HALIFAX: Nova Scotia Power’s (NSP) largest consumer has been approved for a “very unique” tariff agreement that would see the utility have control over the mill’s daily operations – amounting to a $20 million per year savings on their electricity bill.
In a decision released March 26, the Nova Scotia Utility and Review Board (UARB) granted an extension on special electricity rates to Port Hawkesbury Paper (PHP), which is a 25 per cent decrease than what it would be charged on the same cost-recovery model as all other consumers.
The Extra Large Industrial Active Demand Control (ELIADC) is an annually adjusted, below-the-line tariff allowing NSP to schedule the mill’s load, and direct PHP to reduce or increase its consumption across the day and throughout the year, according to system conditions and within agreed parameters.
“As presented, the tariff will allow PHP to continue to operate in Nova Scotia, and continue to make an important contribution to the provincial economy, while providing a substantial increase to the contribution make by PHP to system costs, which will benefit all customers,” said David Landrigan, NSP’s vice president commercial.
Provincial regulators were advised that by controlling how much electricity PHP uses and when, NSP can better synchronize the mill’s operations with overall electricity demand and manage the real-time costs of electricity generation, increasing the benefits for all customers.
Controlling the mill’s usage, NSP suggested will save the utility $6.9 million per year; the mill will receive one-quarter of those savings, which will reduce their power bill by $1.72 million annually.
PHP consumes about a million megawatts of power each year, which equals roughly 10 per cent of all the electricity produced by NSP.
In order to ensure customers don’t bear the risk of an under-recovery of PHP’s fuel costs, the new tariff ensures that the minimum recovery from PHP will be the actual annual costs to serve plus $4 each megawatt hour (MWh) of power it consumes.
Combined with fuel costs, the mill is projecting to pay around $60 per Megawatt hour over the next four years.
In the mill’s opening statement supporting NSP’s application, they indicated the new tariff is truly innovative and ceding the level of control of their facilities’ electricity supply to the utility was not an easy decision to make.
“It is a new paradigm for us and one that will require ongoing deep collaboration with the utility and vigilance on the part of PHP to ensure we effectively carry out our business,” they said. “We are however confident that the tariff can be managed properly, and its design is such that it should provide relatively stable electricity pricing to our business which we hope will allow it to remain cost competitive and profitable, while providing significant benefits to the Provincial electricity system as a whole.”