Legislation Addresses Power Rates, Profits
Amendments to the Public Utilities Act introduced today, October 19, will help protect ratepayers from power rate increases related to Nova Scotia Power’s general rate application now before the Nova Scotia Utility and Review Board (NSUARB).
Under the amendments, the NSUARB will not be allowed to approve an increase based on the utility’s costs except those for fuel and improving reliability of the grid. Any increases related to reliability cannot be more than 1.8 per cent over two years.
“Fuel costs are unavoidable – they have to be paid. But we are protecting ratepayers as best we can by controlling what we can control on other costs,” said Tory Rushton, Minister of Natural Resources and Renewables. “About half of Nova Scotia Power’s costs are for fuel and half are for other things like operations and maintenance. We’re preventing power rate increases based on those other things unless they improve reliability of power services to Nova Scotians.”
Though the cost of fuel is high, the amendments cushion the impact for Nova Scotia ratepayers by not allowing the utility to also pass along most cost increases for operations and maintenance.
Other amendments address the utility’s profits:
- the NSUARB cannot set the utility’s rate of return on equity any higher than 9.25 per cent; Nova Scotia Power asked for up to 9.5 per cent in its general rate application
- the NSUARB cannot set the utility’s equity ratio any higher than 40 per cent; the utility asked for 45 per cent
- any excess profits above the amount approved by the NSUARB will continue to be returned in full to ratepayers; the utility has asked to keep half
- the NSUARB must set a rate of return on equity for each class of assets, rather setting one rate for all assets as a whole
- financing for any deferred cost is limited to the current Bank of Canada policy rate plus 1.75 per cent; the utility cannot earn a profit by financing it themselves at a higher rate.
Amendments also direct the NSUARB to review the utility’s assets and to respond to any recommendations from the Performance Partnership Advisory Table within 90 days. Legislation in the spring allowed for the creation of this table and regulations are in progress to establish it.
It is anticipated that the NSUARB will make a decision on the general rate application before the end of December. As an intervenor, the government will continue to advocate for ratepayers through this process. The government will also continue to look for solutions to reduce fuel costs and explore further action that may be needed to support ratepayers.
- the Province was one of 19 intervenors in the NSUARB process to consider Nova Scotia Power’s general rate application
- intervenors identified opportunities that the board could include in its decision to reduce the utility’s operations and maintenance costs while still providing affordable, reliable and clean power to Nova Scotians
- when setting rates for the next two years, the NSUARB can consider the cost of purchased power like wind energy, which is the lowest-cost energy, and efficiency programs that help Nova Scotians, including low-income households, save money on their energy bills
- the government has already helped reduce the cost of fuel – which benefits ratepayers – by giving the utility relief from some greenhouse gas reduction requirements; the utility calculates the savings to be $165.6 million