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HURDLES AND OPPORTUNITIES
ECOLOGY ACTION CENTRE RECOMMENDATIONS FOR NOVA SCOTIA ENERGY POLICY 1
ELECTRICITY AND NOVA SCOTIA’S FUTURE:
Hurdles and
Opportunities
08.2013
Catherine AbreuTHE ECOLOGY ACTION CENTRE AND ENERGY ISSUES COMMITTEE Since 1971, the Ecology Action Centre (EAC) has been working to build a healthier, more sustainable Nova Scotia and Atlantic Canada. Today the EAC has 2,800 members, 250 volunteers and staff, and seven active issue committees, including the Energy Issues Committee. The Energy Issues Committee (EIC) is composed of EAC staff and volunteers who are interested and engaged in work on energy and climate change issues. EIC members bring a diverse range of skills and expertise to promoting policies and projects that prioritize renewable energy, energy conservation, and responsible resource development for the benefit of Nova Scotians and the future of our province. REPORT AUTHORS AND ACKNOWLEDGEMENTS Catherine Abreu, EAC Energy Coordinator, is the lead author of this report. Kristin Lutes co-authored Section 6.3: Engage Nova Scotians in Long-Term Energy Planning. EIC members provided invaluable input to report content. Very special thanks to Brian Gifford, Jamie Thomson, Claire McNeil, Wendy Lil, Brendan Haley, Richard Starr, Bill Zimmerman, Mark Butler and Wayne Groszko.
HURDLES AND OPPORTUNITIES
1
Table of Contents
The Ecology Action Centre and Energy Issues Committee.................................................................................................. Inside Ftont Cover
Report Authors and Acknoledgements.............................................................................................................................................. Inside Ftont Cover
Report Highlights..........................................................................................................................................................................................................................3
Executive Summary.....................................................................................................................................................................................................................6
1. Introduction ............................................................................................................................................................................................................................... 10
2. Nova Scotia’s Electricity Landscape .......................................................................................................................................................................... 11
2.1 Background and Public Regulation ......................................................................................................................................................................... 11
2.2 Nova Scotia Power Incorporated.............................................................................................................................................................................. 11
2.2.1 Generation .................................................................................................................................................................................................................. 11
2.2.2 Transmission + Distribution ........................................................................................................................................................................... 12
2.3 Efficiency Nova Scotia Corporation........................................................................................................................................................................13
2.4 Independent Power Producers and the Community Feed-In Tariff................................................................................................... 14
2.5 Municipal Utilities ........................................................................................................................................................................................................... 14
2.6 Muskrat Falls and the Maritime Link ................................................................................................................................................................... 14
3. Key Elements of Current Discourse.......................................................................................................................................................................... 15
3.1 Escalating Costs of Electricity.................................................................................................................................................................................... 15
3.2 Ownership and Accountability ................................................................................................................................................................................ 15
3.3 Environmental Obligations........................................................................................................................................................................................ 16
3.4 Energy Security.................................................................................................................................................................................................................. 16
3.5 Access to Electricity .........................................................................................................................................................................................................17
4. The Conversation We Need ............................................................................................................................................................................................ 18
5. Successes to Date................................................................................................................................................................................................................... 19
5.1 Energy Efficiency ............................................................................................................................................................................................................... 19
5.2 Greenhouse Gas Emissions Reductions ............................................................................................................................................................. 19
5.3 Renewable Energy Development............................................................................................................................................................................20
6. Options and Opportunities ............................................................................................................................................................................................ 21
6.1 Plan for 2050: A Fossil-Free Electricity System ............................................................................................................................................... 21
6.1.1 Dismantle Our Attachment to Coal Plants ............................................................................................................................................. 21
6.1.2 Expand Renewables Beyond 2020 ............................................................................................................................................................... 23
6.1.3 Pursue Energy Conservation Through ENSC.......................................................................................................................................... 23
6.1.4 Incorporate More Renewable Energy and Decrease Costs with an Atlantic Power Pool ...........................................24
The NEPOOL Model ................................................................................................................................................................................................24
Power Pooling in 21st Century Atlantic Canada....................................................................................................................................24
6.2 Make Nova Scotia’s Electricity System Available and Accountable to Nova Scotians........................................................... 26
6.2.1 Decentralize Electricity System Authority .............................................................................................................................................. 26
Increasing Non-NSPI Ownership of New Renewable Energy Generation ............................................................................... 16
Changing the Ownership Structure of Utility Assets ........................................................................................................................ 16
6.2.2 Improve Nova Scotians’ Understanding of Utility Accountability ......................................................................................... 28
Remodeling the Guaranteed Rate of Return ........................................................................................................................................... 28
6.3 Engage Nova Scotians in Long-Term Energy Planning ..............................................................................................................................30
How We Plan for Our Energy Future Now .................................................................................................................................................30
Energy Planning Authorities .............................................................................................................................................................................31
Suggestions for a Nova Scotia Planning Authority .............................................................................................................................31
6.4 Protect Universal Access to Electricity................................................................................................................................................................ 33
7. Summary of Recommendations.................................................................................................................................................................................. 35HURDLES AND OPPORTUNITIES
3
Report Highlights
The Conversation We Need
Nova Scotia’s electricity landscape is in the midst of dramatic change, and decisions about how regional
energy resources are developed and consumed have far-reaching implications.
Nova Scotia has legislated a variety of progressive greenhouse gas (GHG) reduction and renewable energy
integration targets. Even these ambitious steps are only the first in getting the province to meet the
scientifically agreed upon target of reducing overall emissions 80% below 1990 levels by 2050. In coming
decades, electricity will fulfill an increasing portion of our energy requirements for home heating and
transportation. Establishing a low-carbon electricity system is essential to facilitating this development.
Nova Scotia differs from other Canadian jurisdictions that have undertaken similar energy and electricity
system transformations in that energy security is a central motivating factor here rather than economic
opportunity. Energy import dependency is one of Nova Scotia’s greatest social and economic vulnerabilities,
since the province is almost wholly reliant on expensive and volatile import markets for its heating,
transportation and electricity fuel supplies. Our degree of reliance on fossil fuel imports is unique in Canada.
Communities around the world are struggling with the rising costs of electricity and energy. Electricity rate
increases are unavoidable as fuel costs rise and ageing infrastructure requires investment. The root of Nova
Scotia’s rate increase problem is coal. Since 2004, the price NSPI pays for coal has increased by 70%. The
latest 3% increases scheduled for 2013 and 2014 reflect the increasing costs of coal and natural gas as well
as the costs of renewable fuels. These increases are the first time investment in renewables has directly
impacted rates.
Low income Nova Scotians who pay more than 3% of their income on electricity (or 6% if they heat their
homes electrically) are most severely affected by electricity price increases. Current barriers to equitable
electricity access significantly affect the health and wellness of Nova Scotians. Nova Scotia must develop
creative solutions that ensure long-term sustainable and equitable access to electricity.
Tensions surrounding rate increases and electricity system transformation in the province are heightened
by the centralization in Nova Scotia Power Incorporated (NSPI) of authority over the electricity system.
Regardless of whether anti-NSPI sentiment is justified, it has a great deal of influence over the tone and
content of energy discourse in Nova Scotia.
Nova Scotians’ anxiety surrounding electricity rates and energy planning has the potential to derail
momentum on progressive energy policy. Energy has become a political football in Nova Scotia. In response
to public concern over rate increases, Nova Scotia’s political parties do Nova Scotians the disservice of
crafting arguments that focus on short-term savings while often ignoring the big picture.
We are in the midst of building a new energy system for our province, because our old system is in crisis.
We need a vibrant debate of intelligent, comprehensive visions for how Nova Scotia might change its electricity
landscape and plan for its energy future to make life better for Nova Scotians. We need leadership that
celebrates our successes and believes we can move forward together to address the crisis that confronts us.4 ELECTRICITY AND NOVA SCOTIA’S FUTURE:
Successes to Protect
Nova Scotia is the leader in energy efficiency in Canada because we have an independent Efficiency Utility,
Efficiency Nova Scotia Corporation (ENSC), that is ratepayer funded. The International Energy Agency
recommends that all jurisdictions seek to establish Efficiency Utilities charged with ensuring energy efficiency
competes with other supply options and providing cost-effective efficiency to end-use consumers. Nova Scotia
can be proud of ENSC with good reason. Ratepayer funding for efficiency means it is accountable to ratepayers.
It enables regulatory oversight and ensures that funding levels are based on cost-effectiveness. To date, energy
efficiency programs have reduced the annual electricity load in Nova Scotia by 469 GWh, or 4.3%.
Energy efficiency is best thought of as an energy source, figuring into our energy system in the same way
that coal, natural gas, wind, and hydropower might. The more energy efficiency we use, the less we have
to use other fuels. Investing money to save electricity only costs on average 3 cents/kWh saved. Ratepayers
pay on average 11 cents/kWh to burn fossil fuels. While energy efficiency is the only energy product we see
singled out on our power bills, Nova Scotians pay for efficiency just as we pay for our transmission and
distribution system along with other energy sources like coal. Referring to the surcharge that funds ENSC
as a tax is equivalent to referring to fuel costs as coal taxes or hydro taxes and referring to system costs
as electric substation taxes or transmission link taxes. We pay much higher “taxes” for fuel and system
maintenance than we do for efficiency.
When Nova Scotia introduced hard caps on emissions from its electricity sector in 2007, we relied on coal
to produce over 80% of our electricity and over 50% of provincial emissions resulted from electricity
production. Nova Scotia has reduced GHG emissions from our electricity sector by 10% since 2007. This
equates roughly to a 5% reduction in overall provincial emissions. In 2012, Nova Scotia counted on coal to
produce 59% of its electricity. These gains are extremely significant.
The Center for Health and the Global Environment at Harvard Medical School estimates that particulate
matter, nitrogen oxide and sulphur oxide associated with the combustion of coal kills over 24,000 people
annually in the US, including 2,800 from lung cancer. The Canadian Cancer Society reports that Nova Scotia
has the highest incidence of cancer rates in Canada for most cancers, and that lung cancer remains the
leading cause of cancer death in Nova Scotia. Protecting the health of our province and our people means
protecting and ramping up our GHG emissions reductions. Continuing to reduce our dependence on coal
and transitioning to a fossil-free electricity system are the key means of ensuring our success.
Renewable energy contributed 18% of Nova Scotia’s electricity production in 2012. This represents a fifty
percent increase from renewable penetration (12%) two years prior in 2010. We are on track to more than
double 2010 renewable energy production within the next two years to 25% of our overall production by
2015. We have established substantial momentum for renewable energy development in the province. The
only domestic energy sources that remain to Nova Scotia are renewable sources. It is incumbent upon us to
harness the power of our renewable resources and build an electricity system that relies to greater degrees
on these sources as their availability grows. This is the only way for Nova Scotia to address its unique energy
security hurdle.
A disproportionate amount of attention is paid to the costs of developing renewable energy. It is important
to keep in mind that traditional fuel sources like oil, coal, and natural gas benefit from direct and indirect
subsidies unavailable to renewable energy. Government programs that incentivize renewable development
are often criticized, yet fossil fuels are riding on a century-long legacy of development incentives. The
price we pay for fossil fuels externalizes the health and environmental costs associated with their use.
Renewables, though requiring higher capital investment in early development stages, offer stable
and predictable prices in the long-term while fossil fuels pose a continuous threat to the stability and
affordability of systems that rely on them.HURDLES AND OPPORTUNITIES
5
Options That Move Us Forward
PLAN FOR 2050: A FOSSIL-FREE ELECTRICITY SYSTEM. Our current targets take us to 2030 and we are on
a trajectory to meet them. Decisions we make now and in the near future will characterize the context
we have to work in moving beyond 2030. We must actively engineer the future we need now and set
intermediate energy targets toward a goal of reducing GHG emissions to 80% below 1990 levels by 2050.
t Depreciate steam generation at a higher rate to align end of useful life for thermal units with 2030
GHG reduction targets
t Pursue energy conservation through Efficiency Nova Scotia Corporation
t Expand renewable energy targets aggressively beyond 2020
t Incorporate more renewable energy, decrease electricity system costs with an Atlantic Power Pool
MAKE NOVA SCOTIA’S ELECTRICITY SYSTEM AVAILABLE AND ACCOUNTABLE TO NOVA SCOTIANS. Nova
Scotians want to understand how they might benefit from the shifts currently taking place in our electricity
system. As long as the range of benefit seems limited to a large, monopoly utility, Nova Scotia’s energy
transition will remain a source of instability and controversy. Nova Scotians want the opportunity to
take part in their new electricity system, and to be sure their best interests are being pursued by those
responsible for their electricity system.
t Increase decentralized ownership of new renewable energy generation by expanding the Community
Feed-In Tariff (COMFIT) and developing a COMFIT or FIT for solar energy
t Target low-income Nova Scotians and incentivize participation in the COMFIT program for individuals
and communities working in resource-based economies and living in rural areas
t Develop a toolkit to support development of energy cooperatives in Nova Scotia
t Develop an education strategy for financing institutions on renewable energy project financing
t Commission a third-party evaluation of the potential for and impact of bringing Nova Scotia’s
distribution and transmission grid back under public ownership
t Commission a report on instituting performance-based regulation (PBR) in Nova Scotia
t Explore the potential for and impacts of linking NSPI’s return on equity to PBR
ENGAGE NOVA SCOTIANS IN LONG-TERM ENERGY PLANNING. The current structures responsible for energy
planning in Nova Scotia are far too limited to allow for a sufficiently dynamic, long-term energy planning
process. Planning for Nova Scotia’s energy system requires balancing a variety of factors such as global
and local environmental impacts, economic considerations, and social implications. While economic
considerations are crucial, the attempt to limit decision criteria to minimizing cost to the ratepayer ignores
other factors necessary to properly evaluate complex energy decisions. A Nova Scotia Energy Planning
Authority can separate energy planning from the whims of election cycles and create a space for public
engagement and
t Appoint a panel tasked with developing the framework for a Nova Scotia Energy Planning Authority
(EPA) through consultation with Nova Scotians
t Make the goal of an EPA to create and enforce a multi-criteria evaluation metric for long-term energy
planning and decision-making in the province
t Establish continuous and meaningful engagement with Nova Scotians on energy planning
PROTECT UNIVERSAL ACCESS TO ELECTRICITY. It is critical to ensure Nova Scotians have equitable access
to electricity without relying on the short-term and blunt response of artificially lowering or freezing
electricity rates. A Universal Service Program, as described in our companion report Solving NS’ Electricity
Pricing Problem - Energy Affordability vs. Rising Electricity Prices, is an elegant solution.
t Establish a Universal Service Program
t Ensure new affordable housing meets high efficiency standards and take further steps to ensure
equitable access to energy efficiency and conservation programs6 ELECTRICITY AND NOVA SCOTIA’S FUTURE:
Executive Summary
Nova Scotia’s electricity landscape
is transforming and we must make
the best of it.
Nova Scotia’s electricity and energy systems are transforming, giving Nova Scotians the opportunity to transform
along with them. We cannot afford to miss out on the chance we have to maturely evaluate our current situation,
accept past decisions, refuse to repeat past mistakes, and make informed, conscientious decisions about our
future. In these reports, the Energy Issues Committee (EIC) of the Ecology Action Centre (EAC) lays out a broad
network of options that, if implemented, can work together to better the lives of Nova Scotians now and ensure a
healthy, sustainable and prosperous Nova Scotia for decades to come.
We are in the midst of building a new energy system for our province, because our old system is in crisis. The world
has changed in ways that Nova Scotia cannot hide from. The reality of climate change has fundamentally altered
the energy systems of jurisdictions around the world. Traditional fuels are increasingly expensive and harder to
come by. Infrastructure customized to the mid-20th century status quo of fossil-fuel abundance and dependence
is ageing, costing more to maintain, retrofit, and upgrade. Along with the cost of fossil fuels, electricity prices
are rising everywhere. The burden of rising fuel and electricity costs is felt more keenly as the costs of most other
consumer goods also rise. Within this milieu, Nova Scotians are talking about energy more than ever, but our
conversations do not adequately reflect the realities and possibilities of our situation.
Anxiety surrounding electricity rates and energy planning has the potential to derail momentum on progressive
energy policy. Energy has become a political football in Nova Scotia. In response to public concern over rate
increases, Nova Scotia’s political parties do Nova Scotians the disservice of crafting arguments that focus on short-
term savings while often ignoring the big picture.
We need a vibrant debate of intelligent, comprehensive visions for how Nova Scotia might change its electricity
landscape and plan for its energy future to make life better for Nova Scotians. We need leadership that celebrates
our successes and believes we can move forward together to address the crisis that confronts us.
Electricity price increases are
inevitable; Nova Scotia needs
real solutions that ensure long-
term, sustainable and equitable
access to electricity.
The reality is that electricity price increases are inevitable. Energy costs have grown at over twice the rate of other
items registered by the Canadian Consumer Price Index for the last 10 years. Electricity rate increases are unavoidable
as energy costs rise and ageing infrastructure requires investment. The root of Nova Scotia’s rate increase problem
is coal. Since 2004, the price Nova Scotia Power Incorporated (NSPI) pays for coal has increased by 70%. Artificially
lowering or freezing electricity rates is an imprudent response to our new and permanent reality. The EIC calls for
real, made-in-Nova Scotia solutions that abandon flashy short-term promises in favor of long-term planning.HURDLES AND OPPORTUNITIES
7
Electricity rates are rising. We can slow the pace of rising electricity bills with energy efficiency and a Universal
Service Program. We can get control over the situation by diversifying our electricity system with renewables.
The latest 3% rate increases scheduled for 2013 and 2014 reflect the increasing costs of coal and natural gas as well
as the costs of renewable fuels. These increases are the first time investment in renewables has directly impacted
rates. Investing in renewable energy now is investing in the structural shift that Nova Scotia needs to build a
flexible electricity system that relies on a diversity of domestically procured fuels. Only this structural shift will
stabilize electricity rates in the long-term.
Scrambling to halt electricity price increases is unrealistic. Ensuring all Nova Scotians have equal access to
electricity means lowering electricity bills with energy efficiency programs and addressing the problems of
poverty and household energy insecurity with creative solutions such as a Universal Service Program.
Energy efficiency, GHG emissions
reductions, and renewable energy
improve the lives of Nova Scotians.
The progress we have made in sustainable energy planning in the past six years should be cause for celebration
in Nova Scotia. As we reduce emissions in this province, we are also developing domestic energy resources,
diversifying a fuel supply that can no longer rely on expensive imported coal, and democratizing our electricity
system with energy efficiency and community-based power generation. It is critical that we stay on track. Nova
Scotia cannot afford to dismantle the momentum we have created to carry us into our future.
Energy efficiency is Nova Scotia’s secret weapon. We are the leader in energy efficiency in Canada because we
have an independent Efficiency Utility, Efficiency Nova Scotia Corporation (ENSC), which is ratepayer funded. The
International Energy Agency recommends that all jurisdictions seek to establish Efficiency Utilities charged with
ensuring energy efficiency competes with other supply options and providing cost-effective efficiency to end-use
consumers. Ratepayer funding for efficiency means it is accountable to ratepayers. It enables regulatory oversight
and ensures that funding levels are based on cost-effectiveness. To date, energy efficiency programs have reduced
the annual electricity load in Nova Scotia by 469 GWh, or 4.3%.
The Center for Health and the Global Environment at Harvard Medical School estimates the combustion of coal kills
over 24,000 people annually in the US, including 2,800 from lung cancer. The Canadian Cancer Society reports that
Nova Scotia has the highest incidence of cancer rates in Canada for most cancers, and that lung cancer remains the
leading cause of cancer death in Nova Scotia. Nova Scotia has reduced GHG emissions from our electricity sector by
10% since 2007. Protecting the health of our province and our people means protecting and ramping up our GHG
emissions reductions. Continuing to reduce our dependence on coal and transitioning to a fossil-free electricity
system are the key means of ensuring our success.
The only domestic energy sources that remain to Nova Scotia are renewable sources. It is incumbent upon us
to harness the power of our wind, solar, and tidal resources and build an electricity system that relies to greater
degrees on these sources as their availability grows. This is the only way for Nova Scotia to address its unique
energy security hurdle. We are on track to more than double 2010 renewable energy production within the next
two years to 25% of our overall production by 2015. The price we pay for fossil fuels externalizes the health and
environmental costs associated with their use. Renewables, though requiring higher capital investment in early
development stages, offer stable and predictable prices to Nova Scotians in the long-term while fossil fuels pose
a continuous threat to our health and the stability and affordability of our electricity system.8 ELECTRICITY AND NOVA SCOTIA’S FUTURE:
Nova Scotia must plan for a
fossil-free electricity system that
is built by the people of Nova Scotia.
If we want to protect our province and our people while remaining competitive in the emerging global economy,
we cannot repeat history and continue with our brittle, centralized electricity system that relies on a single fuel.
Nova Scotia must build a new electricity system that acknowledges our context and capitalizes on our strengths.
Energy import dependency is one of Nova Scotia’s greatest social and economic vulnerabilities, since the province
is almost wholly reliant on foreign markets for its heating, transportation and electricity fuel supply needs. Our
degree of reliance on fossil fuel imports is unique in Canada. A made-in-Nova Scotia electricity system is one that
relies on a diverse range of our domestic, renewable energy supplies.
Our current renewable energy goals take us to 2020 while our GHG reduction targets take us to 2030. Decisions we
make now and in the near future will characterize the context we have to work in moving beyond 2030. We must
actively engineer the future we need now and set intermediate energy targets toward the goals of a fossil-free
electricity system and GHG emissions 80% below 1990 levels by 2050. Steam generation should be depreciated at
a higher rate to align end of useful life for thermal units with 2030 GHG reduction targets. An Atlantic Power Pool
should be established to incorporate more renewables into the regional grid.
Nova Scotians must be given the opportunity to take part in their new electricity system, and to be sure their
best interests are being pursued by decision makers. Otherwise, the transformation underway in our electricity
system will be assailed by doubt and controversy. EIC recommends increasing decentralized ownership of new
renewable energy generation, commissioning a third-party evaluation of the potential for and impact of bringing
Nova Scotia’s distribution and transmission grid back under public ownership, and commissioning a report on
instituting performance-base regulation for NSPI.
A Nova Scotia Energy Planning
Authority can free energy planning
from the political whims of election
cycles, develop a long-term perspective,
and actively engage Nova Scotians.
Nova Scotians must be engaged in planning for their long-term energy future. The current structures responsible
for energy planning in Nova Scotia are far too limited to allow for a sufficiently dynamic, long-term energy
planning process. Momentum on energy policy is threatened every four years due to the election cycle. The Utility
and Review Board is guided by principles set in the Public Utilities Act, a document that dates from 1913. Planning
for Nova Scotia’s energy system requires balancing a variety of factors such as global and local environmental
impacts, economic considerations, and social implications. While economic considerations are crucial, the
attempt to limit decision criteria to minimizing cost to the ratepayer ignores other factors necessary to properly
evaluate complex energy decisions. In other jurisdictions, Energy Planning Authorities work to separate energy
planning from the whims of election cycles and create a space for public engagement and all-party buy-in.
EIC recommends the appointment of a panel tasked with developing the framework for a Nova Scotia Energy
Planning Authority through broad consultation with Nova Scotians.HURDLES AND OPPORTUNITIES
9
Establishing a Universal
Service Program will protect
Nova Scotians’ access to electricity.
It is time that Nova Scotia Focus on affordability instead of electricity price alone. We must take decisive steps
toward energy conservation and to reduce the energy burden of the lowest income Nova Scotians so they don’t
have to choose between heating and eating or medicine and lights. The best solution to the very real problems
facing low income households is to create Universal Service Program, a four point targeted program that makes
energy affordable to those households.
Low income Nova Scotians who pay more than 3% of their income on electricity (or 6% if they heat their homes
electrically) are most severely affected by electricity price increases. The provincial government currently spends
$117 million subsidizing electricity and fuel purchases. The Department of Community Services also provides
repayable loans to some Income Assistance households. Efficiency NS spends some of its $45 million helping low-
income households install money saving devices. We can fund the $9-14 million cost of a Universal Service Program
from general tax revenues including the savings from existing programs; a refund of the HST rebate for households
earning over $100,000 and a contribution from NSPI; or a small fee on all electricity bills.10 ELECTRICITY AND NOVA SCOTIA’S FUTURE:
1 Introduction
Nova Scotians can’t stop talking about energy and electricity, and their preoccupation with these topics is easily
understood. The Province’s electricity landscape is in the midst of dramatic change, and decisions about how
regional energy resources are developed and consumed have far-reaching implications.
Energy poverty is a reality in many Nova Scotian households, where the combined cost of electricity and heating
exceeds six percent of income. Some of Nova Scotia Power Incorporated’s (NSPI) largest industrial customers
have closed their doors, citing high electricity rates as a key reason for closure. The volatility of coal markets and
unparalleled greenhouse gas (GHG) intensity of the fuel are forcing the Province to revamp an electrical system
predicated on coal combustion.
Public debate is polarized and politicized. NSPI and the provincial New Democratic Party government link rate
increases to the rising cost of coal and demand decline. The Official Opposition pinpoints the cost of Nova Scotia’s
efficiency programs as an undue burden for ratepayers. The Progressive Conservative caucus warns against the
costs of investing in too much renewable energy too fast. Solidarity Halifax and other advocacy groups demand
that NS government expropriate the private utility. The Lower Power Rates alliance connects high electricity rates to
what it calls a ‘broken system’ where regulatory authority is too weak to protect Nova Scotians.
Mounting anxiety surrounding Nova Scotia’s electricity rates and energy planning has the potential to derail
momentum on progressive energy policy. Very significant gains that have been made in energy efficiency,
renewable energy, and GHG emissions reductions could be stalled or reversed.
The Ecology Action Centre’s (EAC) Energy Issues Committee (EIC) acknowledges the real benefits that arise from
investment in energy efficiency and renewables and believes they are critically important to sustain. The EIC also
recognizes the potential and opportunity for positive change to arise from the current debate.
This report highlights those areas where the EIC believes there is the greatest opportunity for progress within
Nova Scotia’s electricity system and offers recommendations for change. There is also some discussion of broader
energy planning, though the report primarily focuses on electricity as it is our electricity system that is undergoing
transformation and is the source of a great deal of attention and debate.
The report begins with an overview of Nova Scotia’s current electricity landscape. Understanding the contours of
our electricity system is crucial to imagining how they might shift. From there, an attempt is made to single out
the key themes driving present dialogue around electricity and energy planning in the province. An analysis of
this dialogue follows in Section 4: The Conversation We Need. Section 5: Successes to Date describes the progress
we have made in energy policy thus far, calling for sustained momentum on energy efficiency, greenhouse gas
emissions reductions, and renewable energy development. The next section, Section 6: Options and Opportunities,
contains our recommendations. These recommendations are primarily directed to the level of Nova Scotia’s present
and future governments and policy-makers. The report concludes with a summary of these recommendations.HURDLES AND OPPORTUNITIES
11
2 Nova Scotia’s
Electricity Landscape
2.1 Background and Public Regulation
Nova Scotia Power Incorporated (NSPI) produces and distributes 95% of the electricity in Nova Scotia.
The Department of Energy and Department of Environment are responsible for developing the regulations that
govern the electricity sector. The Nova Scotia Utility and Review Board (UARB) is responsible for overseeing the
regulation of the electricity sector. The UARB has a mandate under the Public Utilities Act to ensure universal
access for all Nova Scotians to public utility services at “just and reasonable” rates.
Comparatively speaking, Nova Scotia is ahead of the curve in Canada in terms of policy goals and approaches to
reducing GHGs and other emissions from the electricity sector. Milestones include:
t Provincial GHG Reduction Goal: 10% below 1990 GHG levels by 2020
t Provincial Emissions Reductions Goals for Sulphur Oxide, Nitrogen Oxide and Mercury
t Electricity GHG Hard Cap Goal: 7.5 Megatonnes (MT) by 2020, which is 25% below 2007 GHG levels from the
electricity sector (this constitutes 50% of the Provincial GHG reduction target)
t Energy Efficiency & Conservation: 20% greater efficiency above 2008 levels by 2020, and the establishment of the
first arms’-length energy efficiency agency in Canada – Efficiency Nova Scotia
t Renewable Electricity: legislated goal to have 25% of provincial electricity supply produced from renewable
sources by 2015 and 40% of provincial electricity supply produced from renewable sources by 2020
Many of these goals were approved with 100% all-party consent from the 2007 NS legislature with the passing of
the Environmental Goals and Sustainable Prosperity Act (EGSPA).
2.2 Nova Scotia Power Incorporated
NSPI primarily generates electricity at 5 thermal electricity plants (roughly 66% of NSPI’s total generating capacity
in 2011). In 2012, about 59% of NSPI’s electricity generation resulted from coal combustion. Most of this coal is
imported from three countries: Columbia, Venezuela and the United States (Hughes 2007).
The release of greenhouse gas (GHG) emissions from NSPI’s coal burning for electricity constitutes the single
largest source of GHGs in the province of Nova Scotia, fully 46% of total provincial emissions.
NSPI is a vertically integrated, regulated utility. NSPI is a publicly regulated utility – the Nova Scotia UARB sets rates
based on NSPI’s approved cost of service and sets a guaranteed rate of return, currently set at a range of 8.75%
to 9.25% a year. NSPI is the major asset holding of Emera Corporation, a multi-national energy company with
holdings in Canada, the U.S.A. and the Caribbean.
2.2.1 GENERATION
NSPI owns, operates, and maintains the vast majority of electricity generation facilities in Nova Scotia.
Table 1 lists Nova Scotia Power Incorporated’s (NSPI) generation assets.12 ELECTRICITY AND NOVA SCOTIA’S FUTURE:
TABLE 1: NSPI GENERATION ASSETS (NSPI 2013G)
Unit Net Capacity In Service Fuel Type 2011 GWh
Lingan Unit 1 155MW 1979 Coal / Petcoke 931.8
Lingan Unit 2 155MW 1980 Coal / Petcoke 778.3
Lingan Unit 3 155MW 1983 Coal / Petcoke 767.9
Lingan Unit 4 155MW 1984 Coal / Petcoke 843.4
Tufts Cove Unit 1 81MW 1965 Oil / Natural Gas 522.6
Tufts Cove Unit 2 93MW 1972 Oil / Natural Gas 621.8
Tufts Cove Unit 3 147MW 1976 Oil / Natural Gas 883.3
Tufts Cove Unit 4 49MW 2003 Natural Gas 259.8
Tufts Cove Unit 5 49MW 2004 Natural Gas 151.4
Tufts Cove Unit 6 50MW 2012 Waste Heat / Nat. Gas 0
Point Tupper 154MW 1973 Coal / Petcoke 627.6
Point Aconi 171MW 1994 Petcoke / Coal 1 098.5
Trenton Unit 5 152MW 1969 Coal / Petcoke 644.5
Trenton Unit 6 155MW 1991 Coal / Petcoke 1 173.3
Burnside 1 33MW 1976 Light Oil 1.357
Burnside 2 33MW 1976 Light Oil 1.422
Burnside 3 33MW 1976 Light Oil 1.33
Burnside 4 33MW 1976 Light Oil -0.046
Victoria Junction 1 33MW 1976 Light Oil 0.189
Victoria Junction 2 33MW 1975 Light Oil 0.261
Tusket 1 24MW 1971 Light Oil 0.005
Hydro System 397MW Various Hydro 1 088.5
NSPI Wind 80MW Various Wind 247.5
A seasonal shutdown schedule was recently announced for Lingan coal-fired units 3 and 4 with complete shutdown
anticipated for 2017.
2.2.2 TRANSMISSION + DISTRIBUTION
NSPI owns and operates Nova Scotia’s electricity grid. The grid delivers electricity to consumers along high-voltage
transmission lines that carry power from generation facilities to demand centers. Lower voltage distribution lines
connect individual consumers within demand centers.
TAKEN FROM NSPI (2013F):
Nova Scotia’s transmission and distribution system consists of 31,800km of power lines stretching
across roughly 29,500 transmission towers, 500,000 distribution poles, and 190 substations to bring
electricity from power plants to customers.
About 5,300 km of transmission lines operating at high-voltages from 69 KV to 345 KV bring electricity
from generating stations to distribution substations throughout the province. Transmission lines
often run along large steel or wooden towers, commonly seen along Nova Scotia’s highways.HURDLES AND OPPORTUNITIES
13
Electricity carried by transmission lines is sent through distribution substations and transformers that
step the electricity down to a lower voltage level that is safe for delivery to homes and businesses.
26,500 km of distribution lines then carry the electricity to localized areas and connect to individual
meters on homes and businesses.
A 350 MW capacity transmission line connects Nova Scotia with New Brunswick, enabling limited
importing and exporting of electricity with neighbouring jurisdictions. The Nova Scotia system
operator may import electricity when it is needed and can be purchased at a lower price than it can be
generated inside the province, or may export electricity when it can be sold at a price that lowers costs
for customers inside Nova Scotia.
FIGURE 1: NSPI TRANSMISSION AND DISTRIBUTION ASSETS (NSPI 2013F)
Q 69 KV LINES
Q 138 KV LINES
Q 230 KV LINES SYDNEY
Q 345 KV LINES TRURO
PICTOU ANTIGONISH
TRENTON
AMHERST
PORT
WOLFVILLE HAWKSBURY
ANNAPOLIS
ROYAL
DIGBY
DARTMOUTH
HALIFAX
YARMOUTH
LIVERPOOL
2.3 Efficiency Nova Scotia Corporation
Efficiency Nova Scotia Corporation (ENSC) was established through provincial legislation in 2009 as a sole-purpose
independent administrator for electric efficiency. ENSC is a not-for-profit agency responsible for the design and
delivery of cost-effective, demand side management (DSM) programs and services in Nova Scotia. In 2010, the
process of transferring energy efficiency programs and service delivery from NSPI to Efficiency NS began. In 2011, with
the transfer complete, ENSC tabled and received UARB approval for its first ever DSM Plan. The Plan detailed energy
efficiency programs and services for Nova Scotia electricity rate-payers and anticipated results for 2012. Following the
successful execution of the 2012 Plan, ENSC received regulatory approval for a multi-year DSM Plan for 2013 and 2014.
A systems benefit charge is levied on all electricity consumers in Nova Scotia to cover ENSC electricity program costs.14 ELECTRICITY AND NOVA SCOTIA’S FUTURE:
2.4 Independent Power Producers
and the Community Feed-In Tariff
The Electricity Act requires Nova Scotia to produce 25% of its electricity from renewable energy by 2015. Legislation
mandates that 300 gigawatt hours (GWh) of this requirement be met using energy from Independent Power
Producers (IPPs). IPPs are larger-scale renewable energy projects of which NSPI can hold no more than 49%
ownership. Their intention is to promote participation in meeting renewable energy goals from non-NSPI parties.
The Community Feed-In Tariff (COMFIT) program was introduced in 2011 to make room for small-scale (under
6MW), community-owned renewable energy projects. COMFIT projects are expected to provide up to 100MW of
generating capacity to Nova Scotia. The program guarantees a pre-determined per-kWh rate, differentiated by
renewable technology, to producers. Municipalities, First Nations, cooperatives, universities, community economic
development investment funds (CEDIFs) and non-profit groups are eligible to apply to the COMFIT program. There
is a separate Feed-In Tariff (FIT) for Developmental Tidal Arrays that does not carry the community ownership
requirements of the COMFIT.
2.5 Municipal Utilities
There are six municipally owned independent utilities in Nova Scotia:
t Town of Antigonish
t Berwick Electric Commission
t Town of Canso
t Town of Lunenburg
t Town of Mahone Bay
t Riverport Electric Light Commissioners
These utilities supply electricity to consumers within their territory and own and operate their own distribution
systems. Together, they account for approximately 2% of the electrical load in the province. Until recently,
municipal utilities were required to purchase power from NSPI. This changed in 2007 when the Province granted
municipal utilities the ability to purchase electricity from any competitor on the wholesale market. NSPI continues
to provide the majority of power purchased by municipal utilties.
2.6 Muskrat Falls
and the Maritime Link
The Nova Scotia Utility and Review Board recently approved the Maritime Link project on a conditional basis. The
Maritime Link is a subsea cable that will connect the island of Newfoundland to Nova Scotia and have the capacity to
transmit 500MW of energy between the two provinces. This energy will come from a new hydroelectric dam being built
at Muskrat Falls, Labrador. Emera will build and finance the Maritime Link in exchange for 20% of the power produced at
Muskrat Falls. Newfoundland & Labrador will consume 40% of that power, leaving another 40% available for purchase.
Harnessing the hydroelectric potential of the Lower Churchill system in Labrador would have irreversible adverse
effects on the local ecosystem and indigenous Nunatsiavut, Nitassinan, and NunatuKavut communities (Lower
Churchill Joint Review Panel 2011). The dramatic, large-scale impacts of the Muskrat Falls project must be weighed
against its potential to transition the region away from fossil fuel dependence.
The ecological and social impacts of developing Muskrat Falls must also be weighed against the potential adverse
impacts of alternative options, in the short and long-term. Widespread ecological and economic consequences of
climate change must be met with comprehensive energy system planning in Atlantic Canada.HURDLES AND OPPORTUNITIES
15
3 Key Elements of
Current Discourse
Debate on energy policy in Nova Scotia is a minefield of competing interests and priorities. The situation is
made more volatile as energy becomes a political football for provincial parties to bandy about leading up to
the imminent provincial election. There are five recurring themes that emerge in all of the varied and often
contradictory conversations being had about energy: escalating costs of electricity; ownership and accountability;
environmental obligations; energy security; and access to electricity.
3.1 Escalating Costs of Electricity
Many Nova Scotians were enraged by Nova Scotia Power Incorporated’s (NSPI) latest application for a six per cent
rate hike over two years. The application came on the heels of seven increases over the last eleven years, and
persistent resentment of salaries and bonuses paid to top executives of NSPI and its parent company, Emera. An
online petition opposing the rate hikes gathered almost 31,000 signatures. Taking the now-approved rate hikes into
account, 2014 electricity rates will be about 50% higher than 2001 rates.
The root of the rate increase problem is coal. Since 2004, the price NSPI pays for coal has increased by 70% (NSPI
2013g). These costs are passed on to Nova Scotian ratepayers. Since 2006, Nova Scotia’s residential electricity rates
have increased over 30%. The preceding decades had seen comparatively few rate increases. On average, Nova
Scotia residents are paying about two cents more per kilowatt hour (kWh) of electricity than they were in 2006
(Hughes 2009). This is due in part to the rising operating costs associated with NSPI’s high dependency on an
imported coal supply and the associated need for environmental compliance in reducing coal burning emissions
through technological innovation and lower-emissions fuel supplies.
The 3% rate increases scheduled for 2013 and 2014 reflect the increasing costs of coal and natural gas as well as the
costs of renewable fuels (NSPI 2012b). These increases are the first time investment in renewable energy has directly
impacted rates in Nova Scotia. Previous increases resulted from rising fuel and infrastructure costs. As the province
transforms its fossil fuel –dependent electricity system and invests in necessary upgrades to ageing infrastructure,
rates will face increasing pressure.
See our companion report Solving NS’ Electricity Pricing Problem: Energy Affordability vs. Rising Electricity Prices for
further exploration of this issue and recommended solutions.
3.2 Ownership and Accountability
Tensions surrounding rate increases and electricity system transformation are heightened by the centralization
in NSPI of authority over the electricity system. NSPI is the focus of much criticism and villainization within the
province. Regardless of whether anti-NSPI sentiment is justified, it has a great deal of influence over the tone and
content of energy discourse in Nova Scotia.
Common concerns revolve around: 1) NSPI and Emera profits, salaries, and bonuses; 2) potential conflicts of
interest arising from the role NSPI’s guaranteed rate of return plays in its investment decision making; 3) whether
NSPI should be allowed to pass on to ratepayers risks associated with new investments; and 4) lack of clarity and/
or accessibility within the regulatory structure that governs NSPI (i.e. perceived absence of public accountability
despite substantial regulatory oversight).16 ELECTRICITY AND NOVA SCOTIA’S FUTURE:
Responses to this issue arise from nearly every sector of Nova Scotia society. As mentioned, several public advocacy
groups have in recent years called on Nova Scotia government to re-appropriate the utility and make it public once
more (Solidarity Halifax 2012). Others have suggested separating generation from transmission/distribution assets and
asserting public ownership over the latter (Majka 2012a). Many Nova Scotians, including the Progressive Conservative
Party, demand adjustments to the guaranteed rate of return ranging from a reduction to a total elimination (Jackson
2013a). Some, including the Provincial Liberal Party, propose partial or complete deregulation of the Nova Scotia
electricity market to allow for greater competition (Jackson 2013b).
3.3 Environmental Obligations
In 2012, the Government of Canada announced new regulations for coal burning electricity that have significant
implications for Nova Scotia. Under the equivalency agreement Nova Scotia has signed with the Federal
Government, the Province is required to reduce its greenhouse gas (GHG) emissions from the electricity sector to
7.5 million tonnes of CO2 equivalent (CO2e) by 2020. This is a 25% reduction from 2007 levels (10.15 million tones
CO2e). A further 40% reduction to 4.5 million tonnes CO2e is required by 2030. (Nova Scotia 2012)
The mitigation of GHG emissions from coal burning in Nova Scotia depends on building greater domestic and
regional energy security from sustainable, low-carbon sources of renewable electricity supplies. Stabilizing and
reducing electricity demand through energy efficiency and conservation programs is also required. The necessity
of these measures is made more critical by the very real threats posed by climate change. As a coastal province
that relies heavily on resource-based economic activity, Nova Scotia is particularly vulnerable to the impacts of
a changing climate.
As outlined above, Nova Scotia has legislated a variety of progressive GHG reduction and renewable energy
integration targets. Even these ambitious steps are only the first in getting the province to meet the scientifically
agreed upon target of reducing overall emissions 80% below 1990 levels by 2050. In coming decades, electricity will
fulfill an increasing portion of our energy requirements for home heating and transportation. Establishing a low-
carbon electricity system is essential to facilitating this development.
3.4 Energy Security
Energy import dependency is one of Nova Scotia’s greatest social and economic vulnerabilities, since the province is
almost wholly reliant on foreign markets for its heating, transportation and electricity fuel supply needs. Our degree
of reliance on fossil fuel imports is unique in Canada. In a time of increasing market volatility and global uncertainty,
this foreign dependency is a key provincial policy issue with broad ramifications on all sectors of society.
The topic of Nova Scotia’s overwhelming reliance on expensive, imported energy supplies like oil and coal has been
thoroughly discussed by policy-makers and the public for decades (see for example Energy: A Plan for Nova Scotia,
1979 and subsequent provincial energy strategies, including the 2009 Energy Plan). Starr (2011) describes the pivotal
role energy insecurity has played in shaping the evolution of Nova Scotia’s energy policy.
Yet still the problem remains: Nova Scotia is energy insecure. Energy insecurity is a primary motivator encouraging
the province’s transition from an electricity system that relies predominately on a single, imported fuel source to
one that incorporates a diverse range of domestic and regionally procured energy supplies.HURDLES AND OPPORTUNITIES
17
3.5 Access to Electricity
Electricity is a necessity, and provides energy for cooking, heating and lighting. As such it is essential to the right
to adequate housing, in providing a safe means of cooking, refrigeration and a healthy home environment. At
an international level, Canada is a signatory to the Convention on Economic, Social and Cultural Rights (CESCR),
which protects the right to adequate housing, as well as the Convention on the Elimination of Discrimination
Against Women (CEDAW), which protects women’s rights to adequate living conditions, particularly in relation to
electricity. For poor households, the loss of electricity can result in a forced eviction into homelessness.
Low income Nova Scotians who pay more than 3% of their income on electricity (or 6% if they heat their homes
electrically) are most severely affected by electricity price increases. This includes people who are unemployed
or living on social assistance, those working for low wages, visible minorities and low income seniors on fixed
incomes. They are most likely to face the stark choice of heating or eating, medications or lights. This is also true
for Nova Scotians who heat with oil with its faster rising price. About 125,000 households are affected with about
76,000 Low Income Cut Off households being the most severely affected.
It is imperative that Nova Scotia develop effective and adaptable means of guaranteeing equitable access to electricity
province-wide. Current barriers to electricity access significantly affect the health and wellbeing of Nova Scotians.You can also read
