Ottawa has finalized a $500 million bailout to help Nova Scotia Power prevent rates from skyrocketing due to delays in delivering electricity from Muskrat Falls.
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 recover from customers for higher-priced fuel purchased due to delivery delays.
Wilkinson has said that without the loan guarantee, average electricity rates could have risen by about 20 per cent over several years, while Nova Scotia Power CEO Peter Gregg has said he expects the loan to keep rate increases “around the rate of inflation.”
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Emera’s statement said the federal loan guarantee will be spread over 28 years, reducing overall financing costs and helping to stabilize Nova Scotia Power’s credit rating.
Nova Scotia’s utility helped pay for the construction of the submarine 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 power plant have not been providing consistent electricity for the past five years.
While the 180-kilometre subsea link, known as the Maritime Link, was completed on time and on budget, Muskrat Falls has suffered from production difficulties and software issues within the transmission system from Labrador to Newfoundland.
As a result, Nova Scotia homeowners and businesses did not receive all the hydroelectric power they expected and Nova Scotia Power was forced to purchase more expensive fuels to increase output from its existing generating plants.
Nova Scotia Power on Wednesday began the regulatory process to have the loan guarantee factored into its rate-setting formula.
This report by The Canadian Press was first published Sept. 25, 2024.
© 2024 The Canadian Press
