The Canadian government is negotiating a $500 million bailout for Nova Scotia’s privately owned power company, saying the money will be used to prevent big increases in electricity prices.
Federal Natural Resources Minister Jonathan Wilkinson announced Monday in Halifax that Nova Scotia Power needs the money to cover increased costs caused by delays in delivering electricity from the Muscat Falls hydroelectric plant in Labrador.
Without the funding, Wilkinson said, the Halifax-based Emera subsidiary would have raised rates by as much as 19 per cent over several years.
“Nova Scotians already pay higher energy bills than many provinces in the country, and immediately recovering these costs in 2025 could have resulted in short-term increases to electricity prices,” the minister said at a press conference.
“The measures we are announcing today are expected to result in a very significant reduction in the annual increase.”
Nova Scotia Power has helped pay for the construction of an undersea transmission link between Nova Scotia and Newfoundland that will carry electricity generated at the Muskrat Falls hydroelectric project in central Labrador.
But the giant dam and power plant has suffered from an unreliable power supply for the past five years.
The 180-kilometre undersea link, known as the Maritime Link, was completed on time and on budget, but Muskrat Falls was plagued by generation problems and software glitches within the electricity transmission system from Labrador to Newfoundland.
Interest rate increases limited to “inflation rate”
As a result, Nova Scotia homeowners and businesses aren’t receiving all the hydroelectric power they were expecting, and Nova Scotia Power is being forced to buy more expensive, polluting fuel to boost production at existing plants.
Nova Scotia Power CEO Peter Gregg said the deal, if approved by the province’s energy regulator, would spread rising fuel costs over several years, keeping rate increases “at about the rate of inflation.”
In 2021, Ottawa restructured its financial support for the Muskrat Falls project and Newfoundland Power Co. to avoid a predicted 75 per cent increase in electricity rates in Newfoundland and Labrador, at which point the project’s original estimated cost of $7.4 billion in 2012 had nearly doubled.
The mounting costs have prompted the Canadian government to launch a $5.2 billion bailout.
In December 2023, Nova Scotia’s Progressive Conservative government asked Ottawa for assistance with potential cost increases caused by Muskrat Falls.
Wilkinson said the federal Liberals were pleased to reach an agreement and that it was essential that provinces without access to hydropower find green sources of power. Without this power, he said, companies could relocate elsewhere for carbon-free electricity.
Clean Electric Energy Project
Monday’s announcement comes after Governor Wilkinson visited the state in July and announced $192 million in funding for six clean power projects, including three utility-operated 50-megawatt energy storage systems and three wind energy projects.
Despite a steady flow of money to Nova Scotia in recent weeks, Premier Tim Houston over the weekend reiterated his government’s demand that Ottawa foot the full bill for protecting the Chignecto Isthmus, a key piece of land connecting the province with New Brunswick, from storms caused by climate change.
Cody Blois, leader of the federal Atlantic Liberal Caucus, said he didn’t understand why Houston was taking an adversarial approach.
“A major contribution”
“If you look at the prime minister’s Facebook page, almost every other day he wants to get into a fight with the government of Canada,” Blois, the Nova Scotia MP, said at a news conference Monday.
“That’s OK, there will always be times when we disagree… but I hope the Prime Minister recognises this important contribution. [Liberal] This is a step that the government has taken in Nova Scotia.”
Federal Infrastructure Minister Sean Fraser said the roughly $325 million Ottawa approved for upgrades to the dike protecting the isthmus is the largest amount ever approved under the federal Disaster, Reduction and Adaptation Fund.
He questioned Nova Scotia and New Brunswick’s decision to continue the legal battle to force Ottawa to foot the full costs, saying the legal costs would be better spent on the project itself.
