Bowater Mersey had agreement to get Mersey Hydro electricity at a better rate, but had to be using the power for making paper. When the province took over the assets and liabilities in December, this deal was still active.
Since the mill is shut down, it reduced the amount of electricity needed. Nova Scotia Power put that power back into the system, and the rate for the company would change as per the agreement.
That cost was calculated by Nova Scotia Power putting the renewable power back into the system, and comparing it to the next lowest costs source of power generation. Depending on if it was higher or lower would depend on a debit or credit.
The worst-case scenario would be a debit every month for the next year, of $200,000 to $300,000, according to Jeff Lawson, president of ReNova Scotia Bioenergy, the former Bowater Mersey Paper Co.
The province officially took ownership of the mill on Dec. 10, so a power bill has not come due yet. Lawson says based on their projections they expect a credit for December.
The costs will not be on top of what they have budgeted, adds Lawson. He says in their operational budget they factored in the costs of transitioning the site, and a 12-month debit on the power bill was factored in.
The fluctuating cost deal will end in a year however.
"Now that the province has the plant, they are transforming the mill site into a Bioenergy Centre of excellence"
The province inherited the arrangement that this rate fluctuation falls under when it took over ownership of the site. Since the mill is no longer being used to make paper, the province gave the require 12 months' notice of permanent closure.