Utility had record profit in 2010
Power rate hikes next year are justified despite a record profit in 2010, says the president of Nova Scotia Power Inc.
Rob Bennett defended the utility’s plan to seek an average nine per cent rate hike this year at the same time it’s recorded an 11 per cent increase in earnings last year.
"Nobody likes a rate increase; I don’t like rate increases," Bennett told reporters after the company’s annual shareholders meeting Wednesday in Halifax.
"But the fact is, costs are going up, particularly with the fuels that we use to make electricity."
Nova Scotia Power’s net earnings last year were $121 million, up from $109 million in 2009.
The utility told shareholders the increase was due to lower income taxes on renewable energy projects and an increase in the expected benefit from accelerated tax deductions. The tax savings were offset by higher operating, maintenance and general expenses related to pension and storm costs.
Nova Scotia Power didn’t have to ask for a rate hike last year because of the tax credits for renewable energy projects, Bennett said.
Emera Inc., owner of Nova Scotia Power and other utilities, had record earnings of $191 million in 2010, an 8.5 per cent improvement from the previous year. The utility earned $176 million in 2010.
Earnings per share were a record $1.68, compared to $1.56 in 2009.
Emera president Chris Huskilson called 2010 "a tremendous year."
"It’s been a year we’re all very proud of," he told an audience of about 250.
Besides record earnings and share prices in 2010, Emera signed a deal with Nalcor Energy to develop the Lower Churchill Falls hydroelectric project in Newfoundland and Labrador, and continued to add to its holdings in the Caribbean, New England and Atlantic Canada, Huskilson said.
"Our success has been the result of six years of solid progress and hard work. Between 2006 and 2010, we delivered eight per cent annualized growth, exceeding our four to six per cent target. Our total return to shareholders over the last five years has been 13.5 per cent annualized. Last year alone, we produced a 31 per cent return to shareholders."
Huskilson told reporters such returns are needed to fund investment in renewable energy projects and lowering emissions.
"As we make those investments, we have to raise money to do that, and as we raise money, we have to be able to attract the capital. In order to do that, we have to be able to provide shareholders and debt holders with a return on their investment."
Bennett said Nova Scotia Power’s rate of return is determined by the Nova Scotia Utility and Review Board, the provincial regulator.
Emera’s first-quarter results for 2011, released Tuesday, included a 59 per cent earnings increase over the same period last year. The utility earned $124 million in the first three months of the year, compared to $78 million a year ago.
The company said the results included one-time gains on two utility acquisitions completed in January.
Nova Scotia Power earned $64 million in the last quarter, compared to $65 million in 2010.
A group of 20 people from the Ecology Action Centre staged a theatrical protest outside the Cunard Centre before the meeting. The protesters, dressed as smokestacks and yellow birds, sang songs and performed a play called Canaries in a Coal Mine.
"We want to send a message that Nova Scotians are very concerned about the rising prices of electricity due, in part, to the unsustainable fuel supply of imported coal here in Nova Scotia," said Brennan Vogel, the centre’s climate change co-ordinator.
The group included six people from the Hillside Trenton Environment Watch Association, which is fighting to reduce emissions at Nova Scotia Power’s coal-fired plant in Trenton.
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