05/15/2012 08:52 EDT | Updated 07/15/2012 05:12 EDT

Mill deal could bring $54 million annually to Nova Scotia Power

SYDNEY, N.S. - A regulatory filing says a tentative arrangement between Nova Scotia Power and the company looking to reopen the NewPage paper mill could bring the utility up to $54 million annually.

The agreement between the utility and Pacific West Commercial Corp. filed with the Nova Scotia Utility and Review Board says the utility could take in $4 million to $5 million monthly in dividend payments and tax savings.

The monthly dividend payments listed range from $2.2 million to $3.4 million, while the tax savings range from $1 million to $1.5 million a month through the deal with the mill in Point Tupper.

The agreement states that the figures are provided for "illustrative purposes to demonstrate the monthly calculations."

Pacific West filed its application for the electricity tariff for the Cape Breton mill with the province's Utility and Review Board last month.

The term of the deal is 7.5 years, with aspects of it to be reviewed after five years.

It is intended to see the mill pay for incremental costs associated with the mill being on the utility's system, and to contribute to the utility’s fixed costs.

The former NewPage mill has been shut down since last September and is in creditor protection.

Pacific West plans to restart only the mill's supercalendered paper machine, leaving the newsprint machine idle.

Nova Scotia Power will provide the mill with an hour-by-hour schedule of projected costs associated with providing power to the mill after all other customers are served.

The mill will develop a tentative production plan based on those costs.

The information will be updated one day in advance, when the mill will refine its papermaking plans.

Finally, one hour ahead, the costs will be fixed and the mill will lock in its production schedule. The mill will be able to base its schedule around when power is most affordable.

Under the agreement, Nova Scotia Power will become a limited partner with 30 per cent of preferred shares in the company.

The complicated deal requires approval from the Canada Revenue Agency as well as the Utility and Review Board.

A Utility and Review Board hearing has been scheduled for July 16.

The unionized workforce recently accepted a 10-year contract that contained significant concessions and will slash the workforce by more than half.

Pacific West is also in talks with the province for access to Crown land and will have to work out an arrangement with fibre suppliers.

Pacific West is owned by Vancouver-based Stern Partners.

Both sides have said the power agreement wouldn't result in higher electricity bills for other ratepayers.

(Cape Breton Post)