UARB approves 14% rate hike
Full increase will be in effect by January 2024
Nova Scotia Power’s residential customers will see their power bills increase by about 14 per cent by January of next year.
The Nova Scotia Utility and Review Board announced Thursday that it has approved most of the utility’s general rate application settlement agreement that was reached in November with representatives for all major customer classes, representing most of Nova Scotia Power’s customers.
The board decision provides for average rate increases of 6.9 per cent across all customer classes in each of 2023 and 2024.
The increase for 2023 is effective immediately and next year’s increase will kick in Jan. 1, 2024.
When compounded, the residential rate increase comes in at a 14.17 per cent hike over two years.
“The board is satisfied that the negotiated average 6.9 per cent rate increases in each of 2023 and 2024 are reasonable and appropriate, and that the increases comply with recent amendments to the Public Utilities Act introduced through Bill 212,” board members wrote in the summary of its decision.
Bill 212, passed into law by Premier Tim Houston and the Progressive Conservative government in November, required that the net rate increase for the utility, across all rate classes, not be greater than 1.8 per cent in 2022, 2023 and 2024, with the exception of an increase for fuel costs and demand side management costs.
The legislation also required that revenue generated from the net rate increase could only be used to improve service reliability.
Houston and the provincial Natural Resources and Renewables Department (NRR), had called for the board to set aside the settlement agreement, saying it was contrary to the purpose and intent of Bill 212.
DISAPPOINTED
Natural Resources Minister Tory Rushton said after a cabinet meeting Thursday that the government is disappointed with the board’s decision.
“I still have to go through with my staff to see if this (decision) does comply with Bill 212,” Rushton said, but he would not say what the government’s next steps might be if they find the board decision out of bounds with the November legislation.
“I want to review the whole document and see where the UARB came from and let’s not presuppose what the wording is in that report,” Rushton said. “We’ve always been very clear that we are standing by ratepayers but we also respect the independent body of the UARB and their decision today.”
Liberal Leader Zach Churchill said in written response that the board’s decision was made in consultation with affordability and environmental experts but the Houston government, which already interfered in the independent process by passing Bill 212, could do it again.
“Punting the problems of today down the road for tomorrow should not be an option,” Churchill said. “Nova Scotians deserve reliable power they can afford, and Premier Houston’s interference will jeopardize that. With the rising cost of living, the Houston government should be focused on providing targeted, direct relief for Nova Scotians instead of interfering in the energy market in a way that will cost Nova Scotians more down the road and make our power grid less reliable.”
In a statement, Nova Scotia Power, which submitted its initial rate application 12 months ago, said the board’s ruling is the culmination of an extensive and transparent regulatory process.
“The UARB ruling substantially endorses and approves the settlement agreement reached in November with Nova Scotia Power and key customer groups, which it (board) ultimately determined is in the public’s best interest,” the NSP statement reads.
“As always, our team will continue to focus on delivering for our customers.”
INCREASE MATH
The rate increase math goes likes this: If a homeowner is currently paying $170 per month for electricity, the increase will mean a hike of $12 per month immediately for a total of a $132 increase through to the end of 2023.
The increase for the existing $170 monthly bill would amount to a bit more than $24 a month for the months of January to December of 2024.
“It’s not a surprise,” said Brian Gifford, chairman of the Affordable Energy Coalition. “The rate increase will be hard on low- and modestincome customers but it’s based on reality. What we have to remember is that the biggest part of the increase is the fossil fuel crisis.
“Some of the power rate increase is to cover increased efficiency spending to lower customers’ bills, including a big increase in spending on low-income homeowner programs, which we strongly support. This rate increase reinforces the need for a systemic program to provide a bill relief for low-income customers.”
Gifford commended the Houston government’ s onetime increase to the heating assistance program to $1,000 and extending it to modestincome household but said a systemic program is necessary for future years.
He said that even before the announced rate increases, Nova Scotia had one of the highest energy poverty rates in the country, measured as people spending more than six per cent of their income on home energy.
Gifford said there are several reasons for that, including the number of older, poorly insulated homes in the province, generally lower incomes than other parts of the country and higher energy costs.
The New Democratic Party said the board decision means families will face a further 14 per cent rate increase over the next two years, making power even harder to afford.
“On the eve of a forecast of (minus) 20 degrees, this rate hike will literally leave many Nova Scotians in the cold,” party leader Claudia Chender said. “The Houston government’s intervention that led to this decision has now made power even more unaffordable for people, while failing to address the underlying issues of how we regulate this utility.
‘WILL BE DIFFICULT’
Chender said the decision only covers the next two years and without serious regulatory changes, which the government could make in the spring sitting of the legislature, Nova Scotians we’ll be in a similar position in 2025, with still more increases to come.
The board, in its summary, said it is “keenly aware that electricity rates are already challenging for many customers and any rate increase will be difficult, especially for those with low or fixed incomes.”
“However, the board does not have the authority to provide special rates for these customers and, as noted by the Nova Scotia Court of Appeal, the board’s regulatory power under the Public Utilities Act is not an instrument of social policy. Further, consistent with principles of utility rate regulation recognized by the Supreme Court of Canada, the board cannot simply disallow Nova Scotia Power’s reasonable costs to make rates more affordable.”
The board decision notes that the principles of regulation “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, Nova Scotia Power’s costs must be reflected in the rates paid by customers.
The board also approved the Storm Rider, the DSM Rider and the Decarbonization Deferral Account in principle, each as described in the settlement agreement.
The board did not approve three items in the agreement, namely the proposed AMI Opt-out fee, the creation of a regulatory asset for Annapolis Tidal Generating Facility, and the four Maritime Link transmission capital projects.
The fuel component this year will amount to 1.5 per cent of the total 6.9 per cent increase. In 2024, the fuel cost will account for 6.6 per cent of the hike. A portion of estimated fuel costs are being deferred beyond the two years covered in this decision.