Nova Scotia regulator approves 14% electricity rate hike, defying premier
CBC
Nova Scotia regulators approved a 14 percent electricity rate hike Thursday, defying pressure from Premier Tim Houston who had called on them to reject the increase.
Rates will rise on average by 6.9 percent each year in 2023 and 2024.
The 203-page Nova Scotia Utility and Review Board decision ratifies most of the elements in a settlement agreement reached between Nova Scotia Power and customer groups after Houston's government legislated a rate, spending and profit cap on the utility in November.
The board said approval was in the public interest and the increase is "reasonable and appropriate."
"The board cannot simply disallow N.S. Power's reasonable costs to make rates more affordable. These principles ensure fair rates and the financial health of a utility so it can continue to invest in the system providing services to its customers. While the board can (and has) disallowed costs found to be imprudent or unreasonable, absent such a finding, N.S. Power's costs must be reflected in the rates," the three-member panel wrote.
In addition to the 14 per cent hike, the board maintained N.S. Power's current return on equity of 9 per cent, with an earnings band of 8.75 to 9.25 per cent. It agreed in principle to the establishment of a Decarbonization Deferral Account to pay for the retirement of coal plants and related decommissioning costs and implemented a Storm Cost Recovery Rider for a three-year trial period.
The board rejected several items in the agreement including rolling some Maritime Link transmission capital projects into consumers' rates.
Houston claimed the settlement breached his government's legislation, known as Bill 212, which he said was intended to protect ratepayers.
It capped rates to cover non-fuel costs by 1.8 per cent. It did not cap rates to cover fuel costs or energy efficiency programs.
Bill 212 was passed after the board concluded weeks of public hearings into N.S. Power's request for an electricity rate increase, its first general rate application in ten years.
In its decision, the board accepted that legislation was intended to protect ratepayers but did not preclude increases in rates.
"Given the exclusion of fuel and purchased power costs when these were expected to cause significant upward pressure on rates, it also did not preclude large increases in rates. Instead, the protection afforded by the Public Utilities Act amendments appears to be focused on N.S. Power's non-fuel costs, with several amendments targeting N.S. Power's cost of capital and earnings."
The board noted the province was the only intervenor in the rate case to object to the settlement.
The legislation triggered credit downgrades from two credit rating agencies who said the law compromised the independence of the Nova Scotia Utility and Review Board.