Nova Scotia looks for rate stabilization

Nova Scotia Electricity Rate Plan proposes 4% annual increases over three years, fuel cost deferral, predictable tariffs, regulatory oversight by the Nova Scotia Utility and Review Board, and risk factors from storms or industrial closures.

Nova Scotia Power is proposing a plan that spreads out increases in power bills over a few years, instead of imposing a steep increase next year.

The utility met with customer representatives and regulators to discuss the proposal, which it says will stabilize electricity rates for three years.

The proposal involves an increase of four per cent each year as part of an NS Power rate hike for the next three years. The original plan involved average increases of nine per cent in 2012 and adjustments to 2013 and 2014 rates of four and two per cent, respectively.

The trade-off is the company will delay payment of millions of dollars worth of coal and other fuel for three years.

"The plan takes into account that we will have the money to pay that in rates when we get to that point, not all at once, much as you might pay a high balance on credit card," said Rene Gallant, General Manager and Regulatory Counsel for the utility.

That means paying interest later on fuel burned to make electricity now.

The plan has been proposed to keep prices predictable, but Gallant warns that rates could jump if a large industrial customer shuts down or if big storms or hurricanes wrack up repair costs.

"A storm like a hurricane can be in the millions of dollars," he said, "both because of the restoration costs and then making sure people are back on line as soon as possible."

If approved by the Nova Scotia Utility and Review Board, which recently approved a 14% rate hike in a separate case, new general electricity rates would take effect January 1, 2012.

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