An announcement is expected as early as Friday on the controversial $208-million project to generate electricity by burning wood proposed by NewPage Port Hawkesbury and Nova Scotia Power, a source has told The Chronicle Herald.
After getting the government go-ahead Oct. 14 to build the biomass-burning project outside Port Hawkesbury, the power company has yet to make a definitive decision on the plant.
Instead, it has been reviewing the regulator’s decision, which stipulated any cost overruns must be borne by the utility’s shareholders, not its customers.
"There hasn’t been much said. Were the conditions so onerous that it scared them off? I don’t know, from the point of view of Nova Scotia Power, perhaps they just don’t like that much risk," said Wade Prest, a small woodlot owner and director of the Nova Scotia Woodlot Owner and Operators Association, on Wednesday.
A Nova Scotia Power vice-president has said the utility has yet to make a decision on the project and is examining the conditions.
"There’s a process we have to go through to carefully consider the conditions and we are doing that," said Robin McAdam on Oct. 15.
Nova Scotia Power wasn’t supportive of the idea of sharing any risks of the project with its shareholders during a hearing into the development last month.
McAdam told regulators that sharing the risk with shareholders would be "proposing a different kind of regulatory construct than exists today in Nova Scotia."
Neither McAdam nor Bill Stewart, NewPage Port Hawkesbury’s lead manager on the project, were available for interviews Wednesday.
NewPage Port Hawkesbury, a subsidiary of Ohio-based NewPage Corp., is a partner with Nova Scotia Power in the plan to build the power-generating plant. The utility intends to spend about $200 million, including $80 million to buy NewPage’s boiler and $93 million in construction costs.
NewPage has previously said the $80 million from the boiler’s sale will enhance its liquidity. The company has reported having $7 million in cash and $113 million available on a line of credit, but it also has a $3.4 billion debt.
Next week, both NewPage and Emera, parent company of Nova Scotia Power, release third-quarter financial results.
In its 50-page decision, the Nova Scotia Utility and Review Board ordered the utility be on the hook if a penalty clause kicks in for a late start to the project.
The deal between the two companies stated that if Nova Scotia Power gives notice to proceed after Sept. 30, 2010, the contract price will escalate by 0.2 per cent per month.
The board also stated the most important part of the project is a contract worth $92.9 million covering engineering, procurement and construction costs. Any additional costs cannot be passed along to power customers on their bills.
Also, if there are capital cost overruns, the power company must come back before the board for another public hearing.
The utility says it needs the biomass project to proceed in order to meet the province’s renewable energy target of generating 10 per cent of its electricity from wind, tides or biomass by 2013.
No comments:
Post a Comment