scotia Block — into the province starting in 2018.
The Nova Scotia Block only started to flow in August 2021, at 19 per cent of contracted amounts.
The replacement energy cost is an estimate that takes the monthly weighted average cost of dispatchable electricity (generated from coal, natural gas, heavy fuel oil, diesel and imported electricity) and multiplying it by the undelivered Nova Scotia Block volume.
‘Likely tremendous benefits’
The dollar amounts were posted on the utility and review board’s website Christmas Eve.
The extra fuel costs were rolled into Nova Scotia Power’s fuel bill, which fluctuates and is trued up annually. So the replacement energy cost cannot be directly tied to rates.
Nova Scotia Power customers have paid another Emera subsidiary — Nova Scotia Power Maritime Link — $450 million for the Maritime Link since it was completed in 2018.
Mahody said the early challenges need to be put into perspective for the Maritime Link, which will deliver a stable source of low-carbon energy for at least 35 years.
“In the full scale of that period of time and the likely tremendous benefits we are going to receive as a result of having the Maritime Link, you need to put these initial costs in that context,” he said.
Final submissions as part of Emera’s efforts to recover $1.7 billion from Nova Scotia Power customers will close on Friday.
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