Rates could increase by 14% over 2 years if Nova Scotia Power customers are settled

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dated: 2022-11-25 16:01:33 .

Nova Scotia Power and its customers have reached an agreement that calls for rate increases of almost 14 per cent over the next two years.

If approved by regulators, rates would rise by 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) ended in September.

The settlement 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 everyone who attended the hearing will have an opportunity to comment on that point,” said consumer advocate Bill Mahody, who represents the Nova Scotia Private Electricity Buyers before the regulator.

The settlement, announced Thursday night, takes into account the 1.8 per cent cap on non-fuel costs imposed through Bill 212 by the province’s Progressive Conservative government after a hearing.

This legislation does not limit the fuel adjustment costs that Nova Scotia Power is targeting over the next two years to meet the rising prices of oil, gas and coal for power generation. The utility warned that the adjustment could raise prices for residents by between 9.6 and 12 percent.

The newly agreed increase covers those fuel costs and includes increased spending on energy efficiency programs the province has also approved.

Lawyers representing private households, small businesses and large industrial clients signed the settlement. Likewise, the Environmental Action Center and the Affordable Energy Coalition.

“That 6.9 percent under the circumstances represents a reasonable rate increase given the income requirements tested at the hearing,” Mahody said.

the province is not part of the negotiations

The province did not participate in the negotiations.

In a statement Thursday evening, the Department of Natural Resources and Renewable Energy said it was unaware of specific details and needed to review the terms of the agreement.

“We passed laws to protect taxpayers and we will continue to protect them. Anything that leads to higher tax rates and potentially circumvents the purpose of our legislation certainly requires close scrutiny,” the Ministry said.

In a press release, Nova Scotia Power president Peter Gregg said, “We appreciate the cooperation of customer representatives in reaching the proposed settlement that was filed today as we adhere to the guidelines provided by the provincial government through Bill 212.”

“There is no doubt that this is a difficult time for Nova Scotians and the current concerns about the rising cost of living require close attention while ensuring that the most basic needs for a reliable electrical system are maintained,” Gregg said.

Nova Scotia Power has withdrawn a proposed “profit sharing mechanism” that would have given the company half of excess profits above the approved nine per cent yield.

Rate cap legislation

In accordance with provincial interest rate cap legislation, the yield is capped at 9.25 percent. The company asked for a maximum of 9.5 percent.

The settlement provides for a storm rider – or additional charge – on bills to pay for extreme weather conditions, but the rider now ends in three years.

The so-called decarbonisation bill is limited to writing off the costs of decommissioning coal-fired power plants pending further consultation with customer groups.

The elephant in the room that remains for ratepayers is fuel costs.

The tariffs in the settlement agreement cover the outstanding fuel bill – estimated at $516 million in 2023 and 2024.

The settlement confirms that Nova Scotia Power will apply to begin recouping these costs next year with the expectation that the compensation will be spread over time.

The settlement comes the same week that S&P Global cut Nova Scotia Power’s credit rating by two notches.

The ratings agency blamed the cap on interest rates, which it said was an unprecedented act of political interference in a regulated utility.

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Rates could increase by 14% over 2 years if Nova Scotia Power customers are settled

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Source https://canadatoday.news/ca/tariffs-could-increase-by-14-over-2-years-if-nova-scotia-powers-customers-are-settled-162344/

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