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  • Maurice McTernan, Guest Blogger

A financial concern for all Nova Scotians

This project should be of considerable concern to all Nova Scotians. Completely missing from the information sparingly doled-out thus far, is cost. Not the capitol cost, but rather the cost per kilowatt hour (KWH) of electricity the windmills will generate. When that topic arises, those proposing the project glossily suggests a few cents more than other sources, but they remain quite vague about what jurisdiction they are using as their point of comparison. Is it a few cents more per KWH than Nova Scotia Power at $0.16, or a few cents more than, say, Bermuda at $0.47 or Germany (the highest in the world) at $0.49 per KWH? The continued hedging speaks volumes, of course.

Last we checked, wind is free. Therefore the cost of the electricity it creates should be fairly easy to calculate - no higher mathematics required; equipment cost, plus land-lease cost, plus operating cost, plus maintenance cost, plus a reasonable profit margin theoretically equals retail cost - at least in the real world. What responsible Government Department, Crown Agency and yes, private company, would contemplate any large expenditure without benefit of a fully documented (and independently verified) cost/benefit analysis? All involved have surely done their own. Why then is cost such a mystery?

Nova Scotians will be saddled with the cost of Higgins Mountain and similar projects for many decades to come. It seems only prudent that our Government, on our behalf, should be negotiating a fixed KWH rate as part of any agreement, say a maximum of $0.10 above the KWH cost of other sources for the life of the project, with increases tied to the national inflation rate.

The contract must also include a cost, independently verified, to remove the equipment at the end of its useful life, in the form of a irrevocable bond or escrow fund. That amount should also increase over time, tied to the national rate of inflation. Too often taxpayers are saddled with the massive costs of cleanup when corporations simply disappear, after decades of milking the public purse.

Public-private partnerships are particularly prone to unpredictable outcomes; huge cost overruns, skyrocketing profit margins and huge decommissioning bills. Examples of taxpayer abuses are certainly not difficult to find; some argue they are more the rule than the exception. Governments turn to these partnerships so it does not look like they are adding to public debt. Corporations love them because the contracts are vague and ambiguous. They are almost always a license to print money.

Who benefits here? As they say on television, follow the money. The proponent of the Higgins Mountain Wind Farm project is a consortium, the majority of whom are based outside the Province. They contend it is an equal partnership, however that assertion simply defies credibility. The partnership includes Elemental Energy Renewables Inc. of British Columbia, 3G Energy Corp of Ontario and Stevens Wind Ltd. of Nova Scotia, arguably the 'token' local component. If successful, the Consortium will enjoy exclusive Power Purchase Agreements from Nova Scotia Power Inc.. There is a lot of money at stake, now and especially in the future. But make no mistake, the bulk of it is not staying here.

To make dubious deals more palatable there is always considerable bluster about 'local benefits'. This one is no exception. But one need not be a trained economist to see that most of the 'benefit' is exaggerated. With few exceptions the skills and equipment involved in this type of construction are very specialized and operating the system requires only a small cadre of highly-trained people. Perhaps some snow clearing opportunities.

By association, the proposal is not without its own background political intrigue. Below is a link to a recent Halifax Examiner article explaining, or at least attempting to explain, the complex, often opaque nature of public/private incentives. The ongoing saga clearly demonstrates how well-meaning initiatives can go horribly wrong.

WARNING: Do not click this link if you are prone to rage or high blood pressure.

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