Energy for Profit or for Service

We are not in a time of business as usual in terms of how we access the energy we need for a functioning society.  The latest report of the United Nations International Panel on Climate Change makes it clear that the climate change will not wait for us to delay or backslide.  The Secretary General underlined the urgency.  “Today’s report underscores two core truths. First, coal and other fossil fuels are choking humanity. All G20 governments have agreed to stop funding coal abroad. They must now urgently do the same at home and dismantle their coal fleets. Those in the private sector still financing coal must be held to account.”  He added, “This abdication of leadership is criminal. The world’s biggest polluters are guilty of arson of our only home.”[1] 

We need a source of electricity that adopts, as a priority, shifting to renewable energy for the sake of our children and grandchildren, for the sake of life on this planet.  We also need reliable service at a price we know is fair without having a significant part of the price going into the pockets of shareholders and over paid senior management.  We clearly do not have that now.

Nova Scotia Power is owned by Emera so for brevity we will refer to them as NSP/Emera.  What they asked for early this year were a number of things. 

  • They wanted to boost revenue by imposing a special levy on those Nova Scotians who taking climate change seriously have installed solar on their homes and businesses.  The effect would have been to make the payback time for installing solar much longer.  Just the announcement of the request sparked an almost immediate shut down of Nova Scotia’s solar installation businesses.
  • They wanted a rate hike of 9.9% over three years.  
  • They wanted an increase in 9% guaranteed return on capital invested in new projects, particularly those related to meeting the targets for renewable energy.  They wanted the 9% return applied to a portion of the funds borrowed from banks as well as their own capital invested.
  • They asked to be allowed to extend the life of their coal fired generator that drives climate change.
  • They want electricity consumers to pay an additional 2% to cover the costs resulting from severe weather caused by climate change.
  • NSP/Emera also proposed that in 2023, they get permission in future years to charge ratepayers $53 million in deferred fuel costs they claim were not covered in past years.
  • NSP/Emera also sought approval to recover $370 million from rate payers in future years for the cost of depreciating or writing down the value of coal plants before the end of their useful lives. 

What we have is a privately owned utility whose business purpose is maximizing the returns to the investor shareholders with senior managers paid huge salaries to ensure that happens.  The means they use is a monopoly authorized to provide an essential service.  What Nova Scotians need is a utility system whose purpose is to provide them with reliable, renewable energy at reasonable prices and is accountable to electricity consumers.  But what would such a system look like and is it a workable, reasonable idea?

In Alberta private for profit utilities did not see sufficient profit in providing electricity or natural gas to rural Albertans.  In the 1950s a Social Credit government provided financial support for the 32 Rural Electric Associations.  The Alberta Federation of Rural Electric Associations provides communication, leadership, support, programs and services, and representation to meet the needs of the REAs.

In the 1970’s in Alberta the Loughheed government spurred the creation of a network of 80 community owned and governed natural gas utilities to serve rural areas and small towns investor owned gas companies were not willing to serve.   Farmers with gas wells on their property could not get gas.  The government’s decision resulted in 52 gas co-operatives, 21 municipal and 7 first nations utilities.  Together they created the Federation of Alberta Natural Gas Co-ops Ltd., to provide themselves with training and economies of scale for the goods and services they need to operate. 

In the USA, rural areas faced the same problems.  Major investor owned utilities focused on profit maximization were not willing to provide services to less populated areas.  In the 1930s under the ‘New Deal’ Franklin D Roosevelt supported the creation of electric co-operatives and today, across the U.S., over 2,000 publicly owned utilities serve more than 43 million people.  70% of the US land mass receives its electricity from co-operative utilities. One state, Nebraska, has the distinction of being the only state in the U.S. where every single home and business receives electric service from publicly owned utilities such as municipal utilities, electric cooperatives, or public power districts.  All exist to serve their electricity users.  But does it really work and is Nebraska comparable to Nova Scotia? 

Text Box: Nebraska ranks #3 nationally for the shortest outage duration.  33% of Nebraska’s population lives in rural areas.  Nebraska encompasses 76, 287 square miles while Nova Scotia is just 21,345 square miles or about 28% the size of Nebraska.  Nebraska has more than 27,000 miles of power lines while Nova Scotia has just 19,760 miles of lines.  Nebraska’s power rates are the lowest of surrounding states sharing a similar geography.[2]  Annually more than $150,000,000 is given back to Nebraska communities.

Electric co-ops bring other benefits to communities, too. In Iowa, three electric co-operatives have joined forces to build a new local daycare facility.[3] In Virginia, a local electric co-op has managed to bring broadband internet to the rural communities it serves.[4]  Across the rural US, more than 100 cooperatives, first launched to provide electric and telephone services as far back as the 1930s, are now laying miles of fibre optic cable to connect their members to high speed internet.[5]

Local ownership ensures the maximum number of jobs possible stay in each community as do the revenues from operating.  There are no profits sucked out of communities to distant investors and inflated executive salaries.  Profits are either returned to consumers or reinvested to provide better, more reliable service.  Accountability is provided through local boards of directors or local municipal councillors, elected people who are easily accessible and understand their communities. 

In Nova Scotia it is not a surprising accident that the municipal utilities in Antigonish, Berwick and Mahone Bay punch far above their weight when it comes to renewable energy and service.  Together they created the Alternative Resource Energy Authority (AREA) to combat rising power costs and to achieve green energy targets proposed by the province of Nova Scotia.  AREA built the Ellershouse wind farm with ten turbines, supplying 23.5 MW to the grid.  They are now working on three solar gardens, one to be located in each community.  Rather than dragging their feet they are leading the way.  That is because their purpose is not to enrich shareholders and corporate executives but to serve the people who own them.

Living in Mahone Bay I can attest to the high level of service reliability from a municipal utility.  There are few power outages in severe weather, outages tend to be short, and when they happen we get a phone call advising of when the power will be back.  After hurricane Dorian, in Mahone Bay our lights were some of the first to come on.  Our latest power outage, unusually long, was a result of a failure of the supply line from NSP/Emera. 

The utility organizational model of local municipal or co-operative utilities blanketing the province is preferable to a single crown corporation.  It allows small but efficient utilities to respond to the needs and opportunities of their own area.  The small scale tidal power opportunity in Annapolis Royal differs from the opportunities and needs of Amherst or New Ross.  People can reach a local board or council member and be far more likely to get a responsive reaction than going to an MLA who would approach the Minister who would perhaps call the UARB. 

Local boards and councils will have more say with an umbrella utility they have created and own, that connects them to the provincial grid, provides them with economies of scale, and connects them to other provincial utility systems.   If the almost 2 million people in Nebraska and 43 million people in the USA can make it work for them so can a million Nova Scotians.   Will municipal and co-operative utilities be perfect?  Not likely but, given the experience elsewhere, they will be significantly better.

If NSP/Emera is regulated to provide the service Nova Scotians need it, it will not be attractive to their shareholders.  It would be better to take it off their hands. 

Chris Payne, investment manager with Nova Scotia’s Office of Economic Development says, “about $600 million leaves Nova Scotia each year in RRSP funds, and very little comes back.”[6]  Perhaps we could use some of those millions to invest in energy solutions to serve us and our grandchildren. 

We need a green, reliable electrical system whose purpose is to serve us and our children and grandchildren.  Climate change will not wait for us to switch to renewables nor will it allow substandard or a poorly maintained power grid.  We cannot allow the revenue generated by electrical service to be drained away.  The main question is whether or not we will have the courage to ensure we go forward in this challenging time with a solution that works because its purpose is to meet our needs.







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