Paying for power
Regulator sets cost recovery for Maritime Link
The provincial regulator has approved the recovery of costs related to construction of the Maritime Link from Nova Scotia Power customers, with ratepayers charged $109.5 million in 2018 and $111.5 million the following year.
The Nova Scotia Utility and Review Board set the interim cost assessment for the project in a decision released Monday.
The link is scheduled to be commissioned in the last quarter of this year and to be in service by January. However, the delay in the Muskrat Falls generating station in Newfoundland and Labrador means that its power will not flow until 2020 at the earliest.
In its application, NSP Maritime Link Inc., a subsidiary of
Emera, had sought to start recovering all of its costs by way
of the interim assessment, as though the Maritime Link would be fully operational as planned.
However, it didn’t get all it wanted. Instead, it was granted approval to charge Nova Scotia Power and its customers for costs related to construction of the Maritime Link. The amounts are already being collected from customers as part of a three-year rate stability plan ending in 2019.
“While delivery of the NS Block is delayed for at least two years, NSPI and its ratepayers may be able to make use of the Maritime Link immediately, and therefore receive various benefits from its use. In that sense, the Maritime Link will be useful to ratepayers,” the 67-page NSUARB decision states.
The board found that it would be difficult to deny NSP Maritime Link recovery of its costs if the Maritime Link is “used and useful,” even if only partially.
The regulator ruled that another $105 million in costs should not be recovered yet, including project depreciation costs and financing expenses in 2018 and 2019. That will result in ratepayers receiving an annual credit on their power bill over the next three years, with the credit varying by customer class.
The company has determined that delaying completion of the Maritime Link to align its in-service date with the availability of the Muskrat Falls power would result in incremental costs to Nova Scotia electricity customers of between $398 million and $533 million, due in part to the renegotiation of construction contracts that were already in place and work that had already begun.
The Maritime Link involves the construction and operation of a new 500-megawatt high-voltage direct current line, as well as a high-voltage alternating current transmission line and associated infrastructure, between Newfoundland and Labrador, and Nova Scotia. The project also includes two 170-kilometre subsea cables across the Cabot Strait, approximately 50 kilometres of overland transmission in Nova Scotia and 300 kilometres of overland transmission in Newfoundland.
While the Muskrat Falls hydroelectric project itself is behind schedule and over budget, Emera officials have said the Maritime Link component is both on schedule and on budget, which the NSUARB decision affirmed. In its decision, the NSUARB said that the announced cost overruns experienced by Nalcor on the Lower Churchill Phase 1 will have no impact on NSPI ratepayers, with any subsequent cost overruns related to Muskrat Falls borne by Nalcor and its ratepayers.
NSPI must provide the NSUARB with a report by October 16 that details how the credit will be returned to customer classes.
The board ordered NSPI to withhold $10 million in payment to NSP Maritime Link in 2018 and 2019 until the anticipated benefits of the link to customers are proven. It also raised some concerns associated with the Muskrat Falls generating station and NSP Maritime Link’s apparent lack of insight on the Nalcor project
Another interim hearing is to take place in early 2019 to provide a project update.
NSP Maritime Link was also directed to continue filing quarterly reports.