In a recent interview the CEO of Emera, Scott Balfour, claims he is worried about “the investment climate here in Nova Scotia” due to the Premier's decision to limit electricity rate increases at 1.8% over the next two years.
Emera, the parent company of Nova Scotia Power, applied for permission to the public utilities board for a hike of 10.2%. This request to increase Nova Scotia’s electricity rates would be in addition to fuel surcharges. As a result of the Premier’s decision, Emera’s CEO said that the “unavoidable conclusion” is that Nova Scotia Power is a less attractive investment for Emera.
Perhaps Mr. Balfour need be reminded that Emera would not exist if it were not for their Nova Scotian customers. NS Power Holdings Inc. was renamed Emera on July 17, 2000. Since that time, Emera has benefited from the strong cash flows and financial strength of their assets in Nova Scotia. Since being renamed, Emera went on to acquire other companies and utilities including Tampa Electric, Emera Caribbean and New Mexico Gas. Today, Nova Scotia Power, which is owned by Emera, is essentially a monopoly with little to no competition, and we have among the highest electricity rates in the country. Of the ten provinces, we have the third highest rates, higher than New Brunswick, Newfoundland, Ontario, Quebec, Manitoba, Alberta and British Columbia - with only PEI and Saskatchewan having higher electricity rates.
It might be worth noting that Emera’s annual dividend increases over the past few years have been 4-5 percent. In a news release dated September 22, 2022, Emera indicated this trend will continue, stating: “Today’s dividend increase and the extension of our dividend growth guidance of 4 to 5 percent through 2025 reflect the confidence we have in our portfolio…” In other words, NS Power customers are being asked to pay an additional 10.2 percent for their electricity, while at the same time Emera announces its plan to increase shareholder dividends by approximately 10 percent over the same two year period. One would wonder if Emera is aware of the sky high inflation that is impacting many Nova Scotians who are struggling to buy food, school supplies for their children, and gas to fuel their cars.
However, Emera shareholders are being treated quite well. Over the past 15 years shareholders have enjoyed a 438 percent return on their investment when factoring in share price appreciation and dividends paid. To give some context, this return was significantly higher than the returns available on the broader S&P/TSX Composite which rose 105 percent during the same period.
Scott Balfour’s compensation totaled $8.3 million last year compared to the $3 million payout 10 years ago to Emera’s CEO. Additionally, compensation to the board of directors of Emera totaled $3.2 million last year, rising $1.4 million over the past 10 years.
It is clearly evident from these numbers that Nova Scotians have indeed treated Emera, its shareholders and executives exceedingly well. At a time when many in our province are struggling, it’s troubling to read that in reaction to Premier Houston’s courageous decision, Emera will be reducing its equity and investment in the province and instead, in the words of Mr. Balfour, they “will divert that capital to our other operations.”
When loading up Emera's website one notes some key words placed prominently, including: Climate Commitment, Sustainability & ESG and Community, along with a picture of a windmill. Yet earlier in the year, Nova Scotia Power publicly took a position that it would implement a system access charge of $8 per month per kilowatt hour of installed capacity. Essentially, the monopoly was proposing to charge customers utilizing solar power higher bills, effectively penalizing these forward looking Nova Scotians. Once again, the Premier intervened to put a halt to this egregious proposal. If Emera actually valued their climate commitment, sustainability & ESG, and their Nova Scotian community, one might think that they would take a different approach.
The Nova Scotia Utilities and Review Board’s role is "to ensure customers receive safe and reliable service at just and reasonable rates.” The very fact that Premier Houston had to halt Emera's excess, speaks loudly that this board is not adequately doing its job.
It is time for Nova Scotians to call on the following to occur:
1) A full review of the cost and effectiveness of The Nova Scotia Utilities and Review Board.
2) Greater accountability at Emera including recent decisions as noted, and review of CEO, executive and board pay.
3) A line by line cost analysis at Emera to identify savings and thereby relieve Nova Scotians through appropriate belt tightening and lower electricity rates.
Our province deserves better.
Wade K. Dawe, Managing Director, Brigus Capital