News release

NSPI to Pay Fairer Share of Taxes

Service Nova Scotia and Municipal Relations (Oct. 2000 - March 2014)

SERVICE N.S./MUNICIPAL RELATIONS--NSPI to Pay Fairer Share of Taxes


A long-standing demand from municipalities for Nova Scotia Power Inc. to pay a fairer share of municipal property taxes will soon be realized. The Nova Scotia government announced the change today, March 21.

Beginning 2002-03, NSPI will pay $26.4 million to the province's 55 municipalities, an increase of $10.7 million over the previously scheduled 2002-03 payment.

"All property owners, whether corporations or individuals, are expected to pay municipal property taxes," said Angus MacIsaac, Minister of Service Nova Scotia and Municipal Relations. "With this increase, Nova Scotia Power will be paying a higher, but also a fairer, share of municipal taxes."

The revenue will be passed by the province directly to municipalities, many of which, especially towns, are struggling to provide adequate public services to their residents.

A portion -- $8.25 million -- of the increase will be used to top up the province's municipal equalization program. This revenue will be added to the government's existing equalization pool and will be paid to municipalities based on a new equalization formula agreed to by the municipalities and the province.

Under the new equalization program, no municipality will receive less than they received this year. Some, especially towns, will receive substantially more.

The new formula recognizes better than the current model that towns generally have higher costs, especially for roads, than do rural municipalities, whose roads are maintained by the province. As a result, towns will receive an additional $50,000 each to help with operating costs.

The minister noted that while the equalization change is positive news for municipalities, they will be affected financially by the upcoming provincial budget.

"I want to emphasize that municipalities will not be spared the impact of the upcoming provincial budget and next week's fee increase announcement," he said. "Municipal education costs, for one, will be going up. The challenge of restoring fiscal stability to Nova Scotia is a daunting one and municipalities will be part of the solution.

"That said, municipalities collectively will still be much better off in the coming fiscal year as a result of today's announcement and government's ongoing commitment to take on the full $44 million municipal cost of social services."

This fulfills the government's commitment to help struggling municipalities following the failure of the most recent fiscal exchange talks with the Union of Nova Scotia Municipalities. Another $2.4 million will be paid each year to municipalities like Trenton, Annapolis Royal and Cape Breton Regional that are home to major NSPI properties.

The mayor of Annapolis Royal said his town will be much better off with this new revenue.

"This is a great day for residents of Annapolis Royal," said John Kinsella. "With this additional revenue, town services to our residents are more secure. I'm very pleased with today's news. I want to commend Mr. MacIsaac for the leadership he has shown in addressing the longstanding NSPI taxation and municipal equalization issues."

Currently, NSPI pays municipalities a grant of about $5.7 million in lieu of property taxes. The company also pays $8 million this fiscal year to offset municipal HST costs, for a total of $13.7 million. This amount was scheduled to increase to $15.7 million in 2002-03.

By contrast, New Brunswick Power, a comparably sized utility, pays more than $30 million to that province's municipalities.

NSPI is applying to the Utilities Review Board for a rate increase. Mr. MacIsaac said NSPI is being advised now of the government's intentions, so that the company may factor this information into its application.

"Our intention was to ensure NSPI paid a fairer share of municipal property taxes, but not so high that it affected Nova Scotia's economic competitiveness."

Mr. MacIsaac said it will be up to NSPI and the Nova Scotia Utility and Review Board to determine if the increase in property taxes will result in an increase in electricity rates.

"The tax rate increase amounts to about 1 per cent of total annual company revenues," he said. "Whether this new cost will be absorbed through belt-tightening, a reduced return on investment for company shareholders or passed on to consumers remains to be seen."

Mr. MacIsaac said legislation to effect the changes in NSPI taxation and municipal equalization will be introduced in the spring session of the House of Assembly.

A table showing the revenue impact on each municipality is available on the department's Web site at www.gov.ns.ca/snsmr/muns/info/impact.stm .