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N.S. Energy Reform (2024) Act: 5 Key Electricity Sector Changes

Published:

August 22, 2024

Author(s):

• Lucia Westin-Eastaugh
• David MacDougall
• Alexandra Gosse

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In early April 2024, Nova Scotia’s Energy Reform (2024) Act (Bill 404) passed, marking the beginning of a new direction for Nova Scotia’s energy system. To date, only one section (adding electrical inspection timelines as a possible public utility performance standard) is in force. The balance of its robust changes are expected to come into force in the near future, ushering in significant changes for Nova Scotia’s electricity sector – including both “traditional” electricity generators and existing and renewable energy and energy storage proponents like onshore and offshore wind and green hydrogen. Here are five key changes that will take effect at that time.

1. Statutory Amendments and New Acts

The Act establishes 2 new statutes:

• The Energy and Regulatory Boards Act.
• The More Access to Energy Act.

These new Acts focus on specialization, competition, environmental, and reliability considerations. In line with these changes, the Energy Reform (2024) Act also makes substantive amendments to the:

• Nova Scotia Electricity Act.
• Nova Scotia Gas Distribution Act.
• Nova Scotia Public Utilities Act.
• Nova Scotia Power Privatization Act.

2. Specialized Energy Board

Over the past few years, the provincial government has put special emphasis on developing the province’s energy potential (both for environmental and economic reasons) and improving services and reducing energy costs for Nova Scotian residents and businesses. With the Energy Reform (2024) Act, the Province takes further steps toward this goal by creating a board with specialization in energy regulatory matters.

Two Boards. The new Energy and Regulatory Boards Act will effectively split the current Utility and Review Board (UARB) into two entities:

• One to deal with energy matters (the Energy Board).
• One to deal with all other matters that previously fell within the UARBs’ jurisdiction (the Regulatory and Appeals Board).

The two boards will have one Chair, and each will have its own Vice-Chair. The chair of the current UARB will take on the role of Chair of the new Boards, while the vice-chair of the current UARB will take on the role of vice-chair of the Energy Board. The Regulations created under the UARB statute remain in force under the new Energy and Regulatory Boards Act, suggesting the procedural rules for matters before the Boards will likely remain the same as for the UARB.

Board Recommendations. However, the Energy and Regulatory Boards Act allows the Minister of Natural Resources and Renewables, when considering changes in legal or political direction related to public utilities or the integrated electricity system as a whole, to submit the proposed change to the Energy Board for its recommendations to protect the interests of the public and the applicable public utility. This would allow the Minister, in collaboration with the energy regulator, to make informed changes for the further development of Nova Scotia’s energy systems.

Board Direction. The Energy and Regulatory Boards Act also provides the Energy Board with additional direction in carrying out its mandate. For example, it requires that, in determining matters over which it has authority, the Energy Board must consider the extent to which the matter:

• Supports competition and innovation in the provision of energy resources in the Province.
• Supports the development of a competitive electricity market.
• Ensures the provision of safe, secure, reliable and economical energy supply in the Province.
• Supports sustainable development and sustainable prosperity.

The government retains the ability to provide further direction by allowing the Governor in Council to add to these considerations through regulation. Further, the Energy Board’s decisions must be consistent with the purpose of the Energy and Regulatory Boards Act, the More Access to Energy Act and their regulations. Contextual analysis will be required in this regard.

3. Promotion of Competition 

Two of the stated purposes of the More Access to Energy Act relate to increased competition:

• Seeking to “increase competition and innovation in the Provine’s energy sector”.
• “[P]rovide for competitive procurement practices for new energy-system resources”.

The More Access to Energy Act largely sets out to achieve these (and its other) goals by establishing a new Nova Scotia Independent Energy System Operator (IESO). The IESO will direct operations of transmission systems pursuant to agreements with owners and operators of transmission systems in the province (the “IESO-controlled grid”), a role currently filled by the Nova Scotia Power System Operator. Amongst many other responsibilities, the new IESO will also be tasked with:

• Responsibility for the development of transmission tariffs (for approval by the Energy Board).
• Establishing market rules governing the IESO-controlled grid and actors on it.
• Facilitating the operation of a competitive electricity market.
• Conducting procurement for energy resources.

4. Environmental Focus

The Energy Reform (2024) Act also aims to integrate additional environmental considerations into Nova Scotia’s energy regulatory system through various mechanisms, including:

Sustainability. One of the stated purposes of the new More Access to Energy Act is to “support the sustainable development, sustainable prosperity, energy efficiency and greenhouse gas emissions reduction goals of the Province articulated in the Environmental goals and Climate Change Reduction Act”. This is particularly relevant since the Energy Board will be required to make decisions consistent with the purpose of this Act. The Energy Reform (2024) Act incorporates the ideas of “sustainable development” (as defined in the Environment Act) and “sustainable prosperity” (as defined in the Environmental Goals and Climate Change Reduction Act):

• “[S]ustainable development” means development that meets the needs of the present generation without compromising the ability of future generations to meet their own needs.
• “[S]ustainable prosperity” means prosperity where economic growth, environmental stewardship and social responsibility are integrated and recognized as being interconnected.

The Energy Board, when approving rates, tolls, charges, tariffs and capital applications or any other matter over which it has authority must consider the extent to which they support sustainable development and sustainable prosperity.

Electricity Act PPAs. The Act makes changes to improve clarity around, and financial compensation for, curtailment for generation facilities that have received a power-purchase agreement (PPA) under a procurement initiated under section 4B of the Electricity Act (which addresses the procurement of renewable low-impact electricity or energy storage). These statutory clarifications, to be set out in the new section 4E of the Electricity Act, directly affect renewable electricity generators and energy storage in the Province, both of which are needed for the Province to reach its renewable energy goals. For this new Section 4E, “curtailment” will be defined as “based on instruction sent to a generation facility from the system operator, the decrease or cessation of the generation facility’s generation output”. Pursuant to that section, generally:

• The purchaser of the facility’s generation output will compensate the facility at the rate set out in the power purchase agreement between them where curtailment exceeds 5% of a generation facility’s total energy bid.
• There will be no compensation for any curtailment below 5% of the total energy bid, where the facility isn’t generating electricity when the system operator instructed the generator to stop/decrease output or where the system operator’s request was due to “an unforeseeable emergency or force majeure event”.

Further regulatory certainty is provided to the curtailment issue by making the system operator responsible for determination of what constitutes an emergency or force majeure event and allowing curtailment disputes to be appealed to the Energy Board.

Policy Guidelines. The amendments to the Public Utilities Act provide the Minister with the authority to issue policy guidelines concerning objectives set out in its regulations. The Energy Board is charged with implementing these policy guidelines. These guidelines provide flexibility in the Minister’s ability to influence regulation of public utilities.

Nuclear Power. The Energy Reform (2024) Act also removes the prohibition against Nova Scotia Power Inc.’s construction of a nuclear power plant. 

5. Increased System Reliability

The Energy Reform (2024) Act increases the Energy Board’s ability to address energy reliability concerns within the Nova Scotia electricity context. One of the express purposes of the new More Access to Energy Act is to “ensure the provision of a safe, secure, reliable and economical energy supply in the Province.”

Energy Board Powers. Reliability is addressed through expanding powers of the new Energy Board.  First, the Energy Board is required to make decisions consistent with the purposes of the More Access to Energy Act, which includes the reliability consideration. The Energy Board is also outright required to give appropriate consideration to ensuring the provision of “safe, secure, reliable and economical energy supply in the Province” when approving rates, tolls, charges, tariffs, capital applications or any other matter over which it has authority. Upon application to it, the Energy Board will be authorized to approve, modify or retire reliability standards. The Energy Board will also be authorized to monitor, assess, enforce compliance with, and make orders with respect to, approved reliability standards and has the power to issue certain interim licences with respect to the operation of the Provincial transmission system where required “to ensure the reliable supply of electricity”.

IESO. The More Access to Energy Act also gives the IESO direction with respect to reliability. Some of the objects of the new IESO relate directly to reliability, including to:

• Establish and enforce reliability standards for the province’s integrated electricity system.
• Maintain the reliability of the bulk electricity system.
• Participate in the development of standards relating to the reliability of the transmission system.
• Undertake power system planning responsibilities to ensure the reliability of the bulk electricity system for present and future needs, as well as for the efficient operation of a competitive market.
• Forecast reliability of electricity resources for the Province.
• Collect and make public information relating to the reliability of the integrated electricity system to meet the Province’s electricity needs.

The IESO will also have authority to give directions for the purpose of maintaining the reliability of electricity service or the IESO-controlled grid.

Transmitters. Meanwhile, transmitters are required to participate in the development of reliability standards for the transmission system and to comply with procedures, directions and orders of the IESO to ensure such reliability.

Regulations. Finally, under the More Access to Energy Act, the Governor in Council will be granted authority to make regulations respecting reliability standards.

Please contact your McInnes Cooper lawyer or any member of our Energy & Natural Resources Team @ McInnes Cooper to discuss how you can be ready for the N.S. Energy Reform (2024) Act.

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