[HALIFAX, NS] — A crucial electricity rate application that could save the idled NewPage mill in Port Hawkesbury could be jeopardized by Pacific West Commercial Corp.’s unwillingness to pay the higher rates associated with renewable electricity.
Nova Scotia’s renewable energy standard will require that by 2015, 25 per cent of the province’s electricity must come from renewable sources.
Pacific West asked the province to make an exception for the mill, saying it was crucial for it to be viable.
When asked by Peter Gurnham, chairman of the Nova Scotia Utility and Review Board, during a hearing Monday what the government’s response was, Pacific West president Ronald Stern said: “They read it and considered it, but they weren’t prepared to undertake any change in regulation.”
Gurnham pointed out to Stern that if the application from Pacific West and Nova Scotia Power Inc. for a load retention tariff does not factor in recovery of renewable energy standard costs, there’s a risk the new owners won’t be able to cover incremental power costs.
"Would you agree with me that a government that wants this transaction to happen should seriously consider taking away this risk?" said Gurnham. “If it doesn’t meet that test, then we can’t approve it.”
After a long pause in which he gathered his thoughts, Stern said Pacific West hopes to make a case that there’s already enough renewables in the system, or will be, and that an exception is reasonable, thus saving Pacific West an estimated $12.5 million annually off its power bill.
In his opening remarks, Stern says his company needs a quick and favourable power rate decision in order to proceed with the purchase of the idled NewPage mill in Port Hawkesbury.
“Unless the mill is operating and delivering paper in late September, we will jeopardize the receipt of major paper orders for 2013,” Stern said. “In order to achieve this, it is necessary for us to be in a position to close the acquisition of the mill by the middle of August.”
Stern, who is also president of Stern Partners which won the bidding for the mill, also said there is no wiggle room left.
“We moved a great deal from what our original objectives were,” Stern said. “We have reached the point in our negotiations that we’ve gone as far as we believe we can prudently go to.”
Consumer advocate Bill Mahody, who says there is a “greater than reasonable risk that ratepayers will be subsidizing the mill” asked Stern if costs went up in two years, would Pacific West be prepared to open up the deal?
"We require certainty,” Stern said, adding that there is a clause in the deal that allows for adjustments after five years.
Nelson Blackburn, the provincially-appointed small business advocate, is concerned the deal could be bad for ratepayers.
“It is the position of the (advocate) that if there are any risk consequences, as a result of the arrangement proposed, it not be borne by the ratepayers … but must be borne by the applicants,” Blackburn told the hearing.
Stern said “it is simply imperative that the Port Hawkesbury mill substantively reduce its input costs and electricity is the mill’s biggest cost.”
There are other essential concessions that Pacific West wants before it will re-start the mill. They’ve managed to get a new collective agreement with the union and are close to reaching a new forest and fibre arrangements. They have also asked for a tax break from the Canada Revenue Agency.