Nova Scotia Power and its customers have reached a settlement that would see rates rise by nearly 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 Utility and Review Board (UARB) ended in September.
The settlement now goes to the UARB for approval.
"It'll be over to the board to determine whether or not the settlement itself is in the public interest, and everyone who participated in the hearing will have an opportunity to make representations on that point," said consumer advocate Bill Mahody, who represents Nova Scotia Power residential customers before 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 province's Progressive Conservative government after the hearings.
That legislation does not limit fuel adjustment costs, which Nova Scotia power was seeking for the next two years to cover the rising price of oil, gas and coal used to generate electricity. The utility had warned that adjustment could boost residential rates between 9.6 and 12 per cent.
The new agreed-on increase covers those fuel costs and includes increased spending on energy efficiency programs, which the province has also allowed.
Lawyers representing residential, small businesses and large industrial customers signed on to the settlement. As did the Ecology Action Centre and the Affordable Energy Coalition.
"The 6.9 per cent in the circumstances represents a reasonable rate increase given the revenue requirement that was testified to at the hearing," said Mahody.
Province not part of negotiations
The province did not participate in the negotiations.
In a statement Thursday night, the Department of Natural Resources and Renewables said it was unaware of the specific details and will have to review the terms of the agreement.
"We put legislation in to protect ratepayers, and we will continue to protect them. Anything that results in higher rates and potentially circumvents the purpose of our legislation will certainly require a close look," the department said.
In a news release, Nova Scotia Power president Peter Gregg said "we appreciate the collaboration of customer representatives to reach the proposed settlement filed today, as we adhere to the direction provided by the provincial government through Bill 212."
"There's no question this is a hard time for Nova Scotians and great attention must be paid to the current concerns over the rising cost of living, while also ensuring we maintain the most basic needs for a reliable electrical system," Gregg said.
Nova Scotia Power has withdrawn a proposed "earning sharing mechanism" that would have given the company half of excess profits earned above its approved rate of return, which is nine per cent.
Rate cap legislation
In accordance with the province's rate cap legislation, the rate of return has been capped at 9.25 per cent. The company had asked for a maximum of 9.5 per cent.
The settlement allows for a storm rider — or additional charge — on bills to pay for extreme weather, but the rider now ends in three years.
A so-called decarbonization account has been 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.
Rates in the settlement agreement do cover the outstanding fuel bill — estimated at $516 million in 2023 and 2024.
The settlement confirms that Nova Scotia Power will apply next year to begin to recover those costs, with an expectation that recovery will be spread out over time.
The settlement comes in the same week Nova Scotia Power had its credit rating cut two notches by S&P Global.
The rating agency blamed the rate cap, which it said was an act of unprecedented political interference in a regulated utility.
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