FOCUS Energy Cost Politics and the Environment in Nova Scotia
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CCPA-NOVA SCOTIA
FOCUS
10 YEARS OF RAISING DEBATE AND PROPOSING POLICY ALTERNATIVES
Energy Cost Politics and
the Environment in Nova Scotia
Reflections on the Government’s Backtrack on Mercury Emissions
Brendan Haley
On July 22nd, 2010, the Government of Nova Scotia announced that it
would delay the mercury reduction standards for the provincial power
utility, Nova Scotia Power. The Premier stated that he made this decision
because the projected rate increase, which the utility said was necessary to
meet the standard, “would have a devastating impact” on Nova Scotians.1
An op-ed written by Nova Scotia Energy Minister Bill Estabrooks later
argued that the decision struck a balance between “affordability and the
environment”.2 In the media the Minister stated: “I make no apologies...I’ll
put people first and that’s what we did in this case in the short term.”3
The Minister’s statements show that a trade-off existed, in his mind,
between “people” and the “environment”. Advocates of sustainable develop-
ment have been striving to eliminate these types of trade-offs for decades.
In Nova Scotia the government`s environmental discourse of “sustain-
able prosperity” emphasizes that the province’s economic future is deeply
coupled with the task of creating a cleaner environment.4 The province’s
Environmental Goals and Sustainable Prosperity Act seeks to “demonstrate
international leadership by having one of the cleanest and most sustain-
able environments in the world by the year 2020.”5
The decision to relax an environmental target is confounding for a
province that has endorsed this progressive environmental and economic
vision, and from a new government that received accolades for its green
energy initiatives. Nova Scotia is the first jurisdiction in Canada to place
caps on Greenhouse Gas (GHG) emissions within its electricity sector and
it has recently launched a strategy focused on making renewable energy a
strategic sector for development.6However, it is also not surprising that Premier to make annual reductions from 2010 to 2014
Dexter’s government would balk at the prospect and to make-up for the emissions over 65 kg/yr
of higher energy prices for consumers. Before by overshooting the 65 kg/yr cap between 2014
the election, the NDP advocated sales tax cuts and 2019.12 Thus the cumulative amount of emis-
to reduce energy prices.7 The NDP also issued a sions up to 2019 should be the same as a 65 kg/yr
press release during the last election campaign cap starting in 2010. The new plan trades more
arguing against a rate increase to fund energy mercury pollution in the short-term for deeper
efficiency programs.8 cuts in the latter part of the decade.13 Environ-
The relaxation of the mercury standards mental organizations in the province condemned
shows that this government has a tendency to the announcement and emphasized the costs of
support low energy prices for consumers at the mercury emissions to human health.14
expense of environmental and health initiatives. The government has provided little assur-
When faced with an increase in electricity rates, ance that these new long-term mercury reduc-
the government’s knee-jerk reaction was to push tion goals are credible. Even though Nova Scotia
environmental standards off into the future. If made a commitment to the other provinces to
this foreshadows the dominant tendency of this reduce emissions in 2010, it changed its regula-
government, Nova Scotia’s emerging green en- tion at the last minute. What is to prevent the
ergy agenda is in jeopardy. same thing from happening in the future?
Is this conflict between energy consumers In 2007, all parties in the legislature support-
and the environment inevitable? If the issue at ed the passage of the Environmental Goals and
hand is real energy affordability and accessibil- Sustainable Prosperity Act, which entrenched a
ity for Nova Scotians and not the dubious and number of environmental targets in legislation,
opportunistic politics of energy price increases, including targets for renewable energy and re-
we can implement policy solutions that ensure ductions in greenhouse gas emissions. The Act
energy affordability while accelerating the transi- states that “mercury emissions will be reduced
tion to a cleaner, lower-carbon economy. Practic- by seventy per cent by the year 2010 relative to
ing a new form of energy cost politics is the key pre-2001 levels”, which is consistent with a 65
to avoiding undesirable tensions and trade-offs. kg/yr target in 2010.15 This Act was supposed to
signal that political leaders were affirming their
commitment to environmental goals by establish-
Implications of Mercury
ing them within legislation, as part of a broader
Regulation Changes
“sustainable prosperity” agenda.
The 2010 mercury regulation stipulates emission When the government chose to delay the
reductions from a cap of 168 kilograms per year emissions target in July, it did not consult the
(kg/yr) to 65 kg/yr. Nova Scotia agreed to this Roundtable on Environment and Sustainable
cap in 2006 in cooperation with other provinces Prosperity tasked with helping the government
as part of the Canada Wide Standards for mer- meet its environmental goals.16 Instead, the En-
cury pollution from coal-fired power plants.9 It ergy Minister held a quick meeting with some
appears that other provinces with compliance business representatives and other stakeholders
obligations will meet their goals.10 before announcing the decision.17
In July, the government decided to move the The broader problem is that the government
65 kg/yr target from 2010 to 2014. It also an- undermines all of the goals contained within
nounced a new cap of 35 kg/yr in 2020.11 Under the Act when it backtracks on one of them via
the new plan, Nova Scotia Power will be required a rather loose consultation process. What is to
2 c anadian centre for polic y alternatives–nova scotiafigure 1 North American Electricity Prices (residential prices, Can cents/kwh)
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source Hydro Quebec. 2009 Comparison of Electricity Prices in Major North American Cities, Rates in Effect April 1. Pg. 20.
prevent the government from backtracking on Nova Scotia politics ever since they caused the
greenhouse gas reduction goals and renewable defeat of Gerald Regan’s government in 1978”.18
energy goals in the future? Figure 1 shows that Nova Scotians face rela-
The lesson here is that future targets (even tively higher electric rates than most other Ca-
when contained in legislation with associated nadian jurisdictions (except Charlottetown,
regulations) don’t amount to much unless ac- PEI). However, Nova Scotia rates are below the
tivities take place in the interim that help meet average of the North American cities sampled.19
these goals in a manner that is politically accept- Claiming that the mercury regulations would
able. Obviously, this government did not find impose significant new costs, Nova Scotia Power
meeting the 2010 mercury goal to be politically proposed to increase rates by 12% for residential
realistic. Nova Scotia’s particular brand of en- customers and 18% for industrial customers in
ergy cost politics is the prime stumbling block. 2011. After the government changed the mer-
cury regulations NSP changed its rate increase
application to 6.5% and 11.3% respectively.20 This
Energy Cost Politics
will be the sixth rate increase in Nova Scotia
Politicians have always had to tread carefully since 2002.21
when it comes to electricity rate increases in Rate increases can have serious social and
the province. Political blogger Parker Donham economic impacts. Anti-poverty organizations
says that “Power rates have been the third rail of have highlighted how low income Nova Scotians
Energy Cost Politic s and the Environment in Nova Scotia 3have foregone food and been forced into home- ity plan anticipates that coal prices will trend
lessness to pay electricity bills.22 Electricity rates upward and it highlights renewable energy as
are also an issue for energy-intensive industries a way to provide “stable” electricity rates in the
in the province. Consider that just two pulp and future.26 This is a rational approach. Neverthe-
paper plants consume about 20% of Nova Sco- less, long-term rationality does not necessarily
tia’s electricity sales.23 win out over short-term expediency. The politi-
Whenever Nova Scotia Power (the prov- cal problem is that deliberate policy action must
ince’s privatized, vertically integrated utility) increase rates in the short-term to make invest-
announces a new rate increase extensive media ments in renewable energy, energy efficiency
coverage and angry letters to the editor are sure and to restructure the transmission and distri-
to follow. In recent years, Nova Scotians have re- bution systems. The more radical energy transi-
peated this ritual on an almost annual basis. It tions required to cut greenhouse gas emissions
feels like something has gone awry. The pattern by enough to avoid dangerous climate change
of rate increase after rate increase is increasing will require even larger investments.27
social unrest. Also, if it is the case that rates are likely to
The electric utility system is encountering increase in almost all future scenarios, and if
a market and policy environment that it wasn’t households, as well as businesses, are actually
set up to handle. The original goal of large, cen- having trouble dealing with energy costs as it is,
tralized utility systems was to increase the quan- isn’t it time for a new discussion about energy
tity of energy consumed and to decrease price affordability in the future?
by reaping economies of scale. Utility managers
even promoted electricity consumption in resi-
Real Affordability:
dential households to increase demand during
Energy Cost Security vs. Energy Prices
off-peak periods. Then nuclear technology cre-
ated the false promise of delivering the ultimate The historic remnants of a utility system whose
in economies of scale and lower prices, making purpose was to deliver energy to passive con-
electricity “too cheap to meter”.24 sumers leaves us fixated on energy prices. But
The power system’s large fixed costs made of course, energy prices are only one component
utilities natural monopolies. Policy makers es- of consumer energy costs. Our energy bills are
tablished regulatory boards to check their mo- determined by both price and how much energy
nopoly power and ensure prices were no higher we use; including the energy we waste. Energy
than actual costs (plus profit). In this centralized bills themselves only become unmanageable
energy paradigm, citizens are passive consum- when they are too high relative to the income
ers that the regulators are supposed to protect of a household or business.
from unjustified price increases. The concept of “energy burden” provides a
Nova Scotia did not experiment in the same full accounting of energy affordability or ener-
manner as other jurisdictions with “deregula- gy costs. The energy burden measures the per-
tion” during the 1990s.25 For better or worse, the centage of a household’s income spent on energy
dominant electricity paradigm in Nova Scotia services. Even if prices increase, the energy bur-
has remained relatively stable over the last num- den equation shows that it is possible to main-
ber of decades. tain affordability by changing the other terms.
If coal prices escalate and society decides to Energy efficiency measures can reduce the quan-
tackle environmental problems the increases in tity of energy consumed. A variety of policy
rates are unlikely to halt. The province’s electric- measures such as decreasing income inequality,
4 c anadian centre for polic y alternatives–nova scotiaincreasing social assistance and promoting eco- Energy Burden
nomic development (this includes green energy
strategies) can also increase income. Energy burden measures how much of a household’s
Individuals in energy poverty face energy income is spent on energy services:
burdens that are too high. Spending more than
Price × Quantity Consumed
6% of household income on electricity has been Energy Burden =
highlighted as an unsustainable energy burden Income
based on targeting no more than 30% of income
spent on shelter costs and no more than 20% of
these costs spent on electricity.28 The UK govern- Energy Efficiency
ment’s energy poverty plan defines 10% of income
The soon to be created Efficiency Nova Scotia
as an unacceptable energy burden.29
agency is expected to operate an energy effi-
Policies that focus on maintaining accept-
ciency program on par with the most advanced
able energy burdens by focusing on prices tend
and ambitious programs in North America.30 At
to create undesirable trade-offs between ener-
least that is the current plan.
gy costs and the environment (e.g. relaxing air
Energy efficiency is a cost-effective energy re-
emission standards).
source because saving kilowatt hours is cheaper
It is very difficult for politicians to propose
than having to produce them by building power
policies that would result in higher energy prices
plants and burning fuels.31 Paying for energy ef-
without offering anything in return to deliver so-
ficiency programs through power rates reduc-
cial security for households with respect to their
es the future costs of the entire electricity sys-
energy costs. But our current obsession with en-
tem. This means less money going out of Nova
ergy prices can be traded in for energy afford-
Scotians’ pockets to provide revenues for Nova
ability policies focused on reducing the quantity
Scotia Power.32
of energy consumed and providing income gen-
Utility board regulators and policy makers
erating opportunities. These policies can actu-
in Nova Scotia now accept energy efficiency as
ally help reinforce environmental transitions by
a cost-effective way to manage the electricity
encouraging energy efficiency, renewable energy
system and to reduce greenhouse gas emissions
production and wider eco-industrial transitions.
and other forms of pollution.
The challenge with the latter approach is that
The other benefit of energy efficiency is that
it requires a new way of thinking and a political
it actually reduces the quantity of energy con-
culture focused less on energy price and more on
sumed by those households and businesses that
energy costs or actual energy affordability. Politi-
participate in programs aimed at increasing the
cal leaders and the public would have to strike
efficiency of heating systems, lighting, appliances,
a new social bargain that would work towards
equipment and industrial operations. This makes
providing universal access to green energy cost
energy efficiency a powerful and direct method
savings opportunities. This requires us to take a
of reducing energy burdens, but these opportu-
second look at existing green energy policies with
nities are not altogether publicly accessible un-
regard to energy affordability and social security,
less they are able to service a wide spectrum of
and not just environmental goals in isolation.
sectors and communities.
Since these programs give households a di-
rect method of controlling their energy burdens,
providing equitable access to them is a social
Energy Cost Politic s and the Environment in Nova Scotia 5objective that can exist alongside the ecological have little opportunity to reduce their energy
objective of reducing pollution and the econom- burdens through energy efficiency. This is most
ic objective of lowering electricity system costs. unfortunate since low-income organizations
These objectives can reinforce one another and were important supporters of the extra charge
increase political support for energy efficiency on electric rates to fund efficiency programs.
programs. Ensuring that everyone has the abil- What they expected in return was a guaran-
ity to participate in efficiency programs is a nec- tee of equitable service provision.37 The politi-
essary component of a social bargain that seeks cal bargain that stakeholders struck to help the
to ensure energy affordability in a future with environment and give energy consumers the
higher electricity rates. security they needed to support investments in
But these different objectives pull program efficiency has been broken (or at least delayed).
administrators in different directions since en- Energy efficiency is not only a means to re-
ergy savings can’t be found as easily or as cost- duce GHG emissions and reduce costs within
effectively in all sectors and communities. The the entire electricity system. We can also con-
issue of equitable access is especially important sider it as a new social program for a low-car-
for low-income households. These households bon future, since it is an effective way to reduce
cannot afford to share the costs of energy up- energy burdens without relying on lower prices.
grades with the administering agency. If the sole Unfortunately, the habit of thought that focuses
objective of energy efficiency policies is to find on energy prices instead of real energy afford-
the cheapest way to encourage energy savings in ability leads policy makers to ignore and neglect
the short term, programs targeting low income the importance of providing universal access to
households will not be a priority. energy efficiency services.
During a consultative process, experts and
stakeholders proposed “equity targets” to ensure
Renewable Energy
that the province’s efficiency agency properly de-
signs and funds programs for groups that could The province’s renewable electricity plan describes
otherwise be excluded. 33 The low income target how renewable energy stabilizes the costs of the
would require Efficiency Nova Scotia to spend a electricity system. Renewable energy also reduces
minimum amount (e.g. 15%) of its overall budget GHG emissions and creates jobs associated with
on low-income households.34 A recommendation manufacturing, installation and maintenance.
to make “special provisions for those on low in- Renewable energy can also play a role in re-
come”, including minimum spending targets defining energy cost politics within the province.
were outlined in a final report to government.35 It has the potential to turn the energy cost equa-
However, it is unclear if this recommendation tion on its head since many consumers could
will ever be implemented, since the government transform into revenue-earning renewable en-
failed to include these equity objectives within ergy producers. While it is difficult for a large
the subsequent Efficiency Nova Scotia Corpora- number of citizens to hold a significant owner-
tion Act. That leaves their implementation up ship stake in coal-fired power plants, citizens can
to the Utility Board, which has previously ruled participate in community wind co-operatives or
that it cannot consider special programs for low- put solar panels on their property. Citizens can
income consumers.36 reduce their energy cost burdens by becoming
If the government fails to amend the Public mini power utilities. Households will increase
Utilities Act or the Efficiency Nova Scotia Cor- their incomes by participating in renewable en-
poration Act low-income Nova Scotians could ergy generation projects and/or directly offset
6 c anadian centre for polic y alternatives–nova scotiatheir bills as their meters run backwards. In the The potential inclusion of solar electric tech-
process, citizens’ political and economic inter- nologies in a FIT demonstrates the difference
ests will shift from those of passive consumers between lowering energy prices and contribut-
to those of energy generators. ing to energy cost security by developing renew-
Like energy efficiency we can think of re- able energy. Solar electric technologies have high
newable energy generation as not only a way to costs per kilowatt hour of electricity41, yet they
reduce greenhouse gas emissions and provide are also technologies with near universal appli-
electric system benefits, but also as a means of cability. Including solar in a FIT would raise the
providing energy cost security for households. electric rates42, but it would also open up renew-
To do this we must consider how we can broaden able energy generation opportunities to a host
and equalize participation in renewable energy of new users.
generation opportunities.
The province’s announcement of a communi-
An Energy Cost Social Safety Net
ty feed-in tariff (FIT) shows potential to include
many more Nova Scotians in renewable energy A social safety net to ensure against unsustain-
opportunities.38 Feed-in tariffs establish fixed able energy burdens is required for a number of
prices for renewable energy generators based reasons. First, it will catch those who might fall
upon their cost of generation, plus a reasonable between the cracks because of low-income and/
rate of return. FITs promote community-based or due to time lags in energy efficiency and re-
renewable energy projects because the adminis- newable energy development. Second, it provides
tration of generation contracts is simplified and a political guarantee to all citizens that higher
the price certainty facilitates access to capital.39 electricity rates will not result in energy poverty.
North American FIT expert Paul Gipe ex- The key to avoiding environment and energy
plains that “Feed-in tariffs work because they are cost trade-offs is to provide social security against
more equitable than other policies. They enable energy poverty without relying on the blunt in-
everyone — including homeowners, farmers, co- strument of low energy prices. The Universal
operatives, and businesses large and small — to Service Program proposed by Roger Colton be-
profit from renewable energy.”40 fore Nova Scotia’s Utility and Review Board is an
The design details of the FIT program will elegant solution consistent with this approach.43
determine the inclusiveness of renewable energy Maintaining appropriate energy burdens is
generation opportunities. The ability for genera- the program’s prime objective. The key compo-
tors to connect to the distribution and transmis- nent of the program is a credit on bills to bring
sion grid will be important since, in some cases, low-income households back under an energy
the utility will need to expand the grid to bring burden threshold.44 For example, if a household
new generators online. spends 15% of its annual income on electricity
Another way to broaden participation in re- an on-bill credit will reduce its energy costs to
newable energy opportunities is to promote a 6% of its income.45
diversity of technologies since different sectors A benefit of this approach is that the credit
and communities will have different renewable will adjust itself in accordance with energy ef-
energy generation options. For example, wind ficiency measures to reduce the quantity of en-
and bio-gas opportunities will exist for many ergy wasted and/or policies to increase the in-
rural communities, but they are unlikely to ex- comes of the energy poor. One way to reduce
ist for urban businesses and residents. the costs of the social safety net program is to
Energy Cost Politic s and the Environment in Nova Scotia 7target households with high energy burdens for tions. This government’s energy policy Achilles
efficiency improvements. heel is their willingness to capitulate in the face
The program also provides a powerful con- of rate increases. They have now fully exposed
servation incentive by fixing the amount of the their vulnerability. Instead of following a strategy
credit for a certain period.46 If a household reduc- of transformation and innovation, the business
es energy consumption, they will keep receiving sector might opt for political strategies that will
the fixed credit as a one-time bonus and if they redistribute benefits to themselves at the expense
increase energy consumption, they will not im- of environmental improvements.
mediately receive a credit increase. The state of affairs should underline the ur-
Like all of the other initiatives mentioned, gent need to enhance the Nova Scotia business
ratepayers will pay for this program and thus it sector’s capacity to transform and adapt to an
might increase electric rates.47 However, it would economy with higher energy prices.
also quite effectively provide universal security The business sector has the potential to pro-
against energy poverty. duce some of the most dramatic energy savings
and transformations of energy systems. This po-
tential exists because successful businesses re-
Industry Productivity and Competitiveness
structure themselves and engage in innovative
Energy affordability policies aim to reduce the activities. They find new markets, produce new
social insecurity of households concerned about products and reform internal processes. How-
access to an essential service. For the energy ever, to harness this innovative capability, and
poor, energy affordability can become a health to push it in a greener and less energy intensive
and safety issue; choosing between heating or direction, businesses need to anticipate a world
eating, medication or lights.48 with higher energy costs and search for new op-
For the industrial sector, energy cost issues portunities within green technological systems.
more directly relate to productivity and compet- Governments can encourage environmental-
itiveness objectives. Business energy cost issues ly-friendly innovation by promoting the expec-
are also very political. Business pressure appears tation of a lower carbon, cleaner economy in the
to have greatly influenced the government’s de- future. This means standing firm with respect to
cision to relax mercury emissions standards.49 environmental commitments in the face of higher
Keeping prices low for business is unlikely energy prices. In addition, the government can
to improve Nova Scotia’s productivity and eco- encourage both large and small businesses to re-
nomic performance. “Policies that convey static, strategize by facilitating access to new networks
short-term cost advantages but that unconsciously and new types of knowledge.
undermine innovation and dynamism represent Efficiency Nova Scotia will encourage incre-
the most common and most profound error in mental changes along existing production pro-
government industrial policy”, says renowned cesses and it will take advantage of opportunities
business competition expert Michael Porter.50 for large energy savings when businesses change
Governments that give into business lobbying product lines and make capital investments. But
for short-term cost relief entrench a conserva- a different policy is required to encourage the
tism that hampers innovation. The Nova Scotia development of more fundamental, systemic
government’s quick backtrack has signalled to changes of business energy systems. Govern-
the business sector that environmental initia- ment economic development initiatives could
tives that could result in rate increases are eas- offer to share the costs of consultants with par-
ily stopped with some lobbying and public rela- ticular eco-industrial expertise within particu-
8 c anadian centre for polic y alternatives–nova scotialar firms, sectors or combinations of firms and deliver universal access to electricity, and the
sectors. This would initiate planning processes government would protect consumers against
to explore new market opportunities; new link- the monopoly power of utilities by keeping en-
ages with other industries to promote industrial ergy prices low.
symbiosis of energy and waste flows; new research The old social bargain involving low energy
and development priorities; and new forms of prices and centralized energy systems is broken.
business organization. Government could then Governments concerned about energy price in-
offer support for the implementation of these creases can only postpone them until after the
strategic plans by developing capital-financing next election. Those governments that initiate
arrangements, prioritizing local-green industries some limited reprieve from higher prices for
in procurement practices, and by supporting new consumers likely do so at the expense of envi-
product and process experiments.51 ronmental progress.
The government must send a message to in- While governments, industry and citizens
dustries that they have to re-tool processes and have, by and large, endorsed a green energy
products as part of developing different strate- agenda, we are still stuck within an old form of
gies to prepare for the future. If this fails to be energy cost politics. The Nova Scotia govern-
an immediate priority, the same industries that ment’s reaction to the potential rate increases
lobbied for lower environmental standards are due to mercury regulations shows that human
likely to fall back on repeating their requests in health and the environment can be the causal-
the future. ity of this mismatch.
The government might have thought that it
would be better to spend its limited political cap-
A New Energy Cost Politics
ital on investments in the transmission system,
The current government is implementing many renewables and energy efficiency. Yet they said
energy efficiency and renewable energy policies. little about preventing such trade-offs from oc-
If they consider the social aspects of these poli- curring again. The government made no moves
cies, they could help alleviate energy costs via to change the nature of the energy cost politics
many of the non-price methods discussed in game in the midst of its capitulation.
this paper. Specific initiatives on energy pov- An escape from these political conundrums
erty and more aggressive policies on industrial associated with the traditional energy paradigm
eco-restructuring have yet to be implemented. is possible. The advent of decentralized renew-
But, even the initiatives and plans already an- able energy and energy efficiency, in addition to
nounced are in jeopardy if Nova Scotia’s energy information and communication technologies
cost politics remains laden with the traditional has the potential to revolutionize the energy
tendency to fixate on energy prices instead of sector.53 In this alternative future, energy cost
real energy affordability. security will not be provided via lower prices,
The idea that citizens have a “right” to low but by providing universal access to energy ef-
energy prices is deeply ingrained within the ficiency services and renewable energy genera-
present political culture. This stems from the tion opportunities. This future requires a new
mass consumption paradigm that took hold in social bargain whereby government, citizens and
the 20th century.52 At that time, the power indus- industry agree to respond to rising energy prices
try, government, and energy consumers struck by developing new methods of ensuring energy
a particular (implicit) social bargain. The power affordability. This process needs to start now.
industry would exploit economies of scale and
Energy Cost Politic s and the Environment in Nova Scotia 9Beyond implementing the initiatives discussed a much more active role as home energy manag-
in this paper, the government could also consider ers, conservers and generators. Businesses need
undertaking changes in rate design, developing to retool their products and processes for a green
initiatives for non-electric forms of energy, and future. Environmentalists need to propose new
encouraging the use of home/business energy methods of providing social security with respect
management systems.54 to energy costs to accelerate (political) momen-
Nevertheless, whether Nova Scotia endorses tum towards a greener future.
a new social bargain on energy costs rests more The government’s decision to relax mercu-
on the political culture of the province than on ry emissions is an example of a trade-off we do
the availability of science and technology, policy not want to see repeated in the future. The gov-
or program options. New thinking in a variety ernment’s mercury decision is a warning signal
of quarters is required. Political leaders have to that reveals the fragility of the province’s envi-
be willing to signal a different direction for the ronmental agenda. For Nova Scotia to meet its
future. The media need to sponsor a discussion environmental goals and realize its vision of sus-
on real energy affordability instead of simply tainable prosperity, we need to strike a new so-
reporting that the utility is threatening another cial bargain on energy costs and practice a new
rate hike. Citizens have to start demanding en- form of energy cost politics.
ergy efficiency services and be prepared to take
10 c anadian centre for polic y alternatives–nova scotiaNotes
1 Premier’s Office, “Province Steps in to Limit Power Upon release of the Province’s renewable energy
Rate Increases,” News Release, July 22, 2010. plan, the Pembina Institute stated, “Nova Scotia is
2 Bill Estabrooks, “Balancing Affordability and the setting a leadership example for other coal depend-
Environment, op-ed,” July 27, 2010, available at http:// ent provinces”. Tim Weis, “Pembina Reacts to Nova
www.gov.ns.ca/news/details.asp?id=20100727003 Scotia Renewable Energy Plan,” News Release, April
23, 2010, available at http://communities.pembina.
3 CBC News, “Emissions goal eased to trim N.S. rate
org/media-release/2005
hike,” July 22, 2010, available at http://www.cbc.ca/
canada/nova-scotia/story/2010/07/22/ns-emissions- See also Tyler Hamilton, “Nova Scotia joins Canada’s
target-eased.html clean energy club,” Toronto Star, Aug 23, 2010.
4 See especially Nova Scotia Premier’s Advisory Coun- 7 One of the NDP’s 7 Key Commitments in the 2009
cil on Innovation, Interim Report of Council, [2005]; election was to “take the HST off home energy to make
Opportunities for Sustainable Prosperity: An Updated life more affordable”.
Economic Growth Strategy for Nova Scotia, [2006]. 8 Originally published by ChronicleHerald.ca, “NDP:
5 Bill 146, Environmental Goals and Sustainable Pros- NSP shouldn’t charge consumers for conservation
perity Act, Bill 146, 1st sess., 60th Leg., Nova Scotia, plans,” June 4, 2009.
(assented to 13 April 2007). 9 Canadian Council of Ministers of the Environ-
6 The David Suzuki Foundation chose Nova Scotia’s ment (CCME), “Canada-Wide Standards for Mercury
decision to cap power emissions as one of the top five Emissions from Coal-Fired Electric Power Generation
actions on climate change in the past year. David Su- Plants,” [2006], available at http://www.ccme.ca/as-
zuki Foundation, “Best and worst moves on climate sets/pdf/hg_epg_cws_w_annex.pdf.
change,” News Release, August 5, 2010, available at 10 Ronan Orsquobeirne, “Mercury target not met; Re-
http://www.davidsuzuki.org/media/news/2010/08/ port: Province makes scant progress in cutting emis-
best-and-worst-moves-on-climate-change/ sions” Chronicle Herald, August 2, 2010.
Energy Cost Politic s and the Environment in Nova Scotia 1111 This target is consistent with a reduction level that 25 Some of these deregulation experiments brought
the CCME 2006 agreed to explore “for 2018 and be- forward even larger rate increases and volatility as
yond” and that Nova Scotia Power’s 2009 Integrat- policy makers found the creation of a free market in
ed Resource Plan base case projected to come into electricity more difficult than originally thought. See
force in 2018. G. Bruce Doern and Monica Gattinger, Power Switch
12 The government has yet to announce the details : Energy Regulatory Governance in the Twenty-First
of the year-over-year reductions at time of writing. Century (Toronto: University of Toronto Press, 2003).
13 Premier’s Office, “Province Steps in to Limit Power 26 Nova Scotia Department of Energy, Renewable
Rate Increases,” News Release, July 22, 2010. Electricity Plan: A path to good jobs, stable prices,
and a cleaner environment, [2010].
14 Sierra Club of Canada et al., “Nova Scotians will
pay the price for giving NS Power a pass on Mercury 27 Science-based GHG reduction targets are 25% be-
Regulations” News Release, July 26, 2010, available at low 1990 levels by 2020 and 80% below 1990 levels
http://www.sierraclub.ca/en/node/2763 by 2050. See Matthew Bramley, The Case for Deep
Reductions: Canada’s Role in Preventing Dangerous
15 Environmental Goals and Sustainable Prosperity
Climate Change David Suzuki Foundation and the
Act, Sec 4(2)(f).
Pembina Institute, [2005].
16 Personal correspondence with Roundtable mem-
28 Roger Colton, Direct Testimony and Exhibits be-
ber Mark Butler.
fore the Nova Scotia Utility and Review Board on
17 Keith Doucette, “NDP asked to soften blow; Pro- Behalf of Dalhousie Legal Aid Service in the Matter
posed power hike puts pressure on government to of: An Application by Nova Scotia Power Inc. for Ap-
alleviate costs,” Chronicle Herald, July 14, 2010. CBC proval of Certain Revisions, to its Rates, Charges and
News, “NSP proposed hike ‘unacceptable’: Groups meet Regulations, 2004.
with energy minister,” July 14, 2010, available at http://
29 The definition depends on what forms of energy
www.cbc.ca/canada/nova-scotia/story/2010/07/14/ns-
are included. It can include electricity as well as oth-
power-rate-hike-concerns.html
er energy sources used in households. The definition
18 Parker Donham, “The biosolidity of Ellen Page” often excludes transportation costs. This paper pri-
Aug 17, 2010, available at http://contrarian.ca/ marily discusses electric energy costs.
19 Cities are taken as proxies for provincial rates. 30 Conserve Nova Scotia, “Efficiency Nova Scotia
20 Also an 8.6% increase for commercial customers Corporation to be Created,” News Release, Oct 23,
21 Residential increases have been 3.1% in 2002; 6.2% 2009. Nova Scotia Power has been implementing
in 2005; 8.6% in 2006; 4.7% in 2007; and 9.4% in 2009. Demand Side Management (energy efficiency) pro-
grams since 2008. The budget and energy savings
22 See Direct Evidence before Nova Scotia Utility and
continue to ramp-up towards the aggressive energy
Review Board in the matter of P-886(3) Constitutional
savings goals contained within Nova Scotia Power’s
and Human Rights Issues, [2007].
Integrated Resource Plan.
23 Summit Blue Consulting, Nova Scotia Power Inc.:
31 See Brendan Haley with Stephanie Sodero, Path-
DSM Report, September 2006, p. 12.
ways to Sustainable Energy Prosperity in Nova Scotia
24 See Thomas Hughes, Networks of Power : Electrifi- Ecology Action Centre [2007], chapter 2, available at
cation in Western Society, 1880-1930 (Baltimore : Johns http://www.ecologyaction.ca/files/images/file/Ener-
Hopkins University Press, 1983). David E. Nye , Con- gy/EACEnergy.pdf
suming Power : A Social History of American Energies
32 Energy efficiency reduces the revenue requirements
(Cambridge, Mass. : MIT Press, 1998.).
of the utility. But this does not necessarily mean lower
12 c anadian centre for polic y alternatives–nova scotiarates. Very aggressive energy efficiency could actually 42 Though solar has high cost per kilowatt hour of
increase rates. The price per kilowatt hour might in- production, if the volume of solar generation is low
crease since the fixed costs of the electricity system there would be a negligible impact on rates.
will be spread over fewer kilowatt hours. 43 Roger Colton, Direct Testimony and Exhibits be-
33 Targets could also be created for the small busi- fore the Nova Scotia Utility and Review Board on
ness sector and to ensure that commercial, industrial Behalf of Dalhousie Legal Aid Service in the Matter
and residential sectors receive a fair distribution of of: An Application by Nova Scotia Power Inc. for Ap-
efficiency program benefits. proval of Certain Revisions, to its Rates, Charges and
34 This could incorporate the electricity budget or Regulations, 2004.
the combined electric and non-electric fuels budget 44 The plan also includes energy efficiency, arrearage
for the efficiency agency. credits and crisis intervention. The credit is restrict-
35 David Wheeler, Stakeholder Consultation Pro- ed to households below the Low-Income Cut-Off to
cess for an Administrative Model for DSM Delivery in avoid subsidizing the luxury consumption of energy.
Nova Scotia: Final Report [2008], available at http:// 45 To illustrate, the credit would have the effect of
www.conservens.ca/resources/publications/DSM- modifying the energy burden equation by adding a
Report-Final.pdf new (negative) term to the numerator:
36 The highest court in Nova Scotia has ruled that
(P×Q )−SN
section 67(1) of the Public Utilities Act prohibits dis- Energy Burden =
I
tinctions between members of the same rate class.
This prevents the UARB from considering programs Where P is price, Q is quantity consumed, I is income
for low income residential electricity consumers. Dal- and SN is the amount of the safety net or the on-bill
housie Legal Aid Service v. Nova Scotia Power Inc., 74, credit. Notice that the program does not change the
(Nova Scotia Court of Appeal 2006) price of energy. Instead, it increases or decreases the
37 See submissions of the Affordable Energy Coali- on-bill credit in accordance with the energy bur-
tion before the Utility and Review Board with respect den target.
to Demand Side Management. 46 In this way, the inevitable administrative delays
38 Nova Scotia Department of Energy, Renewable actually provide the conservation incentive. If the
Electricity Plan: A path to good jobs, stable prices, credit payments are re-adjusted on an annual basis
and a cleaner environment, [2010]. it also fixes annual budget costs and simplifies ad-
ministration.
39 See Miguel Mendonça, David Jacobs and Benjamin
Sovacool, Powering the Green Economy: The Feed-in 47 In some cases, these programs have paid for them-
Tariff Handbook (London: Earthscan, 2009). selves by reducing utility credit and collection costs.
40 Paul Gipe, Feed In Tariff Primer 250 words, avail- 48 See Larry Hughes and Dave Ron, Energy security
able at http://wind-works.org/FeedLaws/Primerson- in the residential sector (Part 2 - Nova Scotia), Rapid
Feed-inTariffsandAdvancedRenewableTariffs.html responses to heating emergencies ( Halifax: Canadi-
an Centre for Policy Alternatives-NS, 2009); http://
41 Solar rooftop FIT prices for Ontario are between
www.policyalternatives.ca/publications/reports/en-
53.9 and 80.2 cents/kwh, depending on project size.
ergy-security-residential-sector-part-2-nova-scotia
Ontario Power Authority, “Feed-in Tariff Prices for
Renewable Energy Projects in Ontario” Base Date, 49 Keith Doucette, “NDP asked to soften blow; Pro-
Aug 13, 2010. posed power hike puts pressure on government to
alleviate costs,” Chronicle Herald, July 14, 2010. CBC
Energy Cost Politic s and the Environment in Nova Scotia 13News, “NSP proposed hike ‘unacceptable’: Groups meet Howard Rush, “Developing Innovation Capability:
with energy minister” July 14, 2010, available at http:// Meeting the Policy Challenge,” in Techno-Economic
www.cbc.ca/canada/nova-scotia/story/2010/07/14/ns- Paradigms, eds. Wolfgang Drechsler, Rainer Kattel
power-rate-hike-concerns.html and Erik S. Reinert (London and New York: Anthem
50 Michael E. Porter, On Competition (Boston, MA : Press, 2009), 19-38.
Harvard Businesss School Publishing, 2008). Pg. 202 52 David E. Nye , Consuming Power : A Social His-
51 For industrial policy discussions along these lines see tory of American Energies (Cambridge, Mass. : MIT
Manfred Binder, Martin Jänicke and Ulrich Petschow, Press, 1998.).
eds., Green Industrial Restructuring: International 53 See Peter Fox-Penner, Smart Power: Climate Change,
Case Studies and Theoretical Interpretations (Berlin: the Smart Grid, and the Future of Electric Utilities
Springer, 2001).; Neil Bradford, “Prospects for Asso- (Washington/Covelo/London: Island Press, 2010).
ciative Governance: Lessons from Ontario, Canada,” 54 See for example Larry Hughes, The Inverted Block
Politics and Society 26, no. 4 (1998), 539-573.; Nigel Rate: An Alternative to Flat Rate Billing [2004]; David
Roome, “Policies and Conditions for Environmen- Leeds, The Smart Grid in 2010: Market Segments, Ap-
tal Innovation and Management in Industry,” in To- plications and Industrial Players, Greentech Media
wards Environmental Innovation Systems, eds. Mat- Inc. [2009]; Optimal Energy Inc and Dunsky Energy
thias Weber and Jens Hemmelskamp (Berlin ; New Consulting, Triennial Plan of the Efficiency Maine
York : Springer, 2005), 237-249,; John Bessant and Trust 2011-2013 [2010]
14 c anadian centre for polic y alternatives–nova scotiaCCPA-NS In Focus: The opinions presented in this document do not
Energy Cost Politics and the Environment in Nova necessarily represent the views of the CCPA-NS.
Scotia: Reflections on the Government’s Mercury
Emissions Backtrack In Focus publications provide commentary and
By Brendan Haley reflections on a specific policy area, sector or
government decision; they are intended to stimulate
isbn 978-1-926888-18-7 public debate.
This report is available free of charge from the CCPA Acknowledgements
website at www.policyalternatives.ca. Printed The author would like to thank Christine Saulnier,
copies may be ordered through the National Office Mark Butler, Claire McNeil and Chris Benjamin
for a $10 fee. as well as an anonymous reviewer. All errors and
omissions are the responsibility of the author.
Please make a donation... Help us continue to offer
our publications free online. About the Authors
We make most of our publications available free Brendan Haley is a CCPA-NS Research Associate
on our website. Making a donation or taking out currently studying energy policy and innovation
a membership will help us continue to provide systems as a PhD candidate in Carleton’s School
people with access to our ideas and research free of Public Policy and Administration. He was
of charge. You can make a donation or become a formerly the energy coordinator for Nova Scotia’s
member on-line at www.policyalternatives.ca. Or Ecology Action Centre where he championed the
you can contact the National office at 613-563-1341 development of energy efficiency programs in the
for more information. Suggested donation for this province and the development of the sustainable
publication: $10 or what you can afford. prosperity agenda. He holds an undergraduate
degree in economics and a Masters of environmental
studies.
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