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Fuel Prices Push Rate Ask – July 5, 2005

July 5, 2005, Halifax, NS: Big increases in the price of oil, coal and natural gas are forcing Nova Scotia Power Incorporated (NSPI) to request an average 15% increase in electricity prices for 2006.

"Everyone - from our customers in Nova Scotia to electrical utilities throughout North America - is feeling the effect of rising global energy prices," said Chris Huskilson, President and Chief Executive Officer of Nova Scotia Power. "With fuel our single biggest expense as a utility, it's impossible to avoid making this rate request, no matter how much we would prefer not to."

In documents filed today with the Nova Scotia Utility and Review Board (UARB), the following fuel increases since 2002 were noted:

  • International coal cost just over $25 US/tonne three years ago - today it's more than $65 US, an increase of 160%
  • West Texas crude oil cost about $20 US/barrel three years ago - today it's more than $55 US, an increase of close to 175%
  • Petroleum coke cost less than $10 US/tonne three years ago - today it's more than $20 US, an increase of more than 100%
  • Natural gas cost just over $3 US/mmbtu three years ago - today it's more than $7 US, an increase of more than 130%

The above fuel sources supply more than 80% of NSPI's electricity generation.

Consequently, fuel costs at NSPI have also jumped, going from $278 million in 2003 to $479 million estimated for 2006 - an increase of 72% or more than $200 million.

Between 2005 and 2006 alone, the major fuel cost drivers for Nova Scotia Power are as follows:

  • The price of import coal is forecasted to increase by 30%
  • The price of heavy fuel oil is forecasted to increase by 31%
  • The price of petroleum coke is forecasted to increase by 44%

"We listened to our customers and regulator who have told us to do a better job managing fuel costs. We have made major changes to do just that. Even so, it's clear there are many outside factors making energy more expensive beyond anyone's control," added Mr. Huskilson.

NSPI recently announced a series of changes to its fuel procurement practices to reflect the recommendations of the UARB in its most recent decision.

NSPI is also proposing to invest an additional $18.7 million towards a host of new measures to improve customer service, strengthen network reliability and initiate new conservation and energy efficiency measures sought by customers.

"Our customers and regulator told us to make changes. We agree and we're prepared to make the needed investments," added Mr. Huskilson.

NSPI is a wholly-owned subsidiary of Emera (TSX-EMA), a diversified regional energy company. NSPI provides more than 97% of electric generation, transmission, and distribution to 460,000 customers across Nova Scotia.