TC • Media
POINT TUPPER — The province’s Utility and Review Board could remove the final hurdle to the reopening of the idled NewPage paper mill under new owner Pacific West Commercial Corp. this week.
If it finds that the amended load-retention electrical rate filing is “in substance the same commercial arrangement for ratepayers in terms of benefits” that the board approved in August — Pacific West is arguing that it is — then it could provide an extradited ruling by Friday. That is the day the mill’s protection from creditors is due to come to an end and when Pacific West is set to assume ownership of the Point Tupper mill.
If the board finds that it is not the same commercial arrangement, however, then a full public hearing would be required, which could derail Pacific West’s plans to begin producing supercalendered paper for the magazine and catalogue market in early October.
If the board decides that it won’t be able to grant final approval by Friday, Pacific West is asking that approval be granted on an interim basis until a final ruling can be issued.
“If, however, the board believes it is unable to issue a final order by then, (Pacific West Commercial Corp.) would consider potentially closing the transaction and commencing resumption of the mill’s operations on the basis of an interim approval,” the filing states.
The August decision by the board granting Pacific West a reduced load-retention power rate from Nova Scotia Power was conditional on the Canada Revenue Agency granting an advanced tax ruling, which has since been denied. Pacific West is now seeking to have that condition lifted.
Pacific West had said that approval was necessary to restart the mill. When it wasn’t received, it entered into negotiations with the province to change the terms of the $124.5-million assistance package that it had offered the company. After failing to come to an agreement, Pacific West announced Friday evening it was walking away from the $33-million purchase of the mill and it wouldn’t reopen. The province and the company subsequently reached a deal on Saturday.
The expedited ruling is needed because the costs of keeping the mill in hot idle are continuing to mount, the filing says, the court-approved stay of proceedings under the Companies’ Creditors Arrangement act is set to expire Friday and, most importantly, the mill must start producing paper within the next few weeks in order to take orders for 2013.
“This is critical to a successful restart of the mill,” it states.
The original plan was for Nova Scotia Power to take a 30 per cent ownership stake in the mill. The changes Pacific West is seeking to the rate approval include removing all references to NSPI taking an ownership interest in the partnership that will run the mill and any related references to dividend payments.
The 7.5-year term of the arrangement and the ability to reopen the rate after five years if it doesn’t contribute at least $20 million to NSPI fixed costs in that period would essentially remain the same, Pacific West’s UARB filing states. Its pricing provisions and the contribution to NSPI’s fixed costs would also remain mostly the same.
Pacific West will make 18 per cent of earnings before tax available to make annual upside payments to a maximum of $4 per megawatt hour beginning in the 2013 fiscal year. The percentage of earnings is based on the amount NSPI could have potentially made under the original deal.
Board staff have asked Pacific West to respond to a number of questions, including the request to cap upside payments.
“This significantly increases the risk the $20-million minimum contribution will not be achieved. Please explain how this benefits NSPI ratepayers in the same manner as the original application?” the board asked.
The Pacific West filing noted that in 2012 the mill be in ramp-up mode to begin filling 2013 orders, and they don’t expect the mill to make money in its first year of operation.
Anyone wanting to comment on the application must do so by Thursday at 10 a.m. NSPI has been asked to clarify its position by Wednesday morning because it’s not a party to the revised application as it was originally.