The Nova Scotia Utility and Review Board has wrapped public hearings pitting the interests of Nova Scotia Power customers squarely against shareholders of the utility's parent company, Emera.

Regulators are grappling with whether they can reduce a guaranteed rate of return for Emera without finding it acted imprudently.

The specially created Emera subsidiary, NSP Maritime Link, is seeking to recover costs from ratepayers for the $1.5-billion Maritime Link transmission system, which will carry electricity across Newfoundland and via subsea cable into Nova Scotia.

The Maritime Link will be ready to receive electricity at the end of 2017, on time and on budget. But construction delays at Muskrat Falls in Labrador by Nalcor mean the electricity for which the Maritime Link is being built won't flow until 2020.

Consultants for the utility and review board say Nova Scotia Power customers should not have to pay Emera a guaranteed nine per cent return on equity in 2018 and 2019 when the Maritime Link is not meeting the approved terms.

Customers not getting what was promised

"The fundamental deal is a power deal and ratepayers are not getting the power they were promised," said board consultant Pelino Colaiacovo, managing director of Morrison Park Advisors.

Colaiacovo and other participants urged regulators to reduce that rate of return so Emera pays a portion of the delay.

Emera argued Tuesday that Nova Scotia Power would be damaged in financial markets if regulators revisit a return on equity approved in 2013.

Colaiacovo downplayed the risk.

"We find it hard to believe that is going to cause a significant reaction on Nova Scotia Power Inc.'s access to capital for a normal, regulated, day-to-day utility business," he said.

Why the case is complicated

Colaiacovo acknowledged the Maritime Link is a complicated financial transaction.

To meet the terms of a federal loan guarantee, he said it must produce a cash flow from Nova Scotia Power ratepayers of $80 million a year in 2018 and 2019.

When loan repayments start in 2020, that jumps to $110 million and close to $140 million in 2021.

To address concerns, on the eve of hearings, Emera offered to delay collecting $51 million per year in depreciation in 2018 and 2019, with the savings credited to power customer bills.

Colaiacovo proposed putting any reduction in the return on equity in a variance account which Nova Scotia Power could earn back on future projects.

Emera responds to 'boondoogle'

The hearings also produced revelations on the relations between Emera and its partner Nalcor.

NSP Maritime Link chief executive Rick Janega was pressed by regulators for a response to Nalcor president Stan Marshall's dismal assessment of the Muskrat Falls project in June 2016.

"Mr. Marshall called it a 'boondoggle,'" said board chair Peter Gurnham. "Was he wrong?"

"I don't believe it's a boondoggle. I hate to use the term because it's a large and complex project," Janega responded.

Janega also said Emera was unhappy when Marshall's predecessor at Nalcor, Ed Martin, did not formally notify Emera of potential delays.

"I do state I was disappointed with the means by which we received that information. We expressed that to them in a CEO-to-CEO meeting," said Janega.

NSP Maritime Link would not provide any information about the meeting.

The Nova Scotia Utility and Review Board said final arguments will be made next month.