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Mill closings prompt Nova Scotia power company to seek higher rates

The first commercial in-stream tidal turbine in the Bay of Fundy near Parrsboro, N.S. on Thursday, Nov. 12, 2009. Nova Scotia Power and their tidal technology partner, OpenHydro, placed the turbine on the ocean floor to be powered by the force of the tides to produce energy.

ANDREW VAUGHAN/The Canadian Press/ANDREW VAUGHAN/The Canadian Press

Nova Scotia's power company blames two troubled paper mills for forcing it to raise electricity rates for the second time in less than a year.

The province's power rates are already among the highest in the country – and now, Nova Scotia Power Inc. is asking ratepayers for even more, citing the shutdown of one mill and reduced operations at the other.

The privately owned power company wants a 3-per-cent increase next year and the year after. That would mean a monthly hike of $3.50 for customers. Rates went up an average of 10 per cent in January.

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It's all because of deep trouble at its two largest customers: the NewPage paper mill in Cape Breton, which shut down last September, and the Bowater Mersey Paper Co. on the province's south shore, which is operating intermittently.

In its application to the Nova Scotia Utility and Review Board, which will consider the rate increase in September, the power company says energy sales in 2013 will be 10 per cent lower than in 2011 because of the NewPage closing. And sales are also expected to decline in 2014.

Sales of electricity dropped by 2.1 per cent in 2011 because of the NewPage closing in last three months of the year.

NS Power, meanwhile, is forecasting a revenue shortfall of $130.3-million next year and $67.5-million in 2014. No power company spokesman would comment to The Globe and Mail about the increase.

"We face unusual circumstances in Nova Scotia at this time," the company says in its application. "The system's largest customer is currently not operating."

It goes on to note that it still has fixed costs, and its second-largest customer – Bowater Mersey – will not be able to contribute because of its precarious circumstances. It is expected to be shut down for several weeks this year.

"This is happening at a time when sales to other customers are not growing so we are not easily able to absorb those unavoidable fixed costs," the document says.

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It details energy decline over the years, noting that consumption grew an average 0.4 per cent every year from 2003 to 2008, but dropped 3.8 per cent in 2009 as a result of the poor economy.

And after a small upward blip in 2010, it dropped again because of the problems at the paper mills.

Provincial opposition leaders aren't buying the company line – and are vowing to fight the increase.

Liberal Leader Stephen McNeil said the entire company needs to be "put under a microscope" and be subjected to a performance value audit.

"Their job is not to look after ratepayers," he said. "Their job is to look after shareholders and they do a real good job at it."

Progressive Conservative Leader Jamie Baillie said the irony in this is that the two mills cited high power costs as a reason for their troubles.

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"Now Nova Scotians are being told the answer to that problem is even higher power rates," Mr. Baillie said. "We intend to pursue that aggressively. … It's a vicious circle."

He said Nova Scotians cannot afford the extra costs, citing recent Statistics Canada data that showed disposable income in the province fell by 1.8 per cent in 2011.

The power company acknowledged its latest rate-increase proposal "comes at a time when many Nova Scotia households and businesses are struggling to manage increases in the cost of heating oil, gasoline, tap water, groceries and other necessities. We realize customers will be unhappy to hear NS Power is asking for another increase."

Haligonians pay the fourth highest rates in Canada after Calgarians and residents of Charlottetown and Regina, according to a 2011 Hydro Quebec study.

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About the Author
Ontario politics reporter

Jane Taber is a reporter at Queen’s Park. After spending three years reporting from the Atlantic, she has returned to Ontario and back to writing about her passion, politics. She spent 25 years covering Parliament Hill for the Ottawa Citizen, the National Post and the Globe and Mail. More

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