URB hearing must wrestle with off-grid rules

Rachel Brighton, a freelance journalist and former magazine publisher, writes on industry, ethics, economics and the environment.

The Chronicle Herald – January 16, 2016 Edition

The plan to allow Nova Scotians to buy renewable energy from suppliers other than Nova Scotia Power Inc. may fail to take hold in the short term. But it points toward a smaller role for the power utility in the future, as competitors chip away at the legal framework supporting the power utility.

On Monday, a hearing will begin before the Nova Scotia Utility and Review Board to review a new system of tariffs and standards that will pave the way for a new electricity market known as renewable to retail.

That concept was enshrined in legislation soon after the Liberals won the 2013 provincial election, keeping a campaign promise to break the utility’s monopoly on power sales.

The new market rules would allow independent producers of renewable power to generate electricity that can be transmitted through the provincial grid, at a cost, and delivered to retail customers served by Nova Scotia Power. Various combinations of retail packages could emerge under the new system, including provisions for the power utility to supply backup power.

But before those details can be ironed out, one critical issue needs to be addressed when the hearing gets underway.

Nova Scotia Power is arguing that any power sales between parties, even when the electricity is generated and delivered off-grid, must be subject to the new rules and tariffs that are being worked out.

But during the pre-hearing fact-gathering process, there appeared to be a legal grey area in the intersection between ‟behind the meter” generation and the creation of a renewable-to-retail market.

With few exceptions, Nova Scotia Power wants to apply tariffs to the generation of off-grid electricity sold to another customer. An example would be a power producer who set up a generation plant next to a condominium or factory to directly sell electricity without using any of the utility’s services.

Under the plan envisioned by Nova Scotia Power, exceptions would be made for net metering, which allows a utility customer to generate their own renewable electricity and sell surplus power to the utility. There might also be an exception granted to larger-scale generation of non-renewable electricity, which is covered by an existing tariff.

Otherwise, according to Nova Scotia Power, any third-party off-grid generator of electricity who intended to sell power to another customer would either come under the renewable-to-retail rules and tariffs or would have to apply for status as a public utility.

This plan to bring behind-the-meter generation and sales within the meaning of the renewable-to-retail legislation raised questions from interveners in the pre-hearing process, including from the board-appointed advocates for small business and consumers, and from Port Hawkesbury Paper LP , which operates the mill in Point Tupper.

Port Hawkesbury Paper’s position seems to be that a customer such as itself should be able to buy power from an off-grid producer without being caught up in the new system of tariffs and rules.

The small business advocate suggested this complex issue should be severed from the main hearing and dealt with separately.

This proposal will be discussed at the hearing.

But now that the idea is out of the bag, it will be hard for anyone to put it back without doing serious damage to the original political intent of breaking up the power utility.

In principle, it is a sensible idea to allow one party to generate electricity and find off-grid ways to deliver it to customers.

Options might include constructing a micro grid, locating the power plant on the customer’s site, or paying for access to the utility’s distribution network but not its transmission network.

Many details would need to be sorted out, such as access to backup power and selling surplus power. Also, any rules would need to ensure that customers who take up alternative contracts do not avoid the existing deferred costs hanging over the heads of all customers of Nova Scotia Power.

The actual business of trying to make a new retail market work for renewable energy is likely to be thwarted by the tariffs Nova Scotia Power wants to charge to use its infrastructure and services.

Alongside that system, however it pans out, developing the behind-the-meter market for institutional and industrial power users would be a good idea, with one caveat. The benefits for off-grid customers would have to be balanced against the system-wide costs that would be carried by the remaining majority of customers served by Nova Scotia Power.