Ottawa 'very committed' to Atlantic Loop electricity mega project despite pause

The federal government is confident the Atlantic Loop electricity corridor will proceed despite the parent company of Nova Scotia Power — Emera — hitting pause on the proposed multibillion-dollar mega project.

"If they decide to press pause, whatever that means for them, it doesn't stop engineering work and financial conversations from taking place with other utilities," Intergovernmental Affairs Minister Dominic LeBlanc said in an interview Wednesday.

LeBlanc said negotiations are ongoing "to come to what we hope can be an agreement in principle in the first quarter of 2023."

"We remain very committed as a national government to the project. We think it's very much part of the clean energy future of Atlantic Canada."

The Atlantic Loop would enable the delivery of hydroelectricity from Labrador and Quebec into Maritime provinces that rely mostly on fossil fuels for electricity.

In Nova Scotia, the Loop is seen as key to meeting the legislated requirement to close all coal-fired electricity generating plants by 2030.

But the project's future became less clear last month when the CEO of Emera, Scott Balfour, told CBC News the company was putting the brakes on the Atlantic Loop because of electricity rate caps introduced in Nova Scotia by the Houston government.

The rate cap legislation, which also caps profits and limits spending, passed this week.

"That's one of the first projects that we've said to the team that, you know, we have to push pause on for now," Balfour said Oct. 19.

"There isn't enough money in order to continue to pursue that, let alone the ability for us to go to the investment community and say, you know, 'Please invest more money in Nova Scotia,' in order to enable that kind of project of that kind of scale."

Later this week, Emera will release what projects it intends to cut because of the Nova Scotia Power rate cap when it releases its three-year capital spending plan.

LeBlanc said he's talked to Premier Tim Houston about Nova Scotia's "very legitimate concerns around electricity and power rates."

"I totally understand that concern of his government, and he and his utility will obviously find a way through that," said LeBlanc.

LeBlanc's message was to get on with it.

"Where the government of Canada is prepared to be a significant partner in this project, the failure to take this opportunity does not augur well for power rates either. So the problem is not going to go away if people stick their heads in the sand."

Natural Resources Minister Tory Rushton, who introduced the Nova Scotia Power rate cap, welcomed LeBlanc's vote of confidence in the project since federal spending is needed to make it happen.

"The biggest portion of funding that we're going to be looking for is from the federal government. It's a capital project. So I'm certainly hopeful that this is encouraging words for Emera and Nova Scotia Power to stay at the table, which they were last week," Rushton said in an interview Wednesday. 

LeBlanc would not say how the federal government would fund the Atlantic Loop.

He said the Canada Infrastructure Bank and the Department of Finance Canada are part of discussions.

"I think a project of this size and in the rather compressed timelines that we recognize it faces, we need to look at those financial structures in a creative and innovative way. So I would expect that a whole series of options would be part of those conversations."

LeBlanc said Emera is "obviously a key player, and Emera and Nova Scotia have to be part of the project for it to work," but relative to the overall scale of the Atlantic Loop, "Emera was not going to be one of the most significant potential partners in terms of capital investment."

When Emera publicly demurred on the project, Houston downplayed the prospects, saying it was only one way to reach renewable energy targets.

"The Loop discussions have been dragging on. There's always been lots of questions. The federal government has been cagey on how much they will fund, whether they will fund it," Houston said Oct. 21.

LeBlanc said it was a legitimate concern, but urged Houston to be patient.

"The scale of the project is enormous. The government of Canada is not in the electricity transmission business. So we need to rely on information that we're getting from provincial utilities, provincial energy departments. The good news is we're getting that information," LeBlanc said.

"Once we have that information from the provinces and their utilities, I'll be in that position to go to my cabinet colleagues and answer those very precise and legitimate questions that the premiers have in terms of the nature of the federal contribution, the structure of the federal contribution and of course the quantum. That's what everybody wants."

In a statement Wednesday in response to LeBlanc, Emera said the Atlantic Loop is a key part of the best, most effective path to retire coal plants in Nova Scotia — but one that requires federal support.

"The cost constraints, investment restrictions and increased investment risks imposed on Nova Scotia Power by Bill 212 are real. We know the Loop can only happen with the help of the federal government so our current situation is a challenge. We are working hard to try to see our way through that," spokesperson Dina Bartolacci Seely said in the statement to CBC News.