Rates may increase by 14% over 2 years in settlement between Nova Scotia Power customers

Nova Scotia Power and its customers have reached an agreement that would raise rates by nearly 14 per cent over the next two years.

If approved by regulators, rates would rise by 6.9% in 2023 and 6.9% in 2024 – the same amount on the table when hearings before Scotland’s Utility and Review Board (UARB) concluded in September.

The settlement now goes to the UARB for approval.

“It will be up to the board to determine whether the settlement is in the public interest, and everyone involved in the hearing will have an opportunity to make statements on that point,” said representative Bill Mahody, a consumer advocate. Nova Scotia Power residential customers before regulators.

The deal announced Thursday night takes into account the 1.8 per cent cap on non-fuel costs that the province’s Progressive Conservative government imposed through Bill 212 after hearings.

That legislation does not cap fuel adjustment costs, which Nova Scotia’s power was seeking over the next two years. covering the rising price of oil, gas and coal used to generate electricity. The utility warned that the adjustment could raise housing rates by between 9.6 and 12 percent.

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

The agreement was signed by lawyers representing residential, small business and large industrial clients. As did the Environmental Action Center and the Affordable Energy Coalition.

“The 6.9 percent represents a reasonable rate increase considering the revenue that was demonstrated 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 night, the Department of Natural and Renewable Resources said it was unaware of the specific details and would need to review the terms of the agreement.

“We have put legislation in place 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 agreement presented today, as we adhere to the direction provided by the provincial government through Bill 212.”

“There is no doubt that these are tough times for Scots and much attention needs to be paid to current concerns about the rising cost of living while ensuring we maintain the most basic needs of a reliable electricity system,” Gregg said.

Nova Scotia Power has withdrawn a proposed “profit-sharing mechanism” that would have given the company half of any excess profits earned above its approved rate of return, which is nine per cent.

Rate cap legislation

In accordance with the territory’s rate cap legislation, the rate of return is capped at 9.25 percent. The company asked for a maximum of 9.5 percent.

The settlement allows for a pilot storm or surcharge to be paid on bills to pay for extreme weather, but the pilot expires after three years.

The so-called decarbonisation bill has been limited to deducting the cost of retiring coal plants, pending consultation with customer groups.

The remaining elephant in the room for ratepayers is the cost of fuel.

The fees in the settlement agreement cover what they pay for the fuel bill — $516 million in 2023 and 2024.

The agreement confirms that Nova Scotia Power will apply next year to start recovering those costs, with the expectation that the recovery will spread over time.

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

The rating agency blamed the rate cap, which it said was unprecedented political interference in a regulated utility.