As Hurricane Fiona batters the province, Nova Scotia Power is defending its “coins we win, tails we lose” proposal for a new storm charge in rate hearings this week.
As part of its application to the Nova Scotia Utility and Review Board (UARB) for an 11.6% general rate increase, the company is also requesting a “storm cost recovery endorsement” that would allow it to collect up to 2% more per year from taxpayers to pay for extreme weather events.
Eric Ferguson, senior director of pricing and regulatory transformation initiatives at NS Power, said Tuesday in Halifax that the Storm Rider would be used sparingly.
“It’s not the company’s goal to have the runner every year, it’s the goal to apply when absolutely necessary,” Ferguson said.
Why customer groups are wary
Here’s why lawyers and consultants representing NSP client groups are wary.
Nova Scotia Power wants to bill customers $17 million to pay for storm damage next year. This amount would be integrated into the tariffs.
The proposed storm rider would allow it to recoup any money spent beyond the built-in severe storm rates.
The runner only goes one way – for the benefit of the company. If the storm costs are lower than what is set in the tariffs, the company keeps the difference. There are no refunds for consumers.
The company wins anyway
In regulatory terms, it is considered an “asymmetric” mechanism.
“The criticism of the asymmetrical nature was that it unreasonably favors [NSP Inc.] shareholders. This was articulated in the consultants’ evidence,” said Nancy Rubin, representing NSP’s large clients.
“Yeah,” Ferguson acknowledged. “The company could recover overspending, but there was no provision for reimbursement of underspending.”
Ferguson said NSP would not request a Storm Rider if the earnings he reports exceeded his approved earnings or his currently set rate of return of 9%.
The limitation is not in the company’s request.
But NSP chief financial officer Craig Flemming said the company gobbled up $17 million in unforeseen costs from Hurricane Dorian in 2019 because it was still able to get its approved rate of return this year. -the.
If the Nova Scotia Utility and Review Board rejects its bid for a Storm Rider, the company asks to incorporate $20 million per year into rates to pay for storm damage.
Move trees away from lines
NSP promised to provide a ‘full picture’ of vegetation management – the regulations speak of tree pruning – after consumer advocate Bill Mahody noted the amount spent in 2020 and 2021 had fallen to an average $4.2 million – half the average between 2010 and 2019.
The company said tree pruning costs appear in various areas of the business and committed to a breakdown.
NSP taxpayers hang for $3 million settlement with Eastlink, Rogers
NSP revealed on Tuesday that it expects taxpayers to cover the $3 million a year it lost in revenue due to its settlement with Eastlink, Rogers and Xplornet. The carriers opposed a proposed 165% increase in connection fees charged for the use of NSP-owned poles.
NSP expected to get $7.5 million by raising the fee from $14 per pole per year to $37.
Michael Willett, NS Power’s director of regulatory finance, said the fee increase was based on misinformation, including double counting of overtime, inaccurate pole counts and added expenses that were not part of the pole connection charges last approved by council in 2002.
The recent settlement of $22 per pole reduced the take to $4.5 million.
“That additional $3 million difference needs to be recovered from other customers,” Mahody asked.
In response, Willet said: “We operate on a cost-to-serve model, so that’s okay. Those costs should be recouped.
The hearing resumes on Wednesday.