A 19-day hearing begins today before the Nova Scotia Utility and Review Board (UARB) that will decide how much more Nova Scotians will pay on their power bills.
Nova Scotia Power is requesting an average increase of 11.6% over three years that is being driven by higher costs for fossil fuel and less hydroelectricity from Muskrat Falls than the company anticipated. That project in Labrador still has not resolved technical issues with transmission that has made it impossible for Nova Scotia to buy additional amounts of market-priced renewable energy, in turn driving up costs to comply with environmental legislation.
The company has asked the UARB to spread out the proposed increases retroactive to last month, August, even though a decision by the UARB is unlikely before the end of this year.
Most participants in the rate-hearing have submitted opening statements to the panel of three UARB Commissioners appointed by the province.
The new chair, Stephen McGrath, is a lawyer who used to work for the Nova Scotia Department of Justice. Roland Deveau is the vice-chair and a past-president of the provincial association of French-speaking lawyers. Steven Murphy is an engineer with 30 years experience in consulting and project management).
A statement written by consumer advocate Bill Mahody notes the public hearing will grapple with thousands of pages of details supplied by the power company, much of it “technical and difficult to reconcile,” as well as having to weigh the often-conflicting opinions of expert witnesses.
“As a monopoly, there is a risk that Nova Scotia Power focuses on justifying rate increases rather than focusing on cutting costs and finding efficiencies to avoid the necessity for rate increases,” reads the opening statement filed by Mahody. “The challenge for the Board and intervenors is to identify what rate increases, or portions of rate increases, are necessary for Nova Scotia Power to provide reliable service to its customers.”
Experts hired by Mahody oppose Nova Scotia Power’s request for increased profits and argue the company’s average 9% return on earnings should be reduced.
Mahody and intervenors on behalf of other participants (such as businesses and low-income consumers) also oppose the implementation of a new charge for storm clean-up costs on the basis that should be a “core competence” expected of any utility. (Nova Scotia Power’s position is that climate change puts the company at risk of having to make more expensive and frequent repairs due to storms).
A request by Nova Scotia Power to establish a Decarbonization Deferral Account to help the company finance the cost of building new renewable sources of generation such as wind and solar farms needs more study and may not be necessary, says Mahody.
In its written opening statement to the UARB, Nova Scotia Power strikes a conciliatory tone.
“The need to apply to the Board for electricity rate increases is part of operating a cost-of-service public utility. That is not to say that it is something we take lightly,” says Nova Scotia Power. “The team of more than 2,000 Nova Scotians working at Nova Scotia Power are focused on delivering the energy our customers need every hour of every day. The team is also committed to aggressively managing costs and making the right decisions to ensure that we are advancing an energy transition that does not compromise safety, reliability, or energy availability, without losing sight of affordability. Each of these factors has been analysed and carefully considered by Nova Scotia Power as part of the General Rate Application.”
Nova Scotia Power says Russia’s invasion of the Ukraine is responsible for fuel costs rising to $681 million, one-third more than forecast in 2022, to pay for coal, oil, and natural gas. That bill will be deferred and payments spread out over several years, possibly beginning in 2023 or later.
Last week, as reported in The Halifax Examiner, the Houston government agreed to let Nova Scotia Power off the hook for millions of dollars in fines for exceeding limits on carbon or greenhouse gas (GHG) emissions regulated under cap-and-trade legislation. That decision prompted Mahody to write “On behalf of residential ratepayers, the Consumer Advocate acknowledges and thanks the Government of Nova Scotia for the GHG Relief that has been provided. This GHG Relief reduces 2022 fuel costs by $165.6 million.”
And while the Houston government may take credit for that “relief,” it can be argued the government hasn’t done much to protect consumers from the proposed 11.6% jump in rates. The Department of Natural Resources and Renewables remains an active intervenor in these proceedings.
“We believe valuable information will be shared and important conversations will be had about improving our utility for the long-term benefit of Nova Scotians,” says the opening statement on behalf of the Province of Nova Scotia. “In the short-term, our priority remains keeping costs reasonable for Nova Scotians and taking whatever steps are necessary to prevent an increase in power rates.”
The province does not outline what “steps” should be taken to prevent that from happening. The expert witnesses hired by the province argue the power company should not be allowed to earn higher profits or keep a larger share of profits.
“The evidence of Natural Resources & Renewables experts, and experts retained by other intervenors, highlights that Nova Scotia Power has overstated its business risk, which in turn has inflated assumptions on what constitutes a reasonably regulated return on equity (ROE). As the overall compensation Nova Scotia Power executives receive far exceeds the regulated compensation figure, and a surplus beyond regulated levels is supplied voluntarily by Nova Scotia Power’s parent company, it is unlikely profits can be said to be deficient.”
By contrast, the opening statement from the Affordable Energy Coalition has a lot to say on the need to protect low-income consumers from the impact of rising power bills.
“Ontario created a Canadian precedent in establishing a system called the Ontario Electricity Support Program which provides on-bill credits to low income electricity customers and which began as a ratepayer funded program and later was changed to a taxpayer funded system… we have also experienced the COVID-19 pandemic which created additional stresses for lower income households, especially those with precarious employment income. Increased funding from government and Nova Scotia Power charitable donations appear to have alleviated some of the worst stresses but the situation highlighted the benefits that would come from a more systematic approach. In our view, the UARB could examine the Ontario and other systems and decide whether or not to recommend the adoption of a similar system in NS.”
The hearing is being held at the Cedar Events Centre in Clayton Park. It begins at 9am and the livestream can be found here.
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