For the second time in one week, Nova Scotia Power has called out extra crews and stood up its Emergency Operations Centre in preparation for a nasty winter storm likely to cause widespread power outages across the province.
With most Nova Scotians confined to home, it might be a good day to take a second look (although by no means a deep dive) at a new charge Nova Scotia Power is proposing to cover its increased costs (and shareholders) due to more frequent storms.
The Storm Recovery charge would be in addition to the proposed 10% increase over three years expected to add $60 to the average residential power bill by 2024.
The same year, 2024, is also the first year customers might see a Storm Recovery charge on their bill, if that gets approved by the Utility and Review Board. Here’s a simplified version of how it might work.
Nova Scotia Power calculates how much it has spent over the last five years preparing and restoring electricity after the worst storms, excluding tropical storm Dorian in 2019, which was off the charts and cost $19 million.
The average cost for the last five years becomes the benchmark for what Nova Scotia Power expects it will pay in 2022. If the province experiences more severe and more expensive storms this year (2022) than the benchmark, ratepayers would cough up the difference.
In 2024, when the Storm Recovery charge for 2022 would appear as a line on the bill; it might be in the range of $2-3.50 each month. The charge will be capped at 2% and it would come and go, like a moving storm front, depending on the intensity of the weather each year.
On page 105 of its written application to the UARB for a general rate increase, the utility supplied this chart to demonstrate how costs attached to extreme storms have risen and fluctuated over the past 5 years.
Nova Scotia Power says the Storm Recovery charge is a measure some other utilities across North America have implemented to deal with the rising cost of extreme weather:
… these events and the associated costs for timely customer outage restorations are substantial and largely beyond the ability of the utility to predict precisely or control. This is a circumstance which exists across the industry and is becoming more challenging with the impacts from global climate change. The magnitude and volatility of this cost driver is illustrated in Figure 12-4 above.
In its written application requesting a Storm Recovery charge, Nova Scotia Power is asking customers to cover every imaginable cost attached to storm preparation, clean up, and restoration separate and above what is currently covered through the monthly power bill.
All non-capital preparation, response, and restoration related costs associated with Level 3 and Level 4 storms will be eligible for inclusion in the Storm Rider, including (1) storm preparedness including crew staging and related logistical expenses; (2) incremental NSPI wages, benefits, and overtime pay related to storm recovery; (3) costs of external service providers and mutual aid utilities hired by the Company during restoration efforts; (4) materials and supplies used to repair damaged assets and any associated expenses; (5) other recoverable expenses, including extra costs for temporary repairs and to expedite the permanent repair of damaged property and expenses incurred for providing services to customers whose electric service has been interrupted.
The Consumer advocate and intervenors (lawyers) representing large and small businesses in the province will have lots of questions and lots to say on this proposal once the public hearing arrives later this year.
The big question underlying not only Nova Scotia Power’s request for a new Storm Recovery charge and a 3.3% a year rate increase is how the company can continue to justify earning a guaranteed 9% annual profit. In fact, the utility is asking to increase its margin to 9.5%. Stay tuned, and here’s hoping the lights stay on all day.
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