Nova Scotia Power must pay a fine of $750,000 for failing to meet performance targets in 2022.
The penalty is contained in a 14-page decision published yesterday by the Utilities and Review Board (UARB).
Last year was the sixth consecutive year that Nova Scotia Power failed to meet certain metrics. The penalty is double the $350,000 the company was charged in 2021 but well short of the $25 million maximum contained in an amendment to the Public Utilities Act passed by the Houston government last April.
The UARB noted the legislative change was not retroactive so the regulator followed the previous rules which set a $1 million limit.
Of 14 established performance standards, the utility did not meet five designed to improve reliability and customer service.
In its decision, The UARB wrote:
As previously stated by the Board, customers are entitled to receive an appropriate level of service for the rates and fees they are charged by the utility. It is not acceptable that non-compliance of the performance standards has become a normal occurrence.
In its report, NS Power noted Nova Scotia is experiencing a changing climate and weather patterns, with more frequent and severe adverse weather events. The company urged the Board to consider the severe weather events in 2022 and its investment action plans already in place when evaluating its results for the year. While these are relevant circumstances, the Board also recognizes that one of the consequences of our urgent need to rapidly decarbonize, in the effort to stave off even more dire climatic changes, is an increasing trend towards electrification. This means that despite the changing climate, the need for a reliable electrical grid is at least as important (and likely more important) than ever. If more frequent and damaging storms are becoming the ‘new normal’, NS Power needs to ensure that its performance, not just its investment plans, keeps up with these changes. [emphasis added]
Last week Nova Scotia Power senior director of Energy Delivery Matt Drover said the utility will double the amount of money it usually spends trimming trees ($40 million up from $20 million) this year. Trees falling on wires is the number one cause of power outages.
Failing grades for reliability in 2022
The frequency and duration of power outages due to storms and unplanned events are measured using benchmarks that apply to other Canadian utilities.
The system average outage frequency incidence known as SAIFI was 2.19 hours, which did not meet the target of ≤2.05 in 2022.
The system average outage duration incidence known as SAIDI for 2022 was 5.16 hours, which did not satisfy the target of ≤4.29.
Nova Scotians pay the highest fees for electricity in the country.
Since 2016, following Hurricane Andrew in 2014, the UARB brought in performance standards which hold the company accountable for its response to storms.
Storms are categorized as a “significant” event, a “major” event, or an “extreme event. In all cases, the power company must restore service within 48 hours to a certain percentage of affected households and businesses.
There was one Significant Event Day (SED) on September 30, 2022. Nova Scotia Power reported that 85.8% of customers had service restored within 48 hours of the storm which did not satisfy the target level of ≥ 95.05%.
There were 16 Major Event Days (MEDs) in 2022, four of which related to Hurricane Fiona last September.Restoration results for September 26, 27, 28, and 29 were 86.39%, 74.88%, 77.53%, and 90.20%, respectively, all of which did not satisfy the target level of ≥ 91.98% of customers who had their power restored within 48 hours of the storm.
There were three Extreme Event Days (EEDs) last year, two of which were due to Fiona. Restoration results were 65.42% for September 23 and 60.98% for September 24, both of which fell below the target of ≥ 78.38% in 48 hours.
Nova Scotia Power blamed the missed targets on the severity of Hurricane Fiona. In its decision to fine the company for the second straight year and third occasion since standards were established in 2016, the UARB quoted from Nova Scotia Power’s explanation to the regulator.
NS Power considers the Percentage of Customers Restored within 48 hours standard for 2022 to be met because the timing of restoration events spanning September 23-30 during Hurricane Fiona was strongly influenced by the priorities of the Provincial and Regional Emergency Management Offices. … In some cases, teams of crews worked for hours to remove trees blocking roadways so that they could access areas with prioritized restoration for critical infrastructure such as hospitals, medical facilities, care homes, water pumping and treatment stations, emergency communications stations, and cell sites. NS Power agrees that these were the appropriate places to prioritize early restoration efforts, but focusing on these individual locations does impact overall outage restoration pace.
Nova Scotia Power asked the UARB to consider using the same storm day benchmarks from 2022 in 2023 because the impact of Fiona will skew how restoration time benchmarks get developed going forward.
In its response, the UARB acknowledged “the inclusion of Hurricane Fiona will likely have a significant impact on the calculation of future MED and EED thresholds for NS Power’s performance standards reporting. However, the increasing intensity, severity, and frequency of adverse weather events are not new phenomena… It is incumbent upon NS Power to appropriately address the challenges of climate change and adverse weather events. As such, the Board finds that NS Power’s proposal to maintain the 2022 MED and EED thresholds in 2023 would diminish the performance standards too much moving forward.”
Although the regulator rejected that idea, the UARB is allowing Nova Scotia Power to do is exclude three Extreme Event Days and one Major Event Day from the data used to develop performance thresholds for next year.
This is similar to what the UARB decided to do after Hurricane Dorian, which makes the following comment from the regulator somewhat suspect:
The Board reminds NS Power that it should not assume that data from any future hurricanes or severe weather events will receive similar treatment, particularly since these events are becoming less exceptional.
The UARB decision includes a table the compares storm response times for Significant Event Days (SED), Major Event Days (MED), and Extreme Event Days (EED) year by year; the table shows that customers are now waiting longer in the dark than a few years ago.
In its letter to the UARB, the Small Business Advocate (SBA) stated:
NSP (Nova Scotia Power) has been consistently saying that storms and winds are becoming more severe. It is imperative that, while we may not build to withstand the most severe storms that affect us, we can expect NSP to be able to respond quickly and effectively to the damage they do cause. The SBA is very concerned that NSP has yet to have a year in which all the Performance Standards were met. The targets are set in coordination with NSP and are based on what is considered reasonable to achieve. A continuing inability to meet those targets raises significant concerns for the SBA, including for the SBA’s rate classes that rely on safe and reliable energy for their businesses, and for the communities that rely on those businesses for their needs.
Demands for service
The decision to levy a larger fine against the company was also driven by what the UARB characterized as a lack of improvement in certain key areas of customer service. This despite higher fees charged by the utility for inspections of electrical work. The UARB decision states:
With respect to customer service, The Board notes NS Power’s statements that the hours of customer-driven work started to increase in the fall of 2020, continued to increase into 2021, and that there has been a 26 percent increase in the hours required for customer-driven work since 2019. Despite identifying this trend in core activities and the need to enhance staffing resources, NS Power has not been able to take the action needed to avoid failures in meeting its customer service targets.
One performance standard the power company was not able to meet involves wait times to connect new customers.
The wait for installation of new poles or transformers in 2022 was 5.09 days, which did not satisfy the target of ≤ 4.9 days.
The wait to change from Temporary to Permanent service for 2022 was 3.73 days, which did not meet the ≤ 3.2 days target.
The wait for line extensions of fewer than 10 Poles for 2022 was 6.38 days, which did not satisfy the target of ≤ 6.2 days.
Although the number of planned power outages decreased from 572 in 2021 to 467 in 2022, their frequency and duration increased by 39% and 54%, respectively.
Approximately 39% of customers experienced a planned outage in 2022 and the average duration was 2.98 hours, an increase of 15%.
The UARB reviews performance standards annually. Next year, the regulator says failing to meet performance standards in 2023 could cost the utility up to $25 million in fines as a result of a change to the Public Utilities Act.