Nova Scotia residents face 2.4% power rate hike due to fuel costs

In November 2024, the Nova Scotia Utility and Review Board approved a 2.4% increase in power rates, effective for 2025. This decision was heavily influenced by circumstances surrounding delays in the Muskrat Falls hydroelectric project, located in central Labrador, which affected the electricity supply to Nova Scotia. Nova Scotia Power encountered challenges in providing reliable electricity, having to purchase fuel at significantly elevated prices during this period, which put financial strain on the utility and necessitated the rate hike in order to cover their accumulated debt related to fuel expenses. Seeking to alleviate the financial burden on both the utility and the customers, the federal government of Canada intervened with a $500-million loan guarantee. This move was crucial in reducing borrowing costs for the utility due to the rising expenses tied to alternative fuel sources as a result of the project’s delays. Consequently, it was estimated that without this support from Ottawa, power rates might have surged by approximately 19% annually to offset the additional costs incurred. The complications surrounding the reliability of the Muskrat Falls project are significant. Over the past five years, the hydroelectric facility has been inconsistent in its electricity generation, leading to further challenges for Nova Scotia Power in meeting the province's energy needs. The financial measures taken now entail a careful balancing act for the utility; while the rate hike is necessary to address immediate concerns, it also places an extra burden on residents who depend on consistent and affordable electricity. As Nova Scotia grapples with these challenges, the implications of the power rate increase and the ongoing issues with the Muskrat Falls project underscore the complex relationship between renewable energy projects and their operational realities, especially in terms of financial viability and impact on consumers. The situation continues to evolve, with stakeholders closely monitoring developments in both the utility sector and the broader energy landscape.