Wind farmer wants penalty removed

By ROGER TAYLOR Business Columnist

A DEVELOPER building a 51-megawatt, 34-turbine wind farm on Dalhousie Mountain says he isn’t worried about competing with Nova Scotia Power Inc.

Reuben Burge, president of RMSenergy Ltd. in Westville, has a long-term agreement with Nova Scotia Power to build the wind farm by the end of 2009. At the time the deal was signed, government rules prevented NSP from building its own wind farms, which was an effort to create a competitive market for independent power producers.

More recently, however, the provincial government relaxed those rules. Subsequent to that, the provincial utility acquired the development rights to a proposed 45-megawatt project to be built on Nuttby Mountain from financially troubled EarthFirst Canada Inc. of Calgary.

That deal, which includes land leases, transmission interconnection rights and provincial environmental approval, raised concerns among politicians who thought Nova Scotia Power might eventually force out the smaller producers.

"I still believe this doesn’t change the competitive playing field," Mr. Burge told me in a phone conversation on Thursday.

"I don’t believe it’s too bad. In some ways it’s good because it means a lot more wind is going to get on the grid this year."

He said he doubts the provincial regulator would allow NSP to charge a rate for wind power generated from its project that is different from the rate for independent producers.

"I don’t feel threatened. I think they’ll maintain a good process. I’m having very good luck with Nova Scotia Power. . . . I feel the way it’s been going on so far has served us well," says Mr. Burge.

While some people have talked about government providing loans to independent power producers to help the little guys to compete, Mr. Burge says he’s not so sure he would want that.

The biggest issue facing independent power producers is the cost of debt, he admits, but generally the terms of government loans are usually too short-term to meet the long-term needs of wind power.

There is one thing, however, which he says government could do to help the little guy.

"Right now, the government will apply a penalty if we don’t get built by the end of 2009. Instead of offering a penalty to put us under pressure, they should be offering an incentive.

"If we complete (the wind farm) in 2009 or in the subsequent year . . . then we would be offered an incentive, like a certain amount per kilowatt hour for a 10-year period."

Mr. Burge, who has one equity partner and debt financing, says providing an incentive would give the independent producer something to show the banker, which could alleviate concerns about extending a loan. An incentive is just one more positive thing the bank would look at when evaluating the project, he says.

RMSenergy incurred additional expenses because of the threat of penalty, he says. Turbines were purchased when the price was high. Mr. Burge estimates he paid about five per cent more for his turbines.

"We didn’t have time to negotiate, either. We didn’t have time to find deals. . . . We probably shelled out another five per cent."

The turbines will arrive this summer. Meanwhile, the company is working on foundations and road construction.

"We’ll be averaging 100 full-time employees from now until Sept. 30."

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