Background
On Feb. 27, 2024, the government of Nova Scotia tabled the Energy Reform (2024) Act, proposing major changes to utility regulation, power systems operation and rules governing power generation in Nova Scotia. The introduction of the Act followed the release of a report by the provincially appointed Clean Electricity Solutions Task Force (CESTF) intended to modernize the province’s regulatory approach to prepare for the transition of the power grid away from fossil fuel electricity generation. Of the 12 recommendations in the report, the Act implements only one recommendation regarding modernization of the system operator and utility regulator. The Act received royal assent on April 5, 2024.
Benefits of the Act
The Ecology Action Centre (EAC) applauds what we view as fundamentally beneficial changes to electricity regulation and power systems operation in Nova Scotia. These policies include:
1. A sustainability mandate for the new utility regulator (Nova Scotia Energy Board)
The creation of the Nova Scotia Energy Board (formerly the Utility and Review Board) represents more than just a title change for the utility regulator. Historically responsible for setting utility rules, ensuring compliance and protecting consumers, the authority of the board has been expanded to consider climate policy in all decisions. This mechanism – known as a sustainability mandate – is a common feature of utility regulation in many Canadian provinces and across North America. For the first time ever, the organization responsible for regulating the behavior of power and gas companies on behalf of the public has authority to ensure its rulings are consistent with provincial climate policy.
For years, the EAC has called for the introduction of a sustainability mandate in Nova Scotia in order to strengthen accountability measures with respect to the province’s clean energy objectives. We are very pleased to see that both the CESTF and the provincial government have heeded these calls, and that sections of the Act will allow the EAC and East Coast Environmental Law to better hold utilities and gas companies to account on environmental grounds before the Board.
2. The creation of an Independent Electricity System Operator (NSIESO)
Previously a division of Nova Scotia Power, the system operator is responsible for planning, dispatch, and operation of electricity generation in the province. Put simply, it is responsible for managing the power grid and ensuring that new power plants are connected to the grid in a timely, reliable and cost-effective way. For decades, advocates for reform have pointed to a clear conflict of interest: a system operator owned by Nova Scotia Power will inevitably prioritize higher profits over the responsibility to ensure safe, reliable service to customers at reasonable rates. Concerns that the system operator could act as a roadblock in ongoing efforts to connect new, renewable sources of electricity generation to the grid presented a serious challenge to decarbonization.
The Nova Scotia IESO will become the 10th independent system operator in North America, operating as a not-for-profit distinct from Nova Scotia Power. The IESO is also now required to make decisions in accordance with the goal of furthering provincial climate policy – including Nova Scotia’s goal of phasing out coal by 2030.
3. New opportunities to enact performance-based regulations
Performance-based regulations reward utilities for providing value to customers, offering incentives for activities like investing in grid modernization and encouraging power use during off-peak periods to reduce stress on the grid. While these regulations are not explicitly mentioned in the Act, the Nova Scotia energy board now has the authority to enact "alternative forms of regulation" with could include performance-based regulations.
4. Power ownership arrangements with third parties
The government can now effectively require public utilities such as Nova Scotia Power to enter into ownership agreements with third parties regarding energy projects if the projects advance environmental goals. These agreements will be regulated by the Nova Scotia Energy Board and will have the potential to make it easier for any stakeholder interested in owning renewable energy projects to jointly own a project, lowering barriers to entry for perspective owners.
The provisions would also apply to Indigenous communities, who now have access to the Canada Infrastructure Banks’s Indigenous Equity Initiative designed to support communities in purchasing equity ownership stakes in infrastructure projects, with $1 billion equity loans available. These partnerships have the potential to advance economic reconciliation with Mi'kmaq communities while advancing environmental goals.
Areas of Concern
1. Nuclear Power development
The Act gives Nova Scotia Power the ability to own nuclear power generation projects for the first time since 1992. The EAC publicly opposed this provision within the Act. We remain strongly opposed to the development of nuclear power in Nova Scotia. As a province, we have the potential to develop enough wind, solar and battery storage to phase out fossil fuels from the grid without the development of nuclear power. While the development of large-scale nuclear power facilities in Nova Scotia is economically infeasible, we are deeply concerned about future efforts to develop Small Modular Nuclear Reactors (SMNRs), which would be to the detriment of ratepayers and the environment. The recent cancellations of SMNR projects in Idaho – the first of their kind in the U.S. – due to skyrocketing costs have led to calls to end New Brunswick’s zealous pursuit of such projects.
The EAC remains committed in our opposition to nuclear energy, which dates back to the 1970s and our work to ban uranium mining – a regulation which currently remains in place. We will work with volunteers and other environmental organizations to ensure SMNRs are not developed in Nova Scotia.
2. No attempts to implement the CESTF recommendations on affordability
Many recommendations of the CESTF report – including those centering on infrastructure, reliability and affordability – remain unimplemented. Perhaps most significantly, the task force’s recommendation that the government of Nova Scotia “evaluate the Ontario subsidy programs [...] and other programs to determine the best way to deliver a ‘Made in Nova Scotia’ suite of programs to help with residential electricity costs” has not been enacted, with no commitment on the part of government to do so.
Fortunately, the required work mentioned in CESTF’s recommendation on affordability has already been completed. A forthcoming report from the Energy Poverty Task Force entitled "A Way Forward: A made-in-Nova Scotia home energy affordability program" will identify a suite of programs to address energy affordability based on in-depth research and analysis. Authored by renowned attorney and economist Roger Colton, the report will draw on Colton’s experience in designing energy poverty reduction programs across 40 US states and Ontario, with input and advice drawn from exports working at forefront of this field in Nova Scotia.
With 43 per cent of households in Nova Scotia currently in energy poverty, we urge the government to act immediately to implement the recommendations of this report, as well as those of the CESTF.
Conclusion
The Energy Reform Act will result in many positive changes to electricity regulation in Nova Scotia. While the EAC is profoundly disappointed that the government has decided to enable Nova Scotia Power to own nuclear generating assets and has not addressed affordability concerns despite explicit recommendations by the CESTF to do so, these factors do not detract from fundamentally positive reforms in this legislation. The EAC will continue to advocate against nuclear power development and in favor of comprehensive measures to address the crisis of energy poverty in Nova Scotia.