With Hurricane Fiona taking its toll on the province, Nova Scotia Power is defending its head-to-head, lose-lose proposal to ship a new storm at this week’s price hearings.
As part of its application to the Nova Scotia Utility and Review Board (UARB) for an overall 11.6 percent price increase, the company is also asking for a “storm cost recovery racer” that allows it to collect up to 2 percent more annually from taxpayers to pay for phenomena extreme weather.
The storm rider will be used in moderation, said Eric Ferguson, senior director of pricing and transformational regulatory initiatives at NS Power, on Tuesday in Halifax.
“It’s not the company’s goal to have a rider every year, it’s the goal to deliver when it’s absolutely necessary,” Ferguson said.
Why are customer groups cautious
Here’s why lawyers and consultants who represent NSP client groups are suspicious.
Nova Scotia Power wants to charge customers $17 million to pay storm damages next year. This amount will be included in the prices.
The proposed storm rider will allow her to recoup any money spent above the included rates related to severe storms.
The rider goes in only one direction – in the interests of the company. If the storm costs less than specified in the pricing, the company keeps the difference. There is no refund for consumers.
The company wins either way
In organizational terms, it is considered an “asymmetric” mechanism.
“The criticism of unequal nature was that it unreasonably favors [NSP Inc.] shareholders. This is outlined in the consultants’ handbook, Nancy Rubin, who represents NSP’s major clients.
“Yes,” Ferguson admitted. “The company could recover expenses, but there was no provision for recovering expenses.”
Ferguson said the NSP will not apply for a storm rider if the revenue it brings in exceeds its approved earnings or rate of return currently set at nine percent.
The restriction is not in the company’s application.
But NSP Chief Financial Officer Craig Fleming said the company amortized $17 million in windfall costs from Hurricane Dorian in 2019 because it was still able to reap the approved rate of return that year.
If the Nova Scotia Utility and Review Board declines its offer to a storm passenger, the company asks to include $20 million annually in pricing to pay for storm damage.
Keep trees away from the lines
The NSP promised to provide a “complete picture” of vegetation management – regulatory talk about pruning – after consumer advocate Bill Mahudi noted that the amount it spent in 2020 and 2021 fell to an average of $4.2 million – half the average between two years 2010 and 2019.
The company said pruning costs appear in a variety of business areas and stick to the detail.
NSP pedigree payers suspended for $3 million settlement with Eastlink, Rogers
NSP revealed Tuesday that it expects taxpayers to recoup the $3 million annually it lost in revenue due to its settlement with Eastlink, Rogers and Xplornet. Telecom companies have been fighting a proposed 165 per cent increase in booking fees charged for use of NSP-owned poles.
The NSP was dependent on getting $7.5 million in fee increases from $14 per pole per year to $37.
Michael Willett, NS Power’s director of regulatory finance, said the fee increase was based on flawed information, including double-calculating overtime, an inaccurate number of columns and added expenses that were not part of the column tie fee approved by the board in 2002. .
A recent settlement of $22 per pole brought the amount down to $4.5 million.
“This additional $3 million gap, is to be recovered from other clients,” Mahudi asked.
In response, Willett said, “We are operating on a service cost model so that it is right. Those costs will have to be recovered.