08/22/2012 12:28 EDT | Updated 10/22/2012 05:12 EDT

Nova Scotia Power files affidavit in bid to prevent release of audit

HALIFAX - Nova Scotia Power says information redacted in an audit alleging that it overcharged customers $22 million shouldn't be released because it's defamatory, would violate the privacy of employees and break contractual confidentiality.

The private utility company filed an affidavit Tuesday with the province's Utility and Review Board that explains why it believes more information in the audit should remain blacked out.

The audit conducted by the Liberty Consulting Group, released in July, said Nova Scotia Power owes its customers a refund because it paid too much for fuel over the past two years. But the company disputes the audit's conclusions.

In the affidavit, Nova Scotia Power president Robert Bennett says if the audit were to be made fully public, it would be damaging to the reputations of some of the company's directors and staff.

"If the defamatory material in issue is made public, specific and serious harm will be caused to the reputations of directors, officers and employees," Bennett says. "That harm would be increased by the publication of this material on the Internet."

Bennett also says that if the audit were released, it could harm Nova Scotia Power's credit rating and drive up costs for its customers.

"Wrongful public defamation of NSPI and its management by the board's auditor will result in a negative reaction by analysts, rating agencies and capital markets," Bennett says.

"That negative reaction could readily drive up borrowing costs, and thus increase costs to rate payers under the cost recovery model of rate making in Nova Scotia."

Progressive Conservative Leader Jamie Baillie said he believes that argument is weak.

"As long as that information is blacked out, there's no way any of us can tell if that concern has any validity or not," he said.

"We have the Utility and Review Board to make sure that only customer specific information is blacked out. But let's be clear, a lot more information than that is being withheld.

"If there is something wrong with the audit of Liberty Group, then it is Liberty Group that will be embarrassed, not Nova Scotia Power, so they should let the chips fall where they may."

Baillie, whose caucus asked the Utility and Review Board to review Nova Scotia Power's request to keep portions of the audit redacted, sent a letter to the board Wednesday further outlining his party's position.

The Liberty Consulting Group did not return requests for comment. Nova Scotia Power declined an interview request.

NDP Premier Darrell Dexter has said if the audit is accurate, then "every cent" should be immediately repaid to Nova Scotia Power's customers.

Nova Scotia Power has asked the Utility and Review Board to approve a three per cent rate increase for 2013 and 2014. Rene Gallant, vice-president of regulatory affairs for Nova Scotia Power, has said the company may be forced to lower power bills by about 1.5 per cent if the provincial regulator accepts the audit's findings.

The audit was commissioned by the Utility and Review Board, which will hold a hearing on Aug. 30 to determine whether information contained in the audit should remain blacked out.

The board will also hold a hearing in September to discuss the proposed rate increases.