HALIFAX, Nov. 21 /CNW/ - Nova Scotia Power Inc. (NSPI) announced today that it has reached an agreement with its supplier on pricing for natural gas under an existing long-term natural gas purchase agreement. As a result of the agreement, NSPI will lower its 2006 fuel forecast by $22 million. This will reduce the Company's 2006 rate application from an average increase of approximately 15 per cent to approximately 13 per cent. NSPI has filed supplementary evidence with its regulator, the Nova Scotia Utility and Review Board (UARB). "This agreement is good news for Nova Scotia Power customers," said Chris Huskilson, President and Chief Executive Officer of Nova Scotia Power. "Given market conditions similar to today, the customer benefits from this agreement will continue for several years." The financial benefits of the agreement will vary based on world energy prices. Nova Scotia Power will propose to the UARB that should its 2006 fuel costs be lower (as a result of this agreement) than the amount the regulator ultimately provides for in the rate decision, the difference will be refunded or credited to customers. The agreement provides NSPI with natural gas at a discount to current world market prices. By having the option to resell the gas, NSPI and its customers can gain financial benefit. The contract - which began in 2000 and runs until 2010 - calls for up to approximately 60 MMBtus of natural gas per day to be supplied to Nova Scotia Power. The contract was subject to a price re-determination on November 1, 2004. With both Nova Scotia Power and its supplier unable to come to terms last year, the matter was referred to binding arbitration. The two companies reached agreement in advance of any arbitration decision. The UARB has been provided with details of the agreement which is confidential for competitive reasons. "This agreement is more than a year in the making," added Mr. Huskilson. "Customers are being asked to cover skyrocketing fuel costs - it's only fair they receive the benefit of this fuel contract gain by Nova Scotia Power." This agreement also results in a favourable adjustment to NSPI's fuel expense for 2005. Consequently, as a result of this agreement and other factors, including warmer weather in the fourth quarter, NSPI has revised its financial forecast earnings for 2005 and now expects earnings to be approximately $15-20 million lower compared to 2004. Nova Scotia Power Inc. is a wholly-owned subsidiary of Emera (TSX-EMA)