The so-called Maritime Link, a 180-kilometre subsea cable linking Newfoundland and Nova Scotia, has been estimated to cost $1.2 billion.
Energy Minister Charlie Parker said Nova Scotia's involvement in the $6.2 billion Muskrat Falls project in Labrador gives the province the opportunity for lower and more stable electricity rates than its continued dependence on imported coal.
Muskrat Falls is a jointly planned project by provincial Crown corporation Nalcor Energy and Nova Scotia's private utility Emera Inc. (TSX:EMA).
The government says that under the new regulations, the board has the authority to do a full review of the Maritime Link and can compare the project to other options.
It has 180 days from the date it receives Emera's application to review the project and make a decision, which could include adding terms and conditions to its approval.
The regulations also require Emera to file a project report with the review board by Dec. 21, 2013, detailing the engineering and design of the project, and updating its cost estimates.
The project would provide Nova Scotia with 170 megawatts of energy annually — about eight to 10 per cent of the province's total power needs — for 35 years.