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CEEA’s Efficiency Matters Blog

Investing in energy efficiency is under attack in Nova Scotia

There’s a battle between a private utility’s need to generate revenue and a not-for-profit’s strong energy efficiency programs that save money and energy

Energy efficiency is treated as a supply in Nova Scotia where it represents 7% of the electricity mix and burning coal is still a reality.

We shouldn’t be surprised but there’s a battle brewing in Nova Scotia between Nova Scotia Power and CEEA member Efficiency Nova Scotia. The for-profit utility has rejected the independent, not-for-profit Efficiency Nova Scotia’s proposed electricity efficiency plan for 2016-2018. In its first effort to negotiate with the utility, Efficiency Nova Scotia recommended an investment of around $40 million in energy efficiency in each of the next three years. The utility has proposed cutting that in half — $22 million over each of the next three years, which also means cutting the benefits and savings for Nova Scotians.

Why? Nova Scotia Power cites the proposal as too expensive and recommends the Nova Scotia Utility and Review Board not approve the plan.

Yet Efficiency Nova Scotia’s proposed level of efficiency is significantly less than what Nova Scotia Power’s 2014 resource plan identifies is required to ensure cost-effective electricity over the long-term. It’s also less than what’s been invested in the past.

Nova Scotia Power has positioned energy efficiency as expensive because it sees it as a short-term investment, even though the benefits extend to 15 years. It’s similar to taking a 25-year mortgage and cramming the payments into five years.

These opposing views of efficiency - as a huge cost or an investment that reaps huge savings year after year - plays out time and time again. But you know where CEEA stands on this.

Energy efficiency is an investment, period. To be fair, it’s important to examine the mindset of for-profit utilities without vilifying them. Let’s remember both organizations have different business starting points: Nova Scotia Power is in the business of selling electricity to make a profit. They only make a profit by investing in capital expenditures. In addition to savings on fuel and operating costs, energy efficiency reduces the need for these very investments to build capacity . It’s no wonder there are opposing views.

What makes Nova Scotia unique?

Keep in mind that elections in the province can be won and lost based on the cost of electricity . The Efficiency Nova Scotia model is ground-breaking. Its innovative and unique model stands alone in Canada. Legislative changes in 2014 shifted how energy efficiency is viewed: treating it as a supply - just like coal or renewables, instead of a cost . The legislation requires Nova Scotia Power to purchase all reasonably-available, affordable, cost-effective electricity efficiency .

There are other things that set Nova Scotia apart from other provinces: while most utilities in Canada are crown corporations, Nova Scotia Power is a private, for-profit company that must respond to shareholders. It also stands out as a utility that remains dependent on coal with hard CO2 caps; in fact over 50 per cent of its electricity is generated by coal.

Combine all of these factors and the stage is set for confrontation, unless the best interests of Nova Scotians are put first.

How Efficiency Nova Scotia is successful

Energy efficiency programs are saving Nova Scotians around $100 million this year on electricity bills. Yes, that’s $100 million less for Nova Scotia Power. But energy efficiency is also creating an industry in a region that struggles with economic growth. There are 1,200 people working in the sector across the province, not just Halifax. And businesses are becoming more competitive as a result of energy savings. Low income Nova Scotians have also benefited – the savings have allowed them to stay in their homes, and with more comfort. And the environmental benefits of energy efficiency are undeniable. In terms of avoided CO2 emissions the$100 million in savings is the equivalent of getting 130,000 cars off the road. Efficiency now accounts for almost 7 per cent of supply in Nova Scotia – they’ve saved enough electricity to power 78,000 homes.

Creating a 21st century business model

It was recently argued in an Energy Collective blog that American utilities are stuck in a 20th century business model where conservation is perceived as cutting into their profits because energy efficiency reduces demand, which means they may be forced to increase the cost of electricity to cover expenses. Utilities in Hawaii, Texas, Arizona and Louisiana are slashing rooftop solar tax credits. The most drastic example is Florida where its energy efficiency goal was cut by 90 per cent.

What we need is a new business model that would not punish utilities for investing in energy efficiency. A new business model would diffuse the tension between power generation and efficiency. What reward could be created for investing in energy efficiency, aside from the benefits we can recite in our sleep? One solution is to expand the definition of infrastructure so it includes efficiency investment. Efficiency needs to be seen as an investment with a rate of return, not a cost.

A call to action

On June 15 there will be a public hearing before the Nova Scotia Utility and Review Board where Nova Scotia Power and Efficiency Nova Scotia will put forward their plans. If you’re a Nova Scotian and you support energy efficiency, contact your MLA, city councillor or MP.

If you’re a supporter of energy efficiency and want to see our friends on Canada’s East Coast succeed, get involved. Contact Nova Scotia’s Minister of Energy Michael Samson

Investment in energy efficiency is an investment in Nova Scotians - not an investment in Nova Scotia Power shareholders.

Posted April 23, 2015

Elizabeth McDonald is president of CEEA