Consumer advocate, Emera clash as Muskrat Falls hearings get underway in Halifax

HALIFAX – Nova Scotia’s consumer advocate and utility company Emera (TSX:EMA) clashed Tuesday on the merits of the Muskrat Falls hydroelectric project as a regulatory hearing got underway that could determine the province’s energy costs for decades.

The $1.5 billion subsea connection that would send Muskrat Falls electricity to Cape Breton would be Nova Scotia’s most affordable source of energy, said Nancy Tower, CEO of Emera Newfoundland and Labrador Holdings.

“We have a solution, and one that is not simply a solution, but also an opportunity,” she told the Nova Scotia Utility and Review Board, which is examining whether the underwater link is the cheapest way for the province to get electricity.

“An opportunity to fundamentally change our electricity market for decades to come and to provide more stable priced energy for Nova Scotia customers.”

But John Merrick, the province’s consumer advocate, said while the project is a great opportunity for Emera to earn a profit, it may not provide an ample supply of market-priced electricity to Nova Scotia customers.

“To say to us that we should take power for 35 years at a very expensive rate and not get any kind of assurance for cheaper power is a very bad decision for ratepayers,” Merrick said.

Under a deal with Nalcor Energy, Newfoundland and Labrador’s Crown-owned utility, Emera would get access to 20 per cent of the power produced at Muskrat Falls. In return, Emera would build a 180-kilometre subsea cable known as the Maritime Link, which would transmit power from Cape Ray in southwestern Newfoundland to Lingan, N.S., in Cape Breton.

Merrick said that guaranteed block of power is expensive because it is based on recovering the cost of building the link, echoing a concern of some business groups.

Nelson Blackburn, the small business advocate, said it’s clear that the deal will benefit Emera but it hasn’t been proven to be the cheapest long-term source of energy for customers.

Both the Liberal and Progressive Conservative opposition parties also argued the proposal should be rejected due to uncertainties over the future availability of Muskrat Falls electricity at market rates.

But Tower said Emera has looked at other options, ranging from wind to importing power from Hydro-Quebec, and concluded they are not reliable or cheaper. She said Emera also does not believe Hydro-Quebec would provide a long-term, fixed price for energy.

She added that it is in Nalcor’s interests to sell market-priced electricity to Nova Scotia because it would make more money due to lower transmission costs.

“Geographically, we’re in the best place to get this energy,” she said.

Merrick asked why a letter provided to the board by Nalcor CEO Ed Martin didn’t contain such an assurance.

Rick Janega, the president of Emera Newfoundland and Labrador, said Martin was simply keeping his options open.

“They may be resisting committing, even in this letter, to say they’re going to sell to Nova Scotia,” Janega said. “They’re shrewd businesspeople as we are in Nova Scotia.

“We know what will happen when this link is in place and we know a good portion of that surplus energy … will be available for Nova Scotians to benefit from.”

“I accept we’re dealing with a shrewd businessman, and that’s what bothers me,” Merrick replied. “Never once does he say it’s likely we will be selling to Nova Scotia for Nova Scotia consumption.”

Merrick said if the board dismisses the project, it doesn’t necessarily mean the development will die as it may still be worthwhile for Nalcor to build the link.

Tower said Emera’s deal with Nalcor allows the two companies to negotiate a new contract if the board doesn’t approve the Maritime Link.

“There’s a certain amount of time for those discussions to happen,” she said. “But there’s no guarantee the Maritime Link would get built or there would be a successful outcome.”

Construction of Muskrat Falls is underway in Labrador and proponents of the $7.7-billion venture are aiming to generate power by 2017.

The hearings in Halifax are scheduled for the next two weeks. The board is expected to rule before the end of July.