The agreement with Emera (TSX:EMA) Inc. allows the company that owns Nova Scotia Power to continue its plans for a subsea link from Newfoundland with some financial certainty.
The so-called stability agreement was a requirement of a federal loan guarantee for the Nova Scotia portion of the project, which is expected to save about $100 million in borrowing costs.
The Utility and Review Board must still conduct its reviews of the subsea cable, known as the Maritime Link.
Its final decision is not subject to the stability agreement.
Earlier this week, the government of Newfoundland and Labrador and Emera gave their official approval to the $7.7-billion hydroelectric project in Labrador.
The Nova Scotia government says the loan guarantee also requires a similar stability agreement between the provinces and the federal government, which is expected to be completed by late winter.
Premier Darrell Dexter says the stability agreement with Emera was always planned for the project.
"This agreement ensures that stability while respecting the Utility and Review Board's transparent review and independent decision on whether the Maritime Link is the right choice for Nova Scotia ratepayers," he said Thursday.
"We continue to believe that this is the lowest-cost option to reduce Nova Scotia's dependence on expensive coal and build a cleaner energy future."
In addition to the stability agreement, Nova Scotia has also agreed with Emera, the government of Newfoundland and Labrador, and its Crown utility, Nalcor Energy, to create a joint committee to oversee the project.
The committee is tasked with making sure the project meets all the conditions of the federal loan guarantee.