Nova Scotia Power’s parent company says it is ceasing spending on the Atlantic Loop and claims the business climate in its home province changed this week when the Houston government imposed a tariff cap and other revenue caps on its subsidiary.
Emera CEO Scott Balfour told CBC News the company is now rethinking capital spending, starting with the Atlantic Loop — a proposed multi-billion dollar energy corridor to connect the four Atlantic provinces with hydroelectric power plants from Quebec and Labrador.
The Atlantic Loop is an important part of Nova Scotia’s strategy to phase out its reliance on fossil fuel combustion to generate electricity.
“That’s one of the first projects that we told the team that we should pause for now,” Balfour told CBC News. “There’s not enough money to continue pursuing that, let alone the opportunity for us to go into the investment community and say, you know, please invest more money in Nova Scotia to enable that kind of project. That kind of scale.” .”
Emera is responding to changes to the provincial utility bill introduced this week by Nova Scotia’s progressive conservative government.
The legislation imposes a 1.8 percent cap on electricity tariff increases for two years – money to be spent on operation and maintenance.
Fuel costs will continue to flow to customers.
The changes also limit the guaranteed return to 9.25 percent, ensure that all excess profits are returned to taxpayers to reduce their costs, and limit the interest Nova Scotia Power can charge taxpayers.
The changes come ahead of — or “kneecap,” according to Balfour — an ongoing hearing by the Nova Scotia Utility and Review Board into Nova Scotia Power’s first general tariff application in a decade.
The company is targeting a 13.7 percent increase over two years, with skyrocketing fuel costs yet to be determined for 2024 and 2025.
‘Whole new territory’
Board members would make a ruling on the complex case in the new year.
“This is very new territory in North America for a government to intervene in an independent regulatory process and I am very concerned about that,” Balfour said.
In a release this week, Emera said the changes will result in “a material reduction” of the approximately $1 billion in capital expenditures Nova Scotia Power has planned for 2023 and 2024.
“The cuts imposed by this legislation will hamper Emera and NS Power’s ability to promote clean energy investments in the province, which were specifically needed to meet the shared 2030 decarbonisation goals. This includes planned investments such as wind generation, grid-scale batteries and improvements to the inter-provincial transmission system,” Emera said.
Exactly where Emera plans to cut spending will become clear on Nov. 11, when the company announces its three-year capital spending plan in talks with investors.
To immediately cut costs, the company canceled 60 new reliability-related jobs outlined in Nova Scotia Power’s general rate application for 2022.
Emera shares fell nearly five percent on Wednesday when the rate cap was announced. Shares fell another three percent on Thursday, closing at $49.99 a share
“While political interference at NSPI warrants a stock price correction, we view the -5% downward pressure as an overreaction,” BMO analyst Ben Pham wrote Thursday morning.
Emera’s Future in Halifax
Nova Scotia Power, headquartered in Halifax, generates just 15 percent of Emera’s revenue.
Balfour would not directly answer whether Emera will remain in the province.
“It’s impossible today not to look through the lens of our continued investment and growth in Nova Scotia differently than we did,” he said.
“Nova Scotia is staying at home, but our focus in terms of future growth and job creation and all that stuff, will necessarily be more and more focused elsewhere because of this legislation.”
Meanwhile, politicians from all three parties shrugged off Emera warnings in Halifax County Hall, where the amendments appeared to be destined.
When asked by a reporter “whether it would be a bad thing if Emera left Nova Scotia,” opposition leader Zach Churchill replied, “I don’t know. I mean, maybe that’s just presumption.”
Prime Minister Tim Houston was also blasé.
“The company may respond the way it responds, but my only concern is for taxpayers,” he said Thursday.
“So reliability, fair rates — that’s what worries me, that’s what worries me. What others say about it doesn’t concern me or concern me,” he said.
Houston also said Emera’s presence in this county is “important.”