Residential customers could see their power bills increase by 10% over the next three years, if a general rate application submitted by Nova Scotia Power this afternoon is approved by the regulator.
The company says that works out to approximately an extra $5 a month but admits the increase could be higher if the Utility and Review Board (UARB) approves other proposals contained in its filing.
Small businesses could see their rates rise by about 11% over three years, while the largest industries in the province would see their bills increase by more than 15%t. https://nsuarb.novascotia.ca/matters-evidence
“The rate application we are submitting today supports the changes we need to make to enable us to meet government environmental goals and ensure we can meet our customers’ growing demand for electricity,” said Peter Gregg, president and CEO of Nova Scotia Power. “We do everything we can to manage our costs prudently and we don’t take it lightly when we seek to increase rates. We understand the impact this does have on our customers.”
To avoid greater “rate shock,” Nova Scotia Power is asking the regulator for permission to set up something called a “Decarbonization Deferral Account” to help transition the grid off coal and meet legislated targets of 80% renewable energy by 2030.
The idea behind the account is to kick down the road or spread out some $370 million in estimated costs to close coal-fired generating stations in 2030 instead of 2040.
Such an account might also allow potential projects like the Atlantic Loop, an overhead transmission line that would deliver renewable energy from Hydro Quebec, to park costs for years after the energy has been delivered and ratepayers are in a better position to absorb some of the cost.
If approved by the UARB, other proposals in this rate application could increase costs over and above the proposed 10% increase for the next three years. The company is asking ratepayers to cover $52 million in fuel costs that came in higher than expected…perhaps related to delays at Muskrat Falls but that will be a matter for more debate at the hearing.
Nova Scotia Power is also asking the regulator to approve what would appear as a new line on the bill for “storm recovery.” In years when the cost of extreme weather exceeds what the company budgeted and already rolled into rates, Nova Scotia Power could apply to charge customers an additional amount capped at 2%. The first year it could appear on the bill is 2024 but there is no guarantee the measure will be approved.
The UARB has twice fined Nova Scotia Power for failing to meets its performance standards when the company tried to pin the blame on bad weather.
Nova Scotia Power is floating a similar idea when it comes to the energy conservation and efficiency programs its customers pay for but which are operated by another company to avoid conflict-of-interest. Nova Scotia Power wants a separate line on the bill so it can recover costs if Efficiency One spends more over the next three years than Nova Scotia Power forecasts.
Last but not least Nova Scotia Power is proposing to add an $8 per kW per month* “system access charge” for all new customers who want to generate their own electricity and sell the extra back to Nova Scotia Power through a process known as “net-metering.” Customers signed up before February 1 of this year will be exempt from having to pay the proposed fee.
The Halifax Examiner asked NS Power CEO Peter Gregg to explain the rationale for this additional charge.
“We see this as an issue of fairness,” said Gregg. “What we want to avoid is for customers that don’t have access to generate their own electricity to be covering or subsidizing costs for people who do have the ability to generate their own electricity. There is still a cost to serve those customers because they continue to be connected to the grid. Their costs have gone down and we still have cost in the system to provide reliable power and so as they are paying less, it just naturally happens that the rest of the customers’ costs go up.”
Look for that explanation to get much more thorough scrutiny at the upcoming public hearing than we can provide today.
Gregg was also asked why instead of proposing that customers pay more for basic electricity, storm costs, and fuel , the utility isn’t reducing its profit margin from its guaranteed 9%.
“We have not seen an adjustment in the cost to operate our business — outside of fuel costs (which ratepayers have covered through power bill increases of 1.5% in each of the past three years) — in a decade,” said Gregg. “There’s been an 11% increase in inflation since 2014 and we do need an adjustment. There are ongoing challenges from the desire to de-carbonize, which we support, and also challenges to reliability related to more extreme weather which are increasing our costs as well.”
Nova Scotia Power has asked the UARB to maintain its average 9% Return on Equity but also extend the range to 8.5% – 9.5% so it could potentially make a profit as high as 9.5%. The company has asked the UARB to approve the first 3.3% increase for residential customers beginning August 1 this year.
*Correction: We updated this article with the correct figure. We regret the error.
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