01/25/2013 12:06 EST | Updated 03/27/2013 05:12 EDT

Muskrat Falls would mean initial increase to Nova Scotians' power bills: Emera

HALIFAX - Nova Scotia consumers were given their first estimate Friday of what the Muskrat Falls hydroelectric project in Labrador could ultimately mean for their power bills.

Emera Inc. (TSX:EMA) president and CEO Chris Huskilson said the project would add about $1.50 per month to the average household's power bill over the first five years.

The head of the parent company of Nova Scotia Power said rates would then remain stable or decline over the next 30 years.

The company said the calculation considered the costs of the subsea cable portion of the project — known as the Maritime Link — and projected savings because of a reduced reliance on coal-fired electrical generation.

Emera is expected to file an application for the project's approval before the Nova Scotia Utility and Review Board (UARB) on Monday.

"I want to be clear though, that the application going to the UARB Monday is not an application to recover the costs of the Maritime Link through Nova Scotia Power rates," Huskilson told the Maritime Energy Association.

"That will happen through a separate application to the UARB in 2017, once the Maritime Link is reaching completion."

Huskilson said the application before the regulator would seek approval of the capital costs of the project, estimated to be $1.52 billion for the Maritime Link with a variance of up to $60 million for the entire $7.7-billion Muskrat Falls project.

After the speech, Huskilson said the cost estimates were based on engineering work that had already been done and on the fact that costs are already locked in by Newfoundland and Labrador, where the project was approved last month.

"Because of the fact that Nalcor in December sanctioned their project, that means that 80 per cent of our costs are now absolutely known, Huskilson said. "And then it is the 20 per cent that we now are working on, and at this point, we have those to a 97 per cent confidence level."

Huskilson said Emera would be responsible for 20 per cent of the cost of the overall project while Newfoundland Crown utility Nalcor would be responsible for the remaining 80 per cent.

Emera will get 20 per cent of the project's energy, or about one terawatt. Huskilson said that would eventually be supplemented by an additional two terawatts in order to provide the lowest possible power rates for customers.

Huskilson was non-commital on whether the utility would go back to the provincial regulator if cost overruns exceeded estimates. He said its ability to do so would be determined by the utility and review board in its upcoming hearings.

Liberal energy critic Andrew Younger said the big question looming over the eventual cost of power rates is the impact of significant cost overruns.

"Will they come back to the utility and review board and apply to have those covered as extraordinary costs?" asked Younger.

"We don't know the answer to that and that's another one of the reasons why we actually don't truly know what the cost to ratepayers will be in the end."

Progressive Conservative Leader Jamie Baillie said any cost overruns should not be passed on to consumers.

"The risk of cost overruns should be borne by Emera and not by ratepayers and we will make that case on behalf of ratepayers before the UARB," said Baillie.