Lurking behind Nova Scotia Power's increasingly frantic efforts to find renewable sources of electrical generation is the threat of a crushing $500,000-a-day fine should it fail to meet legislated targets for 2010. That works out to $183 million per year—half again what NSP earned its shareholders in 2008.
For better or for worse, the threat is symbolic, not real.
Under the Electricity Act, a set of regulations known as the Renewable Energy Standards (RES) requires NSP to purchase at least five percent of its 2010 energy supply from renewable sources owned by third parties and built after 2001. The RES requirement increases to 10 percent in 2013, but may include generation from both third party and NSPI facilities. The Climate Change Action Plan, released last January, would have increased this to 25 percent by 2020, but a little noticed NDP campaign promise trumps that provision, moving the 25 percent deadline up to 2015.
RES regulations stipulate "a daily penalty of no more than $500,000" for failure to comply.
Why did Nova Scotia Power come to the Utility and Review Board with what the board called, "an incomplete, poorly documented application?" In an email exchange with contrarian, Consumer Advocate John Merrick offers a couple of theories:
They didn’t expect as much opposition and questioning because they thought it was such a win-win scenario (using a renewable energy source other than coal; helping keep NewPage viable and thus an employer in the province; giving woodlot owners and sawmills a source of revenue) they would be applauded from all corners of the province. Once into the hearing it was too late to...
In contrarian's view, the strongest arguments put forward by environmentalists in the NSP biomass application hearings dealt with wood supply. The UARB gave them short shrift.
Black River Wind Ltd. argued that pressure to supply the proposed plant would encourage NewPage to adopt unsustainable forestry practices.
The Ecology Action Centre praised recent improvements in NewPage's forest management practices. It argued that a smaller biomass generator, designed to run on wood waste generated by NewPage's existing forestry operations, could be a useful component of the campaign to wean NSP and its customers off dirty coal, but concluded that a boiler of the size proposed would overtax Eastern Nova Scotia's wood supply.
The UARB concluded that harvesting practices were beyond its jurisdiction, adding, "The Board assumes that other authorities who have responsibility for the harvesting of the forest will ensure appropriate regulations and guidelines with respect to harvesting biomass are in place."
The UARB says any decision to implement feed-in tariffs will have to come from government, not the board.
Feed-in tariffs would guarantee pre-set, above-market rates for alternative power producers who want to feed surplus power into the NSP grid at will. It is strongly advocated—surprise, surprise!—by companies like Neal Livingston's Black River Wind, which have not been able to compete with large commercial wind producers in NSP's bidding process, but stand to profit from guaranteed access to the grid at above-market prices.
Given UARB Chairman Peter Gurnham's frequent criticism of NSP during hearings on the biomass project, it is no surprise that today's decision aims strong language at the utility.
Written by Gurnham, the decision calls NSP's application, "incomplete [and] poorly documented." Gurnham acknowledges the urgency of reducing NSP's carbon output, but adds, "the progress of this project has likely been delayed because of NSPI's action."
It's back to the drawing board for Nova Scotia Power now that the Nova Scotia Utility and Review Board has refused to grant prior approval for the utility's plan to generate power by burning wood waste from the NewPage Port Hawkesbury Ltd. mill.