A $208-million project to generate electricity by burning wood waste in a paper mill outside Port Hawkesbury was approved with conditions Thursday by the province’s Utility and Review Board.
Nova Scotia Power and its largest customer, NewPage Port Hawkesbury, were given the go-ahead to proceed with the project at the Point Tupper mill, and they expect to burn 650,000 tonnes of biomass a year for 40 years, producing enough electricity for 50,000 homes.
Opponents say the regulatory board’s decision will clear the way for more tree-cutting in the province and increase carbon emissions.
The board’s 50-page decision, written by chairman Peter Gurnham, includes several conditions to provide safeguards for 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.
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 in its decision.
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.
The Ecology Action Centre of Halifax, which opposes the project, is concerned over the supply of biomass and said the review board should have waited for the provincial government’s new policy on forestry practices, expected to be unveiled later this month.
"We’re especially disappointed that this decision is going forward before the natural resources strategy is being released," said Jamie Simpson, forestry program co-ordinator for the Ecology Action Centre.
"(The new) regulations should come first, and then decide where we want to go with forest biomass harvesting."
Simpson also said the project will place a major new stress on forests and will require an extra 350,000 tonnes of clearcutting a year.
NewPage Port Hawkesbury said it was pleased with the board’s approval, especially since the board rejected a similar proposal last year.
"It’s great news for all of Nova Scotia that we are going to be able to provide a significant contribution to the generation of renewable energy in the province," said Bill Stewart, the company’s director of woodlands and strategic initiatives.
Stewart said the project will create about 150 new jobs in the seven eastern counties of Nova Scotia in trucking, harvesting and silviculture.
Port Hawkesbury Mayor Billy Joe MacLean acknowledged there is deep opposition to the project in some quarters but he said NewPage is a reputable company that will manage the forests properly.
"The company is a good community-minded company and they are the mainstay of our economic base here," the mayor said.
Independent sawmill operator Murray MacDonald, who owns or leases more than 6,000 hectares of timber in Pictou County, said the news was like a shot in the arm to the forestry industry.
"It builds confidence and it is positive news for our industry," said MacDonald, president of M.R. Holdings Ltd. "Everyone in the industry is going to benefit from this, but we must make sure to keep biomass secondary to the sawmills."
Energy Minister Bill Estabrooks applauded the review board’s decision.
"It’s important for Port Hawkesbury particularly, (and all of) rural Nova Scotia," he said.
Estabrooks also noted that Nova Scotia Power customers are protected from any risks.
With Jeffrey Simpson and Mary Ellen MacIntyre, staff reporters
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