K'JIPUKTUK (Halifax, Nova Scotia)
A group of protesters spoke out against Nova Scotia (NS) Power earlier this month, first by delivering speeches at the Halifax Grand Parade, and then by marching down to the company’s headquarters and protesting on its front lawn. Like many Nova Scotians today, the protesters were angry about the quality and price of their electricity compared to the rest of Canada. As it turns out, this anger is not unfounded.
NS Power controls 95% of electricity generation, transmission, and sale in Nova Scotia. The electricity giant was a crown corporation until 1992, when it was sold by the province in what was then the largest private transaction in Canadian history. Today, NS Power is a subsidiary of the publicly-traded company Emera. Every year, Emera receives a net profit of roughly $130 million per year from NS Power—after paying all salaries, expenses, taxes, and Emera CEO Scott Balfour’s $6.1 million yearly compensation (which is nearly 18 times higher than that of the Prime Minister). NS Power could choose to forgo these profits and lower customers’ energy rates, but it doesn’t have to. The company has a monopolistic hold over the generation, transmission, and sale of power in Nova Scotia, so consumers can either pay NS Power’s prices or go dark. This results in Nova Scotia paying the highest electricity prices in Canada, according to Manitoba Hydro’s 2017 Survey of Canadian Electricity Bills. The survey reveals that a Halifax household can expect to pay about $161 for 1000 kWh of electricity per month, which is around the average energy consumption for a household in Canada.
How do other provinces achieve lower electricity rates? Interestingly, there are solutions on both sides of the political spectrum. In Alberta, there is a complex system of competing electricity providers. There are more than a dozen companies that generate electricity, a handful of companies that control transmission lines, and over a hundred sellers and resellers. Consumers have the option to buy electricity from a local utility or from one or more third-party resellers. This system is coordinated by the Alberta Electric System Operator, a nonprofit that operates at an arm’s length from the provincial government and ensures that Alberta’s electricity market is safe, competitive, and accessible for producers and consumers.
According to the Manitoba Hydro survey, a Calgary household that uses 1000 kWh of electricity in a month would pay $106—just two-thirds that of a Halifax household. Introducing competition into Nova Scotia’s electricity market would drive down prices. If all of NS Power’s annual $130 million were saved by consumers, the average household would have an extra $320 to go toward other expenses. That’s sink-or-swim money for many low income households. The money would quickly re-enter the economy, where it could create more than three thousand living-wage jobs.
There’s a different solution on the other side of the political spectrum. Quebec nationalized all of its electricity providers throughout the twentieth century, and today nearly all electricity production, transmission, and sale is controlled by Hydro-Quebec. The key difference between the monopolies of NS Power and Hydro-Quebec is that Hydro-Quebec is a crown corporation, and profits go into the provincial budget. These profits are well-regulated, and as a result executive salaries are far more reasonable: CEO Éric Martel earns $579 461 per year, less than a tenth of Scott Balfour’s compensation. This is why Quebec has the lowest electricity prices in Canada. A Montreal household that uses 1000 kWh in a month would pay only $71—less than half of what a Halifax household would pay.
If NS Power were provincially owned, like it was until 1992, the provincial government could slash power rates and lift low income families out of financial crises. Alternatively, the government could rebuild the Victoria General hospital into a world-class medical center—replacing the crumbling mess it is today—and pay off the expenses in fifteen years. As a third option, the government could hire four hundred family doctors. Nova Scotia is one of the poorest provinces in Canada and does not have the budget to solve its devastating health care crisis. NS Power does.
Despite its large profits, NS Power does not have an entirely free rein over electricity prices. The Nova Scotia Utility and Review Board (UARB) must approve electricity rate increases. It also determines the maximum Return on Equity (ROE) that NS Power is allowed to earn. ROE is a percentage of total assets, and is currently set at 9%. This means that every year, for every $100 of property, equipment, or other assets that NS Power has, it is allowed to earn $9 in profit. The most recent rate and ROE adjustment was in 2012, when electricity rates were raised by 3% in each of 2013 and 2014, and the allowed ROE decreased from 9.2% to 9%. In recent years, electricity rates have increased by 1.7% each year, roughly in line with the rate of inflation, and NS Power has applied to increase rates by 1.5% in each of 2020, 2021, and 2022.
NS Power’s parent company, Emera, is publicly-traded, meaning that anyone can buy shares of the company and become a part-owner. This gives them the right to elect members of Emera’s board of directors. Until recently, provincial law required that at least 75% of Emera shareholders had to be Canadian residents. In April however, the House of Assembly passed Bill 135, which removed this obligation, and on July 11th Emera shareholders voted to remove this requirement from the company’s articles of association. This means that it is now possible for non-Canadians to buy a majority stake in Nova Scotia’s power infrastructure.
Without adequate intervention, NS Power will become the energy empire of the Maritimes. The past Liberal, Progressive Conservative, and NDP governments have done little to remedy this issue, and so far seem to be relying on the people forgetting about it altogether.
Peter Fajner is a computer science student at Dalhousie University. He currently has a major role in running The Black Cat's website. Follow his Twitter for updates.