Nova Scotia Power rates to rise between 2017 and 2019

Nova Scotia Power predictsrates will rise between oneper centand 1.5percent eachyear from 2017 to 2019 inclusive.

The raiseis mostly related to fuel costs,which account for approximately 35 percent ofpower rates.

The utility made the announcement Tuesday after the province introducedits electricityplan on Monday, which mandatesa three-year rate. There will be no rateincrease for most customers in 2016and there is even a possibility of a slight cut,NS Power confirmed Tuesday.

• Nova Scotia Power must meet tough new standards

Under the plan, NS Power must apply for a power-rate increase thatwill remain the same for 2017, 2018 and 2019.

"Rate increases will be small less thaninflation and they will be less than they have been historically," saidBobHanf,president of NSPower.

The utility's vice-president of operations, Wayne O'Connor, saidcommodity prices for coal, oil, and natural gas (which make up 75percent of Nova Scotia'spresent fuel mix) are at historic lowsand now isa good timeto increase hedging.

50% of fuel costs 'locked in'

He compared that to homeownerschoosing a fixed, rather than a floating, mortgage rate.O'Connor says with long-term contracts and greater reliance on hydrofrom Muskrat Falls and other renewables such as wind, 50 percent ofNS Power's fuel costs are already "lockedin."

O'Connor agreed no one can predict coal or oil prices four years fromnow, or what will happen to the other 50 percent of fuel costs,which remain volatile.

Spikes in fuel costs thataren't locked inhave the potential to make a mockery of today's three-year forecastfor power rate increases,35 to40 percent of which are tied to fuel.

Hanf says the company is striving for a zero increase in non-fuel costitems between 2017 and2019. He notedNS Power'sfour-year labouragreement with its unions and cuts to staff and pension costs asmeasures the company has taken to bring its costs down.

Hanfalso said the utility will meet whatever performance standardsthe province imposes on NS Power, as other Emera-owned utilities inMaine and the Caribbean already do.

On Monday, the province announced performance standards which includepenalties of up to $1 million if the utility does not measure up in areas of reliability, storm response and customer service.

No rate cut in plan

The province intends to pass legislation this fall that will set a framework for the standards, whichwill guide the Nova ScotiaUtility and Review Boardas it enforces the new rules.

The plan calls for 40 per cent renewable electricity by 2020, andbetween 16 and 22 megawattsof electricity from in-stream tidal production near Parrsboro by the early 2020s.

Hanfsaid the province's decision to move tomore renewable energygives NS Power "a position ofstrength" becauserenewablesprovide the utility with more flexibilityand can act as a buffer against spikes in other commodities such asnatural gas.

The plan also commits $1.5 million over next threeyears to research technologies related to energy storage, tidaland solar power.

Though the Liberals promised a power-rate cutduring the 2013 provincial election, the plan does not include lower rates.