Nova Scotia Power and its customers have reached an agreement that will see rates rise by nearly 14 per cent over the next two years.
If approved by regulators, rates would rise 6.9 per cent in 2023 and 6.9 per cent in 2024 – the same amount on the table when hearings before the Nova Scotia Utilities and Review Board (UARB) concluded in September.
The agreement now goes to the UARB for approval.
“It will be up to the board to determine whether or not the settlement itself is in the public interest, and anyone who participated in the hearing will have an opportunity to make representations on that issue,” said consumer advocate Bill Mahody, who represents Consumers Nova Scotia Power before the regulators.
The agreement, announced Thursday night, takes into account the 1.8 per cent cap on non-fuel costs imposed through Bill 212 by the provincial Progressive Conservative government after the hearings.
That legislation does not cap the fuel regulation spending that Nova Scotia Power wanted over the next two years to cover rising prices for the oil, gas and coal used to generate electricity. The company warned that the adjustment could push home rates between 9.6 and 12 percent.
The newly negotiated increase covers those fuel costs and includes increased spending on energy efficiency programs, which the province also authorized.
Attorneys representing residential, small business and large industrial clients signed the agreement. As did the Environmental Action Center and the Affordable Energy Coalition.
“In the circumstances, 6.9 percent represents a reasonable rate increase given the revenue requirement that was confirmed at the hearing,” Mahodi said.
The province is not part of the negotiations
The province is not involved in the negotiations.
In a statement Thursday evening, the Ministry of Natural Resources and Renewable Energy said it was not aware of the specific details and would have to review the terms of the agreement.
“We have introduced legislation to protect payers and we will continue to protect them. Anything that results in higher rates and potentially circumvents the purpose of our legislation will certainly require careful consideration,” the department said.
In a news release, Nova Scotia Power president Peter Gregg said “we appreciate the cooperation of customer representatives in reaching the proposed settlement filed today as we adhere to the direction given by the provincial government through Bill 212.”
“There’s no doubt that this is a difficult time for Nova Scotians, and great consideration must be given to current concerns about the rising cost of living while ensuring we maintain the most basic needs for a reliable electricity system,” Gregg said.
Nova Scotia Power has withdrawn a proposed “profit sharing mechanism” that would have given the utility half of excess profits earned above the approved rate of return, which is nine per cent.
Rate cap legislation
In accordance with the province’s cap legislation, the rate of return is capped at 9.25 per cent. The company has asked for a maximum of 9.5 percent.
The agreement allows for a storm rider — or surcharge — on bills to pay for extreme weather, but the rider now ends after three years.
The so-called decarbonisation bill is limited to writing off the cost of retiring coal plants pending further consultation with customer groups.
The elephant in the room that remains for ratepayers is fuel costs.
The rates in the settlement agreement cover the unpaid fuel bill — estimated at $516 million in 2023 and 2024.
The agreement confirms that Nova Scotia Power will apply next year to begin recovering those costs, with the recovery expected to be spread over time.
The agreement comes in the same week that Nova Scotia Power’s credit rating was downgraded by two notches by S&P Global.
The rating agency blamed the rate cap on what it said was an act of unprecedented political interference in a regulated utility.
Add Comment