Public hearings ended Friday into Nova Scotia Power's application for a double-digit electricity rate increase that would see it collect $1.6 billion per year from ratepayers.
The two-week Nova Scotia Utility and Review Board hearing came too late in the year to put a rate increase into effect in 2022, as Nova Scotia Power intended.
The compressed recovery time over two years and additional fuel costs increased the original ask, says consumer advocate Bill Mahody, who represented residential customers at the hearing.
"I think we learned a lot," Mahody said at the end of Friday's hearings. "We learned from the company's perspective that their request of the board is a 6.8 per cent annual increase in both 2023 and 2024.
"The impact on different customer classes is still to be determined and will be filed later. So we don't know the full impact of the residential class."
Nova Scotia Power declined comment until the three-member panel issues its decision on the application.
Board chair Stephen McGrath said new rates will not be in place by Jan. 1, either.
'This is a significant hearing'
"This is a significant hearing," McGrath said in his closing remarks. "Nova Scotia Power hasn't been before the board for a general rate application since 2012, and there are a number of decision points in this proceeding that the board needs to think about carefully in terms of rendering a decision."
Regulators must decide on 16 separate issues presented by the company. A decision is expected sometime in early 2023.
Nova Scotia Power proposes to keep its rate of return at nine per cent, but expand the band of allowable earnings to a low of 8.5 per cent and upper limit of 9.5 per cent.
The Emera subsidiary also wants regulators to increase the proportion of shareholder money it can use to pay for capital projects from 37 to 45 per cent.
If approved, it would allow Nova Scotia Power to earn a nine per cent rate of return on 20 per cent more of the money it spends on capital projects.
Finally, it is asking for a new "earning sharing mechanism" that would give the company half of excess profits earned above its approved nine per cent rate of return.
Proposed storm charge
Right now, all excess earnings go to reduce fuel costs for ratepayers.
"I can't imagine how it could be seen as being an appropriate request of this board at this time," said Mahody.
Nova Scotia Power is proposing a new storm charge that would allow it to collect up to two per cent more per year from ratepayers to pay for extreme weather events.
The storm rider would allow it to recover any money spent above the amount embedded in rates to cover the costs of dealing with severe storms — about $10.5 million per year.
The rider only goes one way — to the benefit of the company.
If storm costs come in below what is set in rates, the company keeps the difference. There is no refund to customers.
Decarbonization deferral account
The company also wants to create an account to spread out the cost of retiring its coal fired plants by 2030. It says unrecovered depreciation in the account will sit at over $600 million at the end of the decade.
The company must persuade the board that existing depreciation rules need to be changed.
There are also key issues that loomed over the rate hearing but were not resolved.
One is the federal carbon tax.
An agreement with the province that averted the tax expires at the end of 2022. It's not clear what will replace it.
Ottawa could impose the "federal backstop program" which Nova Scotia Power said would cost it $243 million over the next two years. That is not accounted for in the rate application.
Fuel cost spike
Ratepayers are also on the hook for the huge spike in fuel costs facing Nova Scotia Power.
The company updated its fuel forecast this summer, revealing the cost of fuel between 2022 and 2024 is $681 million higher than the amount in its application submitted earlier this year.
On the eve of the hearing, the proposed rate increased from 10 percent to 11.6 percent to cover the fuel bill to the end of 2022.
The blow was softened by $165 million in greenhouse gas emission relief provided by the province, but it still leaves $516 million in higher fuel costs expected in 2023 and 2024.
The company says it will wait until next fall to submit its plans to recover the fuel bill.
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