BRIGHTON: Shroud of silence clouds utility board’s decisions about NSP
Peggy Cameron
BRIGHTON: Shroud of silence clouds utility board’s decisions about NSP
A $6.5-million rap on the knuckles of Nova Scotia Powerthis week suggests the public should be watching power purchases as keenly as power rates.
Back-to-back rate hikes of three per cent for all customer classes in 2013 and 2014, effective Jan. 1, will be an unwelcome way to ring in the new year.
But an equal concern, heading into a public hearing on the Maritime Link project, is the breakdown of trust flagged in a wide-ranging decision issued Friday by the Nova Scotia Utility and Review Board, covering future power rates and past fuel costs.
Among the financial setbacks for the utility were $4.5 million in “disallowed” fuel costs in 2010 and 2011, which are being clawed back for customers following a controversial audit, and a $2-million sanction for bad behaviour.
Of the overspent fuel costs, $3.6 million relates to coal-burning practices at the Lingan generating station and $903,000 relates to a natural gas contract.
In 2010, the utility was using cheap, dirty and inefficient local coal stripped from the Pioneer Coal Ltd. surface mine at the site of the former underground Prince mine at Point Aconi.
The board linked the utility’s use of local coal to the provincial government’s decision that year to offer a temporary reprieve on meeting strict limits on mercury emissions. The reprieve for Nova Scotia Power was designed to keep a lid on fuel costs.
But burning high-sulphur and high-mercury coal, with a low-energy output, was “imprudent,” said the board. It ultimately led to higher fuel costs to avoid exceeding pollution limits.
The other “disallowed” fuel cost is tied up with a mysterious bidding process on a natural gas contract to replace a supply from the offshore Sable project.
Nova Scotia Power’s auditor, and several large industrial customers, had alleged an affiliate ofEmera Inc., which is the parent company of the utility, may have interfered in the bidding process to preserve its market in a way that eventually drove up fuel costs. The board rejected that suggestion, but ruled the utility could have acquired natural gas for less cost.
Most troubling to the board was the utility’s decision to wait until the last day of the hearing to disclose critical information about its activities in the natural gas market, in which corporate affiliates play key roles. Its delay earned it a $2-million sanction for wasting time and money.
Despite its “dismay and concern” about such corporate behaviour, however, the board is bound by confidentiality and can’t reveal just what this costly revelation entailed.
In hindsight, such apparently simple and straightforward fuel purchases have been complicated and inflated by “imprudent” management and a deliberate lack of transparency.
How much more complicated will be the parent-child relationship between Emera and Nova Scotia Power, if Emera’s $1.5-billion Maritime Link project is approved next year?
And will these complex transactions be conducted under the same shroud of corporate confidentiality and a cone of silence?
An auditor will have to answer those questions, down the road, before the bills arrive.
Rachel Brighton, a freelance journalist and former magazine publisher, writes on industry, ethics, economics and the environment.
Peggy Cameron
Ratepayers to contribute less toward NSP executive pensions
Ratepayers will be paying $2.85 million less for Nova Scotia Power executive pensions in the new year.
The Nova Scotia Utility and Review Board on Friday reduced the amount that ratepayers will contribute to a supplementary pension plan for executives by $2.05 million for 2013. Nor should ratepayers help fund an $800,000 premium to secure executive pensions, the regulator said in a decision on rates for 2013-2014.
“With respect to the (supplemental executive retirement plan), the board considers it unreasonable that the most highly paid employees working for (Nova Scotia Power) make no contribution to the supplementary pension plan,” the decision says.
The supplemental pension plan is open to executives who earn at least $150,000 a year. They also earn benefits in the company’s regular defined-benefit pension plan.
The $2.05-million amount is based on a calculation that assumes supplemental executive pensions would be jointly funded by employees and the company in 2013.
The disallowance increases to $2.2 million the following year.
The provincially appointed small-business advocate said he was pleased the regulator ruled that senior executives should be paying for their pension top-up.
Nelson Blackburn also welcomed the decision on the security.
“It’s something that Nova Scotia Power should be looking after themselves, not the ratepayers,” the Bedford lawyer said in an interview Monday. “It’s an exorbitant cost and it certainly should not be passed on.”
The security, which is a letter of credit purchased annually, includes an estimated $400,000 for the insurance, plus an equal amount given to the Canada Revenue Agency as a refundable tax payment.
Nova Scotia Power officials have said the premium is used in lieu of putting money into the supplemental plan, which would cost more.
But the board found that the letter of credit is an “unnecessary expense” because it’s unlikely the utility will go out of business.
A Nova Scotia Power spokesman said the company will take steps to comply with the board’s directive on executive pensions.
“We know that pension costs overall are a concern to customers,” David Rodenhiser said.
In its decision, the board said recent changes to the utility’s regular defined-benefit plan are “a significant step in pension reform.”
The changes, negotiated this fall with unionized employees, include higher employee contributions.
“The board, however, expects (Nova Scotia Power) in future to take additional steps to improve contributions to, and the funding of, the pension plan,” the ruling said.
The utility asked the regulator for an extra $26 million from ratepayers in 2013 to help reduce the plan’s unfunded liability, which officials have attributed to lower returns on financial markets.
In addition to the higher employee contributions, Nova Scotia Power has also closed the defined-benefit plan to newly hired non-unionized employees. They will be part of a defined-contribution plan instead, Rodenhiser said.
“We’re committed to ensuring the plan is affordable and sustainable. That’s important to both customers and to our employees.”
Power rates will increase three per cent effective Jan. 1 and again on Jan. 1, 2014, as a result of the URB decision.
The board accepted a settlement agreement on rate hikes reached this fall by Nova Scotia Power and customer representatives.
Besides the rate increases, the deal requires the utility to find $27.5 million in savings over the next two years.
The regulator also sanctioned the utility $2 million for its strong response to a recent fuel audit, calling the fight against the findings by Quentin, Pa.-based Liberty Consulting Group“inexplicable and inexcusable.”
Nova Scotia Power will also be returning $4.5 million to ratepayers, related to fuel purchases in 2010-2011.
The amount includes $3.6 million because of the type of coal used at the Lingan power plant in Cape Breton during the winter of 2010-11. The remaining $900,000 relates to overspending on a natural gas contract.
Peggy Cameron
| Canadian company interested in Grenada utility | |
| Published on December 24, 2012 | |
ST GEORGE’S, Grenada -- A Canadian company is said to be waiting to purchase majority holdings in the Grenada Electricity Services Ltd (GRENLEC), if the Grenada government is unable or unwilling to buy the shares. “Next in line to purchase, should government decline WRB’s offer, is Emera – a Canadian power company based in Halifax, Nova Scotia,” Caribupdate Weekly said in its December 19 edition. WRB Enterprises, which is headquartered in Florida, is selling its 51 percent in GRENLEC holdings. GRENLEC is the sole electricity provider in Grenada. Under an existing agreement, the first option to purchase must be given to the Grenada government. However, the government must exercise its option by December 26 or WRB can seek another buyer. Caribupdate Weekly said Emera is willing to buy the shares, which are said to be valued in the range of $100 million. “The company is already involved in electricity businesses in Caribbean countries such as the Bahamas, St Lucia and Barbados. Greg Hines, a director with Emera, has been visiting Grenada,” said Caribupdate Weekly. There has been mixed reaction from prominent Grenadians, including parliamentarians, on whether the government should purchase the GRENLEC shares. Opposition leader, Dr Keith Mitchell, for example, supports the idea of a purchase. However, the leader of the union representing GRENLEC workers is against it. “I would much prefer GRENLEC to be owned by a power-generating concern, whose interest would not just be profits but also to maintain the world-class facility that GRENLEC has become,” said Senator Chester Humphrey, president general of the Technical and Allied Workers’ Union. Meanwhile, Caribupdate Weekly is also reporting that government has invited Patricia D.M. Clarke to be its new consul general in New York. She will replace Derrick James, who was terminated in early December. “Clarke is a counselor at the Grenada Embassy in Washington and an alternative representative to the Organization of American States,” the paper said. “Caribupdate Weekly was also reliably informed that the consul general job offer was made to Marguerite St John-Sebastian but she turned it down. St John-Sebastian is a counselor at the UN Mission in New York.” | |
Reads: 1393 |
Comments: |
Troy Garvey: Good morning to you...I am a social activist in the Bahamas and we have been fighting against Emera for the past almost 2 years. They are not good for business and as we speak,we are trying to get them out of this country....all they are, is a bunch of greedy money makers who will step on the backs of the people to make their profits....please do not allow these people to buy your power comany, if they do,you will surely regret it!!!! you can contact me on 1-242-646-2972...i would be more than happy to give you much more information.....i also have contacts in halifax who can attest to this..... |
Peggy Cameron
NSP to retire two coal-fired generators by 2019, documents show
Nova Scotia Power plans on mothballing a pair of coal-fired generators at the Lingan power plant over the next seven years, according to a recent regulatory filing.
The power corporation said it expects to retire one unit at the Cape Breton station in 2015 and the other in 2019, say documents made public by the Nova Scotia Utility and Review Board.
“Based on present load forecasts … Nova Scotia Power will have sufficient planning reserve margin to allow for the retirement of a coal unit in 2015,” the utility said in response to questions from customer representatives about its 2013 capital spending plan.
The utility said the shutdowns are the result of lower industrial demand caused by woes in the pulp and paper industry, coupled with the addition of more renewable energy to the system.
“Additional retirements will depend on the decisions made to meet the 2020 Renewable Electricity Standard limits,” the filing said of provincial green-energy targets.
“Some of the options under consideration would allow for the retirement of a second coal-fired unit in 2019.”
Lingan’s remaining two generators would continue to operate, although they may be used less in the coming years, Nova Scotia Power said.
A utility spokeswoman said Thursday the dates mentioned in the filing are projections.
“The decision to retire units in the future years will be made very carefully and in a way that best fits the needs of our customers, the overall electrical system and the regulatory requirements,” Neera Ritcey said.
The units facing permanent shutdown have been operating on standby since March and are available for peak periods during the winter months.
The seasonable shutdown affected 31 of the plant’s 150 workers.
Nineteen employees were able to find new jobs within Nova Scotia Power while the remaining 12 were laid off, the utility has said.
A union spokesman said he hasn’t been made aware of further changes to the operation of the 640-megawatt plant.
“Any time there’s something happening like that, they contact the union on it,” said Jeff Richardson, business agent for Local 1928 of the International Brotherhood of Electrical Workers.
The union represents almost 1,000 utility workers, including power line technicians, power plant staff and various trades.
Richardson said he is slated to meet with company officials in the new year to discuss various operational issues.
“That will be one of them,” he said of Lingan’s future.
The union official said a provincial plan to get hydroelectricity from the Muskrat Falls project in Labrador could impact Nova Scotia Power’s workforce.
“If Muskrat Falls comes across in 2017, if it comes across, we might see some challenges then.”
Nova Scotia relied on coal-fired generation for 57 per cent of its electricity in 2011. The amount of the fossil fuel being burned each year continues to drop as a result of federal greenhouse gas emission rules, coupled with the provincial renewable energy targets.
Peggy Cameron
TAYLOR: Emera eyes turnaround at Grand Bahama
Nova Scotia’s Emera Inc. is projecting 2013 to be a turnaround year for one of its Caribbean investments.
The prediction was found in a prospectus for a new offering of preferred shares by Grand Bahama Power Co., a subsidiary of the Halifax energy conglomerate.
Grand Bahama Power expects to have a 42.1 per cent jump in profitablity this year, but Sasha Irving, Emera’s director of corporate communications, points out that the improved profit projection comes after a couple of years of losses for the Caribbean utility.
Grand Bahama Power lost $2.1 million in 2010 and almost $500,000 in 2011, Irving says. So the improved profit forecast is part of a three-year plan to turn things around.
“The projections have GBPC returning to the type of earnings they would have had prior to 2010-09,” Irving says.
Grand Bahama Power also revealed in the prospectus that it expects to report $8.68 million in after-tax profit for 2012 and anticipates net income will rise to $12.33 million in 2013 due to greater efficiency and a new regulated return on equity implemented last July.
That formula is similar to the one the Nova Scotia Utility and Review Board uses for another of Emera’s regulated subsidiaries, Nova Scotia Power.
Grand Bahama Power is also reported to be working with its regulator, the Grand Bahama Port Authority, to develop a fuel hedging strategy to better manage power rate volatility. Grand Bahama residents protested in the recent past over dramatic increases that the Emera subsidiary had introduced in their power bills.
Sale of the preferred shares, which target high net worth and institutional investors, is expected to raise $30.88 million in net proceeds for Grand Bahama Power. The company will use the money to repay loans to another Emera subsidiary, Emera Caribbean.
The loans were used to help finance construction of the $72-million West Sunrise electricity-generating station on Grand Bahama island. The natural gas-powered facility is significantly more efficient than previous generating stations.
Irving says the operation on Grand Bahama island is the same as how Nova Scotia Power works.
“We invest in the new plant … we make a rate of return within our allowable band on our investment, but fuel costs come down from what they otherwise would have been at the old plant and so really customers benefit.”
Because of the new generating station, Grand Bahama Power now projects that fuel costs should drop to $48.9 million this year from $64.1 million in 2011.
With an increase in profitability forecast, Grand Bahama Power has indicated it is also ready to resume paying dividends.
Meanwhile, another of Emera’s Caribbean investments, Light & Power Holdings of Barbados, is reported to be close to completing a deal to acquire 61 per cent of Grenada Electricity Services.
The Barbadian company is outbidding the Grenadian government, which had expressed interest in reacquiring Grenada Electricity Services from its Florida owner.
Light & Power Holdings, minority-owned by Emera, also holds a majority interest in St. Lucia Electricity Services and has another deal in the works to take over 52 per cent of Dominica Electricity Services Ltd.
The Grenadian government has been in negotiations with Light & Power Holdings in anticipation of it taking control of Grenada Electricity Services.
It has been reported that as a result of those talks, Grenada Electricity Services will be given exclusive rights to generate power using only fossil fuels.