NOVA SCOTIA POWER CORP.’S (NSP) woes have caught the attention of the province’s politicians. All three provincial parties are now proposing legislation that would significantly limit the publicly traded company’s ability to raise customer rates and reward its senior executives.

The legislative scramble comes in the wake of public relations snafus that have recently plagued NSP, which is owned by Emera Inc. Earlier this year, NSP asked the province’s utility and review board to hike residential customer rates by 3% in each of the next two years. NSP held a posh party for the board of its parent company only a day later. A day after the celebration, NSP announced that its senior management team had received bonus increases – in some cases, of more than 50%.

The public saw red, and politicians acted quickly. The New Democratic Party government of Darrell Dexter introduced legislation that will restrict the costs NSP can recover from its ratepayers. The legislation would also prohibit executive bonuses from being paid, even in part, by ratepayers. Shareholders will have to bear the full brunt of all bonuses. Executive salaries will also be capped at a level similar to that of a deputy minister in the provincial public sector. Amounts beyond that must also be covered by shareholders.

As well, the proposed legislation will require NSP to file multi-year rate applications to cut hearing costs, which can hit $2 million for each hearing. The government also wants to strengthen the utility board’s authority to order independent reviews investigating potential savings in years without a rate hearing. There will be no additional rate increases under the new legislation until at least 2015.

The provincial government says it’s an issue of fairness. Says Energy Minister Charlie Parker: “People are telling me that it’s not fair that executives at NSP have had their bonuses and salaries paid for by ratepayers when there are families struggling to make ends meet, and I agree.”

The other parties are joining in. Liberal Leader Stephen McNeil wants to hold NSP accountable for its lacklustre operations and is calling for performance standards. Under this proposal, failure to meet these standards could cost NSP up to $100,000 a day in fines if problems were avoidable with proper maintenance.

The Liberal party’s proposals, which are unlikely to pass, make it clear that fines won’t come out of the pockets of ratepayers and would go into a special fund to make purchases such as community generators.

Progressive Conservative Leader Jamie Baillie wants to hit NSP on its bottom line. His proposed legislation would take away NSP’s guaranteed 9.2% rate of return, part of a lucrative deal it has with the province.

At present, NSP is conserving its energy and remaining relatively silent as the legislative frenzy unfolds. The power utility has, however, launched a billboard and radio campaign to support its efforts to improve communication and explain why rate hikes are necessary.

The politicians – for now, at least – are turning a deaf ear. IE

© 2012 Investment Executive. All rights reserved.