Nova Scotia Power and a fledgling renewable energy company are butting heads over the details of a program meant to break up the electric utility’s monopoly.

Renewall Energy Inc. is vying to become the first competitor to Nova Scotia Power by selling wind energy directly to consumers, but it would need to use Nova Scotia Power’s grid.

It’s part of a provincial initiative known as Renewable to Retail, which was first introduced a decade ago by the former Liberal government. It has yet to get off the ground.

Nova Scotia Power is supposed to recover costs for tying new energy providers on to the grid through tariffs, but in a letter to the Nova Scotia Utility and Review Board this month, it said the upfront costs are proving too much.

Seeking a letter of credit

That’s why, earlier this year, it asked Renewall to provide a letter of credit — that is, a document from a financial institution guaranteeing payment.

Renewall refused, and Nova Scotia Power has now asked the utility and review board to find a resolution.

Dan Roscoe, Renewall’s president, declined to comment while the matter is before the regulator, but a copy of a letter he wrote to Nova Scotia Power is included in the utility’s application to the board.

In it, Roscoe referred to the original board proceedings where details of the Renewable to Retail program were hammered out.

“It was always contemplated that the implementation costs (such as they were described) would be recovered through the [Renewable to Retail] tariffs,” he wrote.

Roscoe cited one of Nova Scotia Power’s submissions to the board that said it would defer recovery of costs “until a future date after the [Renewable to Retail] market has begun to develop,” and amortize them “over a reasonable period,” through annual rate adjustments.

The board approved the proposed approach.

Renewall’s first proposed wind farm would be constructed near the Mersey River, south of Milton, N.S. (Mersey River Wind)

Roscoe also noted that a security for implementation costs is not mentioned in Nova Scotia Power’s terms and conditions for licensed retail suppliers, and that a letter of credit was already required to receive a retail licence.

“If we have overlooked some statutory or regulatory authority, please let me know,” Roscoe wrote.

“Otherwise, we believe that the existing mechanisms for credit assurance balance ratepayer interests with those of the [licensed retail supplier], so as to enable the development of the [Renewable to Retail] market.”

‘Not in alignment’

Jennifer Power, a lawyer for Nova Scotia Power, told the board that the utility “is not in alignment” with Renewall’s interpretation of the rules.

Power said the utility is required to facilitate the Renewable to Retail program, but “this does not mean that N.S. Power must solve every issue that may be faced by a [licensed retail supplier] no matter the cost, time, effort, or resources that may be required.”

“Continuing to take on millions of dollars in costs without a clear path or guarantee of recovery of those costs is neither reasonable nor prudent,” said Power.

Power told the board the utility has spent $1.45 million on implementing the Renewable to Retail program, and it estimates that figure will eventually grow to $6.4 million.

CBC News asked the utility for a breakdown of those costs. They did not provide any numbers but said generally that implementation costs include “detailed design work, planning, integration and engineering.”

Power said a letter of credit is not the only surety Nova Scotia Power would accept; it would be open to another “similar security arrangement.”

A spokesperson for Nova Scotia Power said in an email that a letter of credit “is standard commercial practice and an important part of ensuring we’re doing everything we can to manage customer dollars responsibly during the transition to renewable energy.”

Tory Rushton, Nova Scotia’s minister of natural resources and renewables, wouldn’t comment on the specifics of the dispute, but said in an interview that he would “encourage both parties to get at the table and find a pathway forward.”

“Obviously, we want renewable energy on the system as soon as possible,” Rushton said.

The utility and review board has agreed to consider the issue and are accepting public comments until Dec. 6.

MORE TOP STORIES