Nova Scotia Power seeks approval for continued rate stability

HALIFAX – The price Nova Scotians pay for electricity has increased each year by less than inflation since 2014, and Nova Scotia Power is looking to continue that trend for the next three years.

Nova Scotia Power applied today (THURSDAY) to the Nova Scotia Utility and Review Board (UARB) to implement a three-year fuel stability plan that, if approved, would hold average fuel rate increases for residential customers to 1.5% in 2020, 2021 and 2022. For the average household, this equates to roughly $2 per month.

"Nova Scotia families and businesses want continued rate stability, with a clear emphasis on minimizing price increases, and we’re committed to delivering on our customers’ expectations," said Karen Hutt, President and CEO of Nova Scotia Power. "We have 1,700 employees in communities across this province working hard every day to provide electricity that is reliable, safe, affordable, and increasingly renewable."

Eight Years of Rate Stability Below Inflation for Residential Customers

"We’ve stabilized power rates, while at the same time advancing the most ambitious transition to renewable energy in Canada," Hutt said. "Last year we achieved a new milestone, delivering 30% of electricity from renewable sources – triple where we were a decade ago. We will reach 40% renewable next year, thanks to the Maritime Link subsea transmission cable to Newfoundland and Labrador, giving us access to hydro power from Muskrat Falls. We have also reduced carbon emissions by 35% compared to 2005 levels, which makes us a Canadian leader in cutting carbon and surpasses the COP21 Paris climate conference target of achieving a 30% reduction by 2030."

Fuel and purchased power costs represent Nova Scotia Power’s single largest expense, comprising approximately 45% of the total cost of producing and distributing electricity. From 2020 to 2022, this cost is expected to total $2.2 billion — $275 million (or 12.5%) higher than the previous three years. The increase is due to the cost of acquiring renewable energy to meet environmental requirements and higher fuel commodity prices. The three-year plan includes a forecast deferral of $44 million, which equates to less than 2% of forecast fuel costs for 2020-22.

Broadly speaking, Nova Scotia Power’s expenses fall into two categories governed by two separate regulatory processes:

• Fuel and purchased power costs: The fuels used to generate electricity, such as coal and natural gas, as well as the cost of purchased power, such as renewable energy contracts or electricity imported from other provinces via transmission lines. By law, these costs are a direct flow-through to customers, meaning customers pay only the actual costs. Fuel and purchased power costs are governed by the Fuel Adjustment Mechanism.
• Non-fuel costs: All other company costs, including labour, equipment and supplies. Non-fuel costs are set through General Rate Applications.

The application submitted today to the UARB is being made under the Fuel Adjustment Mechanism, and solely relates to fuel and purchased power costs. An active team focus on cost control and creating efficiencies across the business has enabled Nova Scotia Power to avoid seeking an increase in non-fuel costs since the 2014 General Rate Application.

The rate changes proposed in Nova Scotia Power’s 2020-2022 plan average 2% across all customer classes. This includes 1.5% for Residential and averages of 2.3% for Commercial customers and 3.7% for Industrial customers.

Nova Scotia Power’s fuel stability plan is subject to review and approval by the UARB. A hearing is planned for October, with a decision expected before the end the year.

A copy of the regulatory filing can be found at nspower.ca/ratestability.