Nova Scotia Power says higher rates, which would hit residential customers hardest, are necessary to strengthen the province’s power grid.Andrew Vaughan/The Canadian Press
Nova Scotia’s electrical utility has proposed rate hikes that could prompt a showdown with a provincial government bent on improving affordability – while the utility’s credit rating hangs in the balance.
Last week, Nova Scotia Power revealed it seeks to increase the rates it charges residential customers by 4.1 per cent in 2026 and again in 2027. That’s the main request in the filing, known as a general rate application, that it plans to submit later this month to its regulator, the Nova Scotia Energy Board. The utility said higher rates are necessary to strengthen the province’s power grid, including through trimming vegetation and hardening against storms.
Nova Scotia Power currently bills residential customers a fixed charge of $19.17 a month, plus 18.6 cents per kilowatt-hour consumed. That reflects increases from February resulting from rising costs for coal, oil, natural gas and other fuels the utility uses to generate power.
Its latest rate proposal received broad support from representatives of residential, small-business and industrial customers after several months of consultation.
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Residential customers would bear the brunt of the increases. (Though Nova Scotia Power did not disclose rate changes for other customer classes, it said the average increase across all classes is just 2.1 per cent; more detailed figures will be included in its filing to the board.)
David Roberts, a lawyer with the firm Pink Larkin who represents residential consumers, did not respond to interview requests from The Globe and Mail last week.
Also supporting the application is lawyer Melissa MacAdam, who serves as the small-business advocate. Ms. MacAdam said that while affordability is a significant concern for small businesses, it must be balanced against other priorities, including improving the reliability of service and eliminating coal-fired power generation. Considering these various factors, the settlement the representatives reached with the utility represents “a reasonable resolution,” she said in an interview.
But the proposed hikes threaten to set Nova Scotia Power on a collision course with Premier Tim Houston. He demanded the utility withdraw the application or reduce the rate increases sought.
“Time and time again, Nova Scotia Power shows Nova Scotians how out of touch they are,” he wrote in a statement. “This is not the time for a rate increase.”
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Brian Gifford, chair of the Energy Poverty Task Force – a coalition of 13 groups including Nova Scotia Power, the provincial government and non-governmental organizations – said more than 40 per cent of Nova Scotians struggle to pay their energy bills, which include electricity and heating oil.
“Not all of those people, but a fairly substantial number of people end up having to choose between essentials – between food and covering their energy bills.”
In a report last year, the task force proposed that the province provide a 50-per-cent subsidy for low-income households.
In published statements, the energy board has said it sets rates at levels that allow utilities to “recover reasonably incurred costs plus a reasonable profit.” The board has emphasized it does not have the authority to provide special rates for customers struggling to pay their bills.
On the campaign trail last year, Mr. Houston pledged to make many aspects of life more affordable for Nova Scotians. His party platform vowed to “cap power rate increases to the Canadian average increase.”
The Premier’s office did not respond to interview requests or queries from The Globe concerning when and how it might implement this commitment.
Mr. Houston’s government intervened in the utility’s last rate application. After Nova Scotia Power applied for significantly higher rates in 2022, the government amended the Public Utilities Act to prohibit the board from granting increases greater than 1.8 per cent annually in each of 2022, 2023 and 2024.
However, bond-rating agencies S&P Global and DBRS Morningstar responded by lowering Nova Scotia Power’s credit ratings, with Morningstar DBRS citing “heightened and adverse political interference” that might harm the utility’s financial performance. Both rating agencies have maintained their lower ratings since then. These ratings affect utilities’ borrowing costs.
Nonetheless, the board approved average 6.9-per-cent rate increases for Nova Scotia Power for 2023 and 2024. Its decision warned that further credit downgrades could impose “even more costs on ratepayers.”
Bond-rating agencies are watching Mr. Houston closely this time around. In a report published in January, Morningstar DBRS said it “remained concerned about potential political interference” and warned it might lower Nova Scotia Power’s rating again should Mr. Houston’s government take further measures that affect “the Company’s ability to fully recover its costs”; conversely, it might increase its rating should this year’s application proceed undisturbed.
Mr. Gifford said Mr. Houston’s 2022 intervention “wasn’t a terribly effective way of intervening.” But he praised some of the government’s existing programs, including those promoting energy-efficiency retrofits, which he said permanently reduce utility bills.
Power bills are rising rapidly across much of North America. According to the U.S. Energy Information Administration, average prices paid by American residential consumers rose from 13.15 US cents per kilowatt-hour in 2020 to 17.47 cents in June. Oft-cited contributing factors include surging electricity demand from data centres, electric vehicles and other major power consumers.
Prices are also surging in other Canadian provinces. New Brunswick Power charges urban customers a fixed rate of $29.55, plus 15.17 cents per kilowatt-hour. Last year, its regulator approved average rate increases of 9.25 per cent for 2025 and 2026, while acknowledging concerns from ratepayers “in this environment of significant annual rate increases.”