The Utility and Review Board (UARB) has approved a request by Nova Scotia Power to delay the filing of its 2022 fuel costs update from August 19 to September 2 so the company and provincial government can continue discussions about how to prevent power bills from climbing above the 10% already proposed.
As first reported in the Halifax Examiner on August 8, fuel costs for 2022 are expected to be $174 million higher than forecast due to delays of renewable hydroelectricity from Labrador, as well as higher prices for oil, natural gas, and biomass. These fuel costs — in addition to a $92 million overrun for 2021 — will eventually be rolled into or recovered from ratepayers through our power bills.
The UARB insisted Nova Scotia Power provide a fuel cost update based on current market conditions prior to a public hearing scheduled for September 7 on its request for an average 10% rate increase over three years. The general rate application (GRA) did not include these higher fuel costs for the last 12 months but it does include changes to increase profits for shareholders and decrease its business risk or exposure when it is unable to meet environmental regulations on carbon emissions.
Nova Scotia Power requests deadline extension
Last week, Nova Scotia Power sent a letter to the UARB requesting a two-week extension to its deadline for filing the fuel cost update for 2022. The company provided the following reason:
As the Board is aware, the fuel and purchased power forecast on which the GRA is based was generated in May 2021. Fuel and purchased power costs have risen significantly since May 2021. In preparing its Fuel Update, NS Power has had meaningful engagement with the Province of Nova Scotia, which is represented in this proceeding through the registered participation of the Department of Natural Resources and Renewables (NRR).
The Province is seeking to have further immediate discussions with NS Power on the nature and extent of the fuel and purchased power costs increases in an attempt to lessen the impact on customers by mitigating fuel related costs that would otherwise be included in the Fuel Update. To the extent any portion of these fuel costs can be mitigated as a result of these efforts, this would reduce the fuel costs to be considered by the Board for inclusion in NS Power’s proposed 2022-2024 rates.
So, maybe some type of relief for ratepayers is in the works, although it is not clear what that deal would look like beyond booting the costs further down the road for future generations to pay.
The province also submitted a letter to the UARB supporting the power company’s request for an extension to the fuel cost update, which would also delay the hearing date for the power rate application until September 12. Here’s part of the letter submitted by lawyers on behalf of the Department of Natural Resources and Renewables:
Since the filing of NS Power’s GRA, there have been unprecedented global increase in fuel costs which will have a direct impact on electricity costs in Nova Scotia. The Province’s first priority in this proceeding is the ratepayers of Nova Scotia. As such, it has been engaging with NS Power on potential solutions for Nova Scotians and understands the need for timely action in the coming weeks. The Province is committed to continuing that engagement and to examining and assessing every reasonable opportunity that may lessen the impact of increased fuel costs. The additional time requested by NS Power to submit its Fuel Update and for the Board to commence the oral hearing would enable these important conversations to continue and should not impact the ability of the Board or other participants to examine NS Power’s application.
The consumer advocate and lawyers representing a group of large business owners in the province certainly don’t like the change to the schedule because it makes their preparation more difficult. However, the UARB accepted Nova Scotia Power’s suggestion that fuel costs be dealt with at the end of the public hearing on power rates in order to give other participants enough time to prepare.
If not, the UARB has indicated it might be persuaded to allow a short adjournment. For its part, Nova Scotia Power has promised to be “flexible” when it comes to future scheduling. So, the UARB decided it is willing to give the company and the Houston government time to work out an agreement to address these climbing fuel costs. Here’s the written decision released by the UARB on Monday:
In the circumstances, the Board finds that NS Power’s requested extension and the delayed start of the hearing are reasonable and NS Power’s requests are approved. The nature of the ongoing discussions between NS Power and the Province, the potential significance of increasing fuel and purchased power costs on electricity rates set in this proceeding, and the possibility that information filed in the proceeding, if the original schedule was maintained, could be materially revised in a relatively short period of time, make it appropriate to delay the filing of the Fuel Update.
Finally, although the filing of the Fuel Update will be delayed, the Board expects that a full update will be provided in this proceeding so there should be no concerns about transparency. However, to the extent that NS Power and the Province are successful in mitigating fuel and purchased power impacts on customers, the Board directs NS Power to highlight the gains that have been achieved by providing versions of the Fuel Update showing the fuel and purchased power costs both with and without the achieved mitigation measures, including the full extent of all costs related to any deferral of fuel and purchased power costs.
September could be a very interesting month. The Fuel Cost update is due September 2 and the public hearing where arguments for and against Nova Scotia Power’s proposed 10% rate hike over two to three years will now get underway on September 12. Stay tuned.