If a proposed deal negotiated among Nova Scotia Power and consumer advocates and environmental groups is approved by the Utility and Review Board (UARB), residential Nova Scotia Power customer with a power bill of $100 a month could expect to pay $16.40 more each month by January 2024.
Homes that heat with electricity are looking at closer to $23.40 dollar a month increase by 2024. The more electricity a household consumes, the more the bill increases.
The rate increases are detailed in information provided by Nova Scotia Power in a submission to the Utility and Review Board (UARB) yesterday. That submission responds to questions submitted to the company by the province of Nova Scotia and the UARB itself.
The province is asking UARB to reject the deal.
Reliability
The new legislation says 1.8% of the non-fuel portion of the power bill must be spent on improving the reliability of the grid to prevent future power failures. The province asked Nova Scotia Power to submit a list of expenditures about how it plans to achieve that.
The company essentially said it didn’t know and couldn’t provide that information because as the government interfered in the regulatory process, it is still recalibrating budgets for2023 and 2024.
Nova Scotia Power has calculated it will now have $70 million less to work with to strengthen the grid.
The company had planned to increase its tree-trimming budget, hire 60 more power line technicians, and move forward with testing and implementing grid-scale battery storage.
But according to information filed by Nova Scotia Power yesterday, those expenditures are now being re-considered, as well as upgrades to transmission lines and the construction of a long awaited $350 million inter-tie connection between New Brunswick and Nova Scotia. The present interconnection has been at capacity for more than a decade and unless there is an upgrade, the Atlantic Loop remains just a pipedream.
While the amendment passed by the Houston government limits the company to a 1.8% increase on the non-fuel portion of the power bill, the government has zero control over fuel costs, which jumped one-third over budget, partly due to buying higher priced coal and oil when the Muskrat Falls development did not deliver expected volumes of renewable hydro.
Approximately $400 million in fuel costs will be deferred to later years. Consumers will pay interest costs in the range of $67 million. That’s the depressing backdrop.
“Nova Scotia Power expects that the required cost reductions will make the achievement of future Performance Targets more challenging,” warns the power company. And, “The effect of this will be that Nova Scotia Power will need to find significant operating and capital related savings across the business and potentially face earnings shortfalls over 2023 and 2024.”
That’s business speak for the fact the company will have to find savings internally and cut planned projects or its shareholders will make less money. A gentle reminder that those shareholder “earnings” included $152 million in profit last year and have consistently topped $100 million for the past 12 years.
Affordability
The province also asked Nova Scotia Power to explain how a deal which will increase power rates by almost 14% over the next two years beginning next month could meet its description of being both “reasonable” and “ affordable.”
Nova Scotia Power replied the Houston government ought to consider what took place on the financial markets “in the immediate aftermath” of the Houston government passing Bill 212 to limit company profits to the status quo ( 9%) and limit one part of the rate hike. The company said:
This includes the public statements made by DBRS Morningstar and S&P Global regarding Nova Scotia Power’s credit ratings, as well as S&P Global’s downgrade of Nova Scotia Power’s credit rating. These have real and material near and long-term impacts on the costs Nova Scotia Power must incur to provide electric service to its customers and must be considered in determining what is reasonable, affordable, and in the best interests of customers in this rate application process.
Storm costs
The proposed deal recommends the UARB establish a new temporary mechanism for the next three years that would allow Nova Scotia Power to recover from consumers the cleanup and restoration costs from major storms.
Expenses over and above $10.2 million in the first year and $10.4 million in 2024 and 2025 would be picked up by ratepayers about two years after the storm hit.
Nova Scotia Power has estimated Hurricane Fiona has cost the company about $48 million. The province asked if the company intends to ask ratepayers to pay those costs, which occurred in September 2022.
The answer from Nova Scotia Power boils down to a Yes, but it hasn’t figured out exactly when and how to apply:
The Company has not made a final determination as to the scope or content of an application for the recovery of Hurricane Fiona-related costs. When such an application is made, Nova Scotia Power will provide the appropriate support for its request. The Company anticipates the matter will be examined by the Board as part of a NSUARB process separate from the current proceeding.
A final report from Nova Scotia Power will be filed to the UARB on December 21. A decision is expected at the end of this year with a rate increase likely to take effect in January 2023.
I read through the “negotiated agreement” and noted that Schedule A – Overall Rate states that wholesale market customers won’t have to pay for fuel recovery costs for 2020 – 2022 because they weren’t FAM (Fuel Adjustment Mechanism?) customers at the time. So I guess those costs get spread to consumers again?
Doing the math, which the consumer advocate at NSUARB has NEVER shared with those he represents, that ~93,000 apartment dwellers will get to enjoy an average (521kWh) electricity inflation rate of ~16.8 % in 2023 whereas the remaining ~335,000 residential customers will enjoy an 11% electricity inflation rate of ~11%.
My sense is the CONSUMER ADVOCATE believes these INFLATION RATES are REASONABLE for the average Nova Scotian family to carry.