Ottawa has finalized a $500-million bailout to help Nova Scotia Power keep rates from skyrocketing due to delivery delays of Muskrat Falls electricity.
Emera, the parent company of Nova Scotia Power, confirmed the deal—first announced Sept. 16 by federal Natural Resources Minister Jonathan Wilkinson—in a news release Tuesday.
The loan guarantee will reduce the amount the utility needs to recoup from customers for higher-priced fuel purchased due to the delivery delays.
Wilkinson has said without the loan guarantee, average power rates might have gone up by close to 20 per cent over several years, while Nova Scotia Power CEO Peter Gregg has said he expects the loan would keep rate increases to “around the rate of inflation.”
The release from Emera says the federal loan guarantee will be spread over 28 years, lowering overall financing costs and helping stabilize Nova Scotia Power’s credit rating.
The Nova Scotia utility helped pay for construction of the underwater transmission link between Nova Scotia and Newfoundland that carries electricity generated by the Muskrat Falls hydroelectric project in central Labrador.
But the massive dam and generating station has been inconsistent in delivering electricity over the past five years.
While the 180-kilometre undersea link—known as the Maritime Link—was completed on time and on budget, Muskrat Falls has suffered through production difficulties and software problems within the Labrador-to-Newfoundland transmission system.
As a result, Nova Scotia homeowners and businesses didn’t receive all of the hydro power they expected, and Nova Scotia Power was forced to purchase more expensive fuels to boost production from their existing generating stations.
Nova Scotia Power started the regulatory process Wednesday to have the loan guarantee factored into the rate-setting formula.
