Pacific West expects to save C$32M under proposed deal with Nova Scotia Power, says approval necessary for former NewPage Port Hawkesbury paper mill to be economically viable

Diane Keaton

LOS ANGELES , June 5, 2012 (Industry Intelligence) – During its first year of operating the former NewPage Port Hawkesbury paper mill, Pacific West Commercial Corp. expects to save about C$32 million in electrical expenses compared with the current power rate, if its deal with Nova Scotia Power Inc. is approved, the Cape Breton Post reported on June 4.

Last week Pacific West and Nova Scotia Power filed documents with the Nova Scotia Utility and Review Board that provided details of their proposal.

On July 16, regulators will consider the proposed agreement, which must also be approved by Revenue Canada.

Pacific West, a unit of Stern Partners Inc. in Vancouver, British Columbia, said in its filings that if the deal is not approved, the mill would not be economically viable. The mill has been shuttered since September and is in creditor protection.

The proposed limited partnership is aimed at protecting NewPage assets from potential claims of creditors once the mill restarts and also to allow the general partner to oversee the day-to-day operations, according to the filings.

Pacific West has said it would restart only the supercalendered (SC) paper machine, and not the newsprint machine, though there are no plans at the moment to dismantle it.

The SC operation is expected to use about 1 million megawatt hours of electricity per year, which would result in a $2-million contribution to Nova Scotia Power’s fixed costs. Pacific West would also pay fuel costs.

Once Nova Scotia Power’s biomass facility at the mill begins operations next year, 24% of the steam generated by its boiler would be provided to the mill, and in exchange, Nova Scotia Power would receive annual dividends of about $4.72 million.

Both Pacific West and Nova Scotia Power have said that electricity bills for other ratepayers will not increase as a result of their proposed deal.

Pacific West is also discussing access to Crown land with the province of Nova Scotia.

Union workers recently agreed to a 10-year contract regarding the Port Hawkesbury mill that contains significant concessions and that would also reduce the workforce by more than half.

The primary source of this article is the Cape Breton Post, Sydney, Nova Scotia, on June 4, 2012.

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