A day after getting the government go-ahead for its proposed $208-million biomass-burning project outside Port Hawkesbury, Nova Scotia Power couldn’t say Friday if it will proceed.
Executive vice-president Robin McAdam told The Chronicle Herald that the power company is still reviewing the provincial regulator’s decision, which approved the electricity-generating project but stipulated that any cost overruns must be borne by the utility’s shareholders, not its customers.
"So, I don’t have a clear fix on that," McAdam said.
"But be assured there’s a lot of work going on."
Nova Scotia Power will not appeal the Utility and Review Board’s ruling but is studying the conditions the board imposed.
"That’s something we’re still working our way through, but I expect there’s a way to advance the project," McAdam said. "There’s a process we have to go through to carefully consider the conditions and we are doing that."
Nova Scotia Power and its largest customer, NewPage Port Hawkesbury, have been given the green light to burn 650,000 tonnes of wood waste a year for 40 years at NewPage’s Point Tupper plant, producing enough electricity for 50,000 homes.
The review board’s 50-page decision, written by chairman Peter Gurnham, includes several conditions intended to protect Nova Scotia Power’s 470,000 customers.
Gurnham wrote that 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 Nova Scotia Power customers, he ruled.
The board noted that Nova Scotia Power "has shown an unusual aversion to shareholder risk" in twice presenting this project to the board for approval.
McAdam was noncommittal Friday on whether the utility is prepared to shift any risk to its shareholders.
"Our job is to provide electricity at the lowest possible cost to our customers of Nova Scotia, and we are able to do that because of the kind of regulatory regime that we have here," he said.
"We work to keep the risk at the right level so we can raise money at the lowest possible cost. When we raise money at the lowest possible cost, customers benefit.
"We manage the risk profile to the best of our ability."
The board also ordered that Nova Scotia Power’s shareholders, not its customers, be on the hook if a penalty clause kicks in for a late start to the project.
Also, if there are capital cost overruns, the power company must come back before the board for another public hearing.
The board also addressed the financial woes of NewPage Corp., the Ohio parent company of NewPage Port Hawkesbury.
NewPage has reported having only $7 million in cash and $113 million available on a line of credit while being $3.3 billion in debt and facing annual debt servicing charges of $330 million.
If NewPage or its Nova Scotia subsidiary fails, no additional project costs can be passed on to Nova Scotia Power customers, the board ordered.
The utility has said 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.
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