Ratepayers received a small windfall in April from a surge in the use of natural gas to generate electrical power in Nova Scotia.
Using more natural gas, at relatively low prices, helped hold the line on fuel costs despite higher loads on the system, according to a monthly report from Nova Scotia Power Inc.
The utility reports monthly on the fuel adjustment mechanism, which is the regulatory process for managing customer payments to the power utility.
Each year, the utility tallies up the fuel costs used for generating electricity. If fuel was more expensive or cheaper than forecast, it collects the difference from ratepayers or returns what was over-collected.
“The additional load being served with low-cost natural gas helped drive the average fuel cost below the rates in the base cost of fuel, contributing to the over-recovery in the month,” reported the utility.
Over-recovery means that at some stage, the extra amount collected from ratepayers to cover their collective April fuel bill will be returned.
Ratepayers may never notice, however, because this is the result for one month only. At the end of the year, ratepayers could still owe the utility for under-recovered fuel costs.
My purpose in pointing this out is to show that markets, not regulation, still play a primary role in determining fuel costs in Nova Scotia, even though regulation and government policy play a big role in fixing, or driving up, the costs of the power, as is the case with the biomass plant in Point Tupper.
The plant is located on the site of the mill owned by Port Hawkesbury Paper LP, but it is owned by Nova Scotia Power. It is fuelled primarily by wood fibre.
Following a decision by the former NDP government, power from this plant must be dispatched to the grid even when cheaper forms of electricity can be generated from plants burning other fuels.
A Nova Scotia Power spokeswoman confirmed Friday that right now it is cheaper to generate electricity from natural gas, given its relatively low price, than it is to generate electricity from biomass.
But government policy dictates that the Port Hawkesbury power plant is a “must-run” facility. The policy is sheer stupidity. It should be reversed. In the meantime, truckloads of trees are being transported by road, from one end of the province to the other, as fuel.
The Nova Scotia Utility and Review Board is huddled over piles of written evidence submitted to the June hearing into the question of how much money ratepayers should pay for energy efficiency programs to lower energy consumption and demand on the system.
Meanwhile, ratepayers’ money is being squandered on a costly, environmentally questionable source of electricity.
Natural gas is a commodity with fluctuating prices, and its supply in Nova Scotia is in question. It will not always be cheaper than biomass as a fuel source, but the fact that it is cheaper now raises questions.
Even when burning biomass is an economic choice, is the technology efficient? Is it efficient to truck wood such long distances, including fibre imported from New Brunswick and Quebec?
Consumption of electricity is just one part of the energy-efficiency equation. The efficiency of generation, transmission and distribution are other parts of the equation.
It’s time to think about energy efficiency on a broader scale, starting with the merits of large-scale biomass.