The federal government has finalized a bailout for Nova Scotia Power and provided a $500 million loan guarantee to the financially troubled Nova Scotia electricity distributor.
Ottawa said last week that it was negotiating such a financial rescue, in order to reduce the costs of refinancing the maritime link project between the hydroelectric plant in Muskrat FallsLabrador, and Nova Scotia.
Tariffs to increase by 2.4% next year
According to Nova Scotia Powera subsidiary of the listed company Emera, this financial aid was necessary to avoid consumers paying more for their electricity.
Without Ottawa’s help, the company said consumers would see their residential rates increase by an average of 19.2%.
With this rescue, she says the increase in tariffs will be limited to 2.4% next year.
Emera confirmed in a statement Tuesday evening that the loan application was approved. In documents filed Wednesday morning with the Nova Scotia Public Utilities and Review Board, Nova Scotia Power reports $359 million in unrecovered fuel costs.
The company estimates that the sum will reach $412 million by the end of the year.
Delays in electricity delivery Muskrat Falls to Nova Scotia, through the Maritime Link company, are the main reason for the accumulation of costs for Nova Scotia Power.
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Muskrat Falls Dam on the Churchill River in Labrador in November 2023
Photo: CBC / Danny Arsenault
This connection is now working, but while waiting for it to be put into operation, Nova Scotia Power had to buy fuel at a higher price to increase production at its existing power plants.
Nova Scotia Power has 28 years to repay the $500 million loan, which is expected to carry an interest rate of between 4% and 5%.
If the company fails to repay it, taxpayers will foot the bill.
$117 million in aid from the province
Earlier this year, the Nova Scotia government gave $117 million to Nova Scotia Power to cover some of its costs. The province estimates that this action has allowed taxpayers to avoid a 7% increase in rates.
Nova Scotia taxpayers will pay this amount over 10 years, plus interest, with rate increases spread out over a long period of time, instead of a more abrupt increase all at once.
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Emera’s Nova Scotia Power headquarters in Halifax (File photo)
Photo: Radio-Canada / Jonathan Villeneuve
In its statement, Emera said the financial rescue by Ottawa will help stabilize the company’s credit rating, which fell in 2022 and would have declined further without the help.
Alongside these difficulties, Nova Scotia Power is frequently the target of criticism from consumers, who complain about the unreliability of the electricity network and repeated power outages.
The electricity provider, Nova Scotia’s biggest polluter, is also struggling to meet targets for generating electricity from renewable sources to decarbonize its grid.
According to the report of Taryn Grant, of CBC, and with information from The Canadian Press
