Nova Scotia Power Vs. Pretty Much Everyone

Full disclosure: I have not read Nova Scotia Power’s (NSP) application to the Utility and Review Board (UARB) for a 10% rate increase over the next three years — an application that apparently runs to 1,500 pages.

I’ve read a lot about the application, though, beginning with NSP’s initial press release which stated:

NSP submitted a general rate application to the Nova Scotia Utility and Review Board (UARB) requesting a rate increase in 2022, 2023, and 2024…

Climate change is a real concern for all of us. The federal and provincial governments are focused on reducing carbon emissions on an expedited basis to mitigate potential impacts. This includes the requirement to phase out coal-fired electricity and deliver 80 percent renewable energy by 2030. We are committed to achieving these goals. To do that, we need to change how we make, deliver, and store electricity in less than 10 years to transform an electrical system that took over 50 years to build. ​

It may have taken “over 50 years” to build the electrical system, but Emera, NSP’s parent company, has been in the driver’s seat for the past 30 of them — our power company was privatized in 1992, the same year as the Earth Summit in Rio de Janeiro during which governments agreed the United Framework Convention on Climate Change. It’s key objective, the “stabilization of greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system.” Developed countries agree to return their emissions to 1990 levels.”

Is Emera really suggesting it has done nothing to change the way it makes, delivers or stores electricity since 1992 and now has 10 years to play catch-up? Who thought that was a good way to frame the situation?

 

Fairness?

Jennifer Henderson, who keeps an eye on all things power-related for the Halifax Examiner, has a good piece on the UARB application. She explains that the estimated $5/month NSP claims the increase will add to the average residential bill could be higher if the UARB approves other proposals contained in the filing. Proposals like asking ratepayers to cover $52 million in higher-than-expected fuel costs (Henderson says they might be related to delays in the Muskrat Falls project); a “storm recovery” charge for years when the costs associated with extreme weather exceed what the company has budgeted (no incentive to lowball the budget there, I’m sure); and the one you’ve no doubt heard the most about, a proposed “system access charge” of $8 per kW per month for “all new customers who want to generate their own electricity and sell the extra back to Nova Scotia Power through a process known as “net-metering.”

Opposition to the solar fees has been particularly vociferous, driven both by industry but by those hoping to transition to solar. (Anyone who installed their panels prior to the introduction of the fee will be grandfathered and exempted from it for the next 25 years.)

Gurprasad Gurumurthy, energy coordinator for renewables and electricity with the Ecology Action Centre told Henderson:

“We’re in a climate emergency and this fee will dis-incentivize residents who want to set up solar energy at a time when we need to be transitioning to renewables as fast as we can.”

Gurumurthy says the new system access fee works out to $960 a year for homeowners with the maximum allowable 10kw system.

NSP claims the charge is necessary in the name of “fairness,” without it, CEO Peter Gregg told Henderson:

There is still a cost to serve those (net-metered) customers because they continue to be connected to the grid. Their costs have gone down and we still have cost in the system to provide reliable power and so as they are paying less, it just naturally happens that the rest of the customers’ costs go up.

But Brendan Haley, an ex-pat Nova Scotian who serves as a policy director for energy efficient economy at Efficiency Canada, took a scalpel to this on Twitter (@br_haley). Haley says that to know whether those with solar are escaping costs everyone else must pay “you need to count both costs and benefits to everyone on the grid,” benefits that include “reduced costs on the entire system,” and he takes issue with how NSP calculates these reduced costs:

The application suggested NSP estimated them from last “Integrated Resource Plan” – a long-term model of electricity system.

Yet the last IRP was conducted before the benchmark carbon price of $170/tonne was announced & it was critiqued for valuing any GHG reductions greater than required under existing cap at $0. Solar and energy efficiency produce carbon reduction benefits that were not valued

That’s a big oversight! Since the last IRP, things have changed -$170/tonne is benchmark carbon price -80% renewable target -2030 coal phase out -zero-emission vehicle mandate All this adds value to solar and energy efficiency, yet NSP stymies both.

And even if solar did put an unfair burden on low-income customers, says Haley, the UARB “does not have a mandate to distinguish between high and low income customers.”  In fact, a Charter challenge to the Public Utilities Act in the 2000s that tried to expand the UARB’s mandate to include consideration of “energy poverty and low-income burden” was rejected.

Haley concludes:

So if NSP is concerned about differential impacts of energy costs on low-income customers they should ask the gov’t to change the regulatory rules That would enable an energy poverty strategy that includes credits on unaffordable bills, emergency assistance & robust efficiency…

Low-income households shouldn’t be fodder for a debate actually about protecting utility revenues.

Liberal leader Iain Rankin responded:

This is all well said, but I would add that instead of asking the regulator to look at low-income specifically, add a broad based sustainability mandate that takes into account socioeconomic implications and historically marginalized communities (ie low income and others).

(Interestingly, something like this was considered before — in 1995, to be exact — but I’ll get into that next week.)

In response to the loud and negative reaction to its proposed solar fee, Gregg first issued a press release defending it and then sent out a press release announcing NSP would postpone the introduction of the fee for a year.

 

Social solidarity

Everyone else was getting reactions to the proposed rate hike so I decided I would to.

I called Alec Stratford, chair of the Nova Scotia Action Coalition for Community Well-Being (NSACCW) and someone whose concern for low-income Nova Scotians strikes me as more sincere than NSP’s.

I wanted to follow up on NSACCW’s January 31 press release, headlined:

NS Power is throwing a wrench in NS’s climate plan: UARB must reject the utility’s rate hike plans and solar fee plans

Stratford says the proposed solar fee is “certainly not conducive to a good climate plan” but it is “the rate increase and the profit that are the most suspect here.” (NSP has asked the UARB to maintain its average 9% return on equity but also extend the range to 8.5% – 9.5%.) The release noted:

Nova Scotia Power expects to earn $213 million in 2024 from its rate of return based on this application. Meanwhile, there are over 100,000 Nova Scotians who live below the poverty line in inefficient housing that will carry the burden of this rate increase. As the province seeks to meet ambitious climate goals, we cannot ask modest-income households to electrify their home heating and travel while also expecting them to absorb such cost increases.

Stratford says that in the face of climate change we, as a province, haven’t “done the work” and are now simply reacting:

[W]e haven’t invested in Nova Scotia, our infrastructure is old and aged and we continue to burn fossil fuels, which are going up in price, whether it be coal or natural gas or home heating oil.

What is needed, he says is “a massive home efficiency program,” one that will help low-income Nova Scotians whose houses tend to be the most inefficient, but “the reality is that that’s not going to be done by the private sector, it’s too piecemeal it’s not coordinated and costs are exorbitant.” The government, he says, has yet to come to terms with this, preferring to wait for “the hand of the free market” to solve the problem, but Stratford says bluntly, “It’s not going to.”

Stratford also contends that NSP’s rate hike application:

…doesn’t take a climate justice into perspective and it drives inequality, making the rich richer and the poor poorer and in the process, this erodes the social solidarity that is required to tackle these issues and it builds resentment and it builds mistrust and we need to be doing the opposite right now because if we’re going to be successful in meeting our ambitious targets, we need a great deal of social solidarity.

He points to the social solidarity we’ve witnessed here in Nova Scotia in the face of the COVID-19 pandemic and says we need “to be that effective” in transitioning off fossil fuels.”

But at the end of the day, he says we “100%” should not have a privatized power company:

It’s what, minus 15 in Halifax today? I don’t know what it is in Sydney, but people need energy to survive and when something is a public good like that, it ought not be treated like a commodity.

 

Swift response

The rate application received generally poor reviews from politicians too.

On Friday, Natural Resources and Renewables Minister Tory Rushton issued a statement saying he was “disappointed” by NSP’s proposal:

Let’s make something very clear — this government will protect ratepayers. We’re going to be active intervenors in this process. And we are exploring all of our options to respond to this move.

On Monday, Premier Tim Houston said he was “shocked” (no pun intended, presumably) by NSP’s application and that his government would sit as an intervener during the UARB hearings “to argue against the proposed rate hike.”

NDP Natural Resources and Renewables spokesperson Claudia Chender issued a statement calling on the government to “take immediate action to ensure there isn’t a chill on new solar power projects in the province” and noting that “Nova Scotians cannot afford the 10 per cent rate hike NSP is requesting.”

On Wednesday, Houston went a step further, sending a letter to UARB chair Peter Gurnham, alerting him of “urgent, immediate action” the government intends to take:

Specifically, the Province plans to quickly bring into effect the necessary legislative and regulatory framework to deny the net metering system access charge (SAC) requested by Nova Scotia Power in its January 2022 General Rate Application.

That same day, Liberal leader Iain Rankin called on the premier to pass Bill 97, a piece of legislation introduced by his government in Spring 2021 that would “transfer Nova Scotia Power’s authority to regulate initiatives such as the Net Metering Program to Cabinet.” (I haven’t had time to consider whether this is a good idea, but you can read the presentations made in support of the legislation if you follow that link.)

All of this is good news for those considering transitioning to solar — and the companies doing the work — but it also seems to be drawing attention away from the rate hike itself, which some observers have suggested is exactly what the solar fee proposal is intended to do.

I actually find it’s had the opposite effect — it’s made me more curious about the rate hike. In fact, it’s reignited my interest in Nova Scotia Power in general, to the point where I spent way too much time researching it this week, hence the shorter-than-usual edition. But I promise, it will pay off next week because I’m going to speak to someone who knows a lot about NSP and will help me put everything where I like it put — in historical context.

Featured image: NSP logo and Paul Palmeter/CBC photo from student climate protest in Halifax on 24 September 2021.