Topic:"Cost Considerations" in M13007

("MPs") (similar to the ISOs in Australia and Ontario). Fourth and last, a direct fee to NSP who passes through a proportion of the fee to the other relevant MPs (similar to the EfficiencyOne model). In the immediate future, we propose to...

AI summary The document proposes introducing a Direct Charge as a fee recovery mechanism for the IESO NS, where the IESO charges relevant MPs a fixed monthly fee proportional to their annual electricity consumption. This approach aims to reduce setup and administrative costs, provide flexibility for future changes, ensure revenue stability, and align with economic principles.

Billing determinants Billing determinants are the specific units of service consumption, such as megawatt-hours ("MWh"), megawatts ("MW"), or number of customers, used to calculate charges and determine how a revenue requirement is collect...

AI summary Billing determinants are units of service consumption used to calculate charges and revenue requirements. They can be based on usage (MW or MWh) or fixed charges. Cost reflectivity is a key principle for regulated activities, as export charges can distort efficient trading patterns and shift revenue recovery.

Ranking Ranking of each of the four options based on the five criteria indicates that a custom Direct Charge to MPs would most effectively recover IESO fees from users of the system, as shown in [Figure 11.](#page-21-0) Figure 11: Ranking...

AI summary The text evaluates four options for recovering IESO fees, concluding that a custom Direct Charge to MPs is most effective. It considers criteria like set-up costs, administrative simplicity, flexibility, revenue stability, and economic principles. A fixed charge offers revenue stability and minimizes behavioral distortions.

Appendix 1: Detailed example of Direct Charge to each MP (Option 2.a.) To provide more detail and explanation on how the monthly charges for a Direct Charge to MPs would work, the figures below provide additional illustration of the recomm...

AI summary This appendix details the structure of monthly charges for Market Participants (MPs) under a Direct Charge mechanism. The charge consists of a base allocation, an allocation adjustment based on forecast vs. actual load share, and a true-up based on forecast vs. actual IESO revenue requirement. The total revenue collected by the IESO is derived from base allocations and true-up amounts, while allocation adjustments net to zero.

Set-up costs The set-up costs are the initial implementation costs associated with establishing the new recovery mechanism under each framework. The criterion is defined according to i) whether the initial filing process is straightforward...

AI summary The text discusses set-up costs related to establishing a new recovery mechanism under different frameworks. It highlights the importance of straightforward filing processes, integration with existing structures, and reliance on agreed-upon methods to minimize additional staffing costs.

NON-CONFIDENTIAL 40 e) Yes, subject to the clarification on timing provided in response in part d) above. Pursuant 41 to Application 4.2 and Figure 13, the compliance filing True-Up Option 2 also allows for 42 FY1 load actuals to be adjust...

AI summary The text discusses adjustments to load actuals in compliance filings, referencing Application 4.2 and Figure 13. It confirms adjustments for FY1 load actuals and mentions an actual load allocation adjustment for FYI variances based on FY1 actual load.

Cons - Inconsistent with allocation of costs when system operator was within NSP

AI summary The concern raised is that the proposed approach is inconsistent with the allocation of costs when the system operator was within NSP, suggesting potential misalignment in cost distribution.

NON-CONFIDENTIAL of IESO-NS's costs under True-Up Option 1 (two-year lag) as compared to True-Up Option 2 (one-year lag via compliance filing) and confirm how those carrying costs are reflected in the fee amounts proposed in Figures 14 thr...

AI summary The text requests an analysis of the costs of IESO-NS under two different True-Up options, comparing a two-year lag with a one-year lag via compliance filing, and how these costs are reflected in the proposed fee amounts.

41 39 Date Filed: September 22, 2026 IESO Nova Scotia (MEU) IR - 1 Page 3 of 4 43 c) IESO Nova Scotia's carrying cost is its line of credit rate, currently 2.32%. The dollar 44 figure for carrying costs depends on the period of recovery in...

AI summary IESO Nova Scotia outlines its carrying cost as the line of credit rate, currently 2.32%, and explains that the carrying cost figure depends on the recovery period, including the start date and number of months of recovery. A table is provided for the scenario described.

Response IR - 2 ISO Core Costs are internal costs such as ISO staff, control room operating and capital expenditures, load forecasting software and running procurement processes. These costs do not include the remuneration of resources for...

AI summary The document outlines ISO Core Costs, which include internal expenses such as staff, control room operations, load forecasting software, and procurement processes. It clarifies that these costs exclude remuneration for ancillary services and transmission or energy balancing costs, which are managed separately by transmission owners.

Response IR – 19 a) Each LSE has its own cost of service allocation methodology that generally assigns different proportions of costs to different customer classes. For example, an LSE might be charged an additional 5 cents in ISO charges...

AI summary The response discusses how Load Serving Entities (LSEs) allocate costs differently across customer classes, using an example of a 5 cents per MWh charge. It mentions IESO Nova Scotia's role in assisting stakeholders through engagement sessions and the development of an illustrative model to demonstrate potential cost allocations.

Cons - Inconsistent with allocation of costs when system operator was within \ensuremath{\mathsf{NSP}}

AI summary The argument presented highlights an inconsistency in the allocation of costs when the system operator was within NSP, suggesting a potential issue with how costs were managed or distributed during that period.

. . Pros - Inconsistent with method NSP would allocate system operator costs in revised methodology - Consistent with method NSP allocates generation and had allocated transmission prior to 2026/27 GRA - Inconsistent with method IESO alloc...

AI summary The text highlights inconsistencies in the allocation of system operator costs under the revised methodology compared to NSP's previous methods for generation and transmission prior to 2026/27 GRA, and also notes inconsistency with the IESO's approach for MPs.

Con - Need to define % of costs related to generation and % related to transmission

AI summary The text highlights the need to define the percentage of costs related to generation and transmission, which is crucial for accurate cost allocation and regulatory analysis.

- Inconsistent with method IESO allocates costs to MPs Energy % (SLF) Demand % 51.81% 48.19% Transmission ansmission Generation 80.4% 19.6% (To be Determined) Pros

AI summary The text discusses inconsistencies in the method used by the IESO to allocate costs to MPs, highlighting a discrepancy in the distribution of energy and demand percentages, as well as transmission and generation costs.

Option 5: SLF for Gen , Demand for Tx Options Summary ¢/kWh IESO RR Fuel-related in aggregate ¢/kWh ¢/kWh 8.947 0.151 8.477 -0.471 -5.3% 9,970 kWh 892.02 845.11 15.02 845.11 Non-fuel related in aggregate ¢/kWh 5.781 6.216 0.434 7.5% 576.39...

AI summary The text presents a detailed table summarizing various costs and percentages related to energy generation and demand, including fuel-related and non-fuel-related costs, as well as overall totals and changes in cost per kilowatt-hour. It outlines aggregate figures, percentages, and comparisons between different options.

5.1 Revenue requirement components Per the fee recovery application, IESO Nova Scotia is currently responsible for system planning, energy resource procurement, and interconnection functions, but does not yet have operational control of th...

AI summary The document discusses the revenue requirement components for IESO Nova Scotia, highlighting that most costs are fixed and primarily include employee, transition, and IT hardware costs. These costs do not vary significantly with energy throughput, and IESO Nova Scotia's costs are expected to remain fixed even as it assumes additional responsibilities under the MAEA.

5.2 Appropriateness of proposed cost allocation based on load Cost causation is a key underlying principle to be considered when allocating revenue requirement. As discussed earlier in Section [3,](#page-7-0) cost causation holds that the...

AI summary The section discusses the appropriateness of allocating costs based on load, emphasizing cost causation as a key principle. It notes that while MWh load is a reasonable method, the application lacks a detailed cost allocation exercise, unlike other North American ISOs.

In each case, costs are allocated directly to the function or customer class that causes them wherever practicable, with indirect and shared/overhead costs typically allocated based on the resulting direct-cost proportions. This approach a...

AI summary The text discusses cost allocation practices, emphasizing direct allocation to functions or customer classes that cause costs, and notes that IESO Nova Scotia's current limited mandate justifies a less granular approach, but a more detailed allocation may be needed as its responsibilities expand under the MAEA.

Illustrative granular cost allocation methodology Utilizing a granular cost allocation approach, the illustrative steps would be as follows: - Allocate all direct costs to each function, i.e., system planning, energy resource procurement,...

AI summary The text discusses a granular cost allocation methodology, emphasizing the allocation of direct and indirect costs to functions like system planning and energy procurement. It highlights the potential for increased electricity exports in Nova Scotia, such as through the Wind West initiative, and suggests that a granular cost allocation approach should be implemented as soon as IESO Nova Scotia reaches Phase 2 steady state.

5.5 Appropriateness of the proposed true-up options IESO Nova Scotia's proposed revenue requirement true-up builds on the revenue requirement Deferral and Variance Mechanism ("DVM") proposed in its 2026/27 revenue requirement application,...

AI summary IESO Nova Scotia proposes two true-up options for revenue requirement variances. Option 1 defers adjustments to the revenue requirement application two years later, while Option 2 allows for earlier refunds or collections. LEI recommends Option 1 due to its lower compliance costs and minimal financial benefits of Option 2, despite potential future benefits as revenue requirements grow.

Q: Did the IESO NS filings discuss any other options? A: Yes. FTI also discusses allocating all IESO NS costs direct to NS Power, similar to the Efficiency One DSM charge. While even simpler than the LSE charge, it outsources the allocatio...

AI summary The IESO NS filings discussed an option of allocating all IESO NS costs directly to NS Power, similar to the Efficiency One DSM charge. This approach would outsource cost allocation to NS Power's process, adding complexity to its rate case.

Q: Do you agree with IESO's allocation recommendation? A: Yes. I agree that IESO NS has identified this is the most equitable outcome based on principles of cost allocation. Where a specific cost driver cannot be identified, it is more equ...

AI summary The respondent agrees with the IESO's allocation recommendation, arguing that allocating costs based on the commodity delivered (electricity) is more equitable than allocating based on peak demand. This approach aligns with how most key commodities are priced for all customers.

dequacy of consideration of renewable energy in IRP, retirement of uneconomic plants, and use of all-source procurement process. Shareholder incentive mechanism for both renewable energy and DSM plan. - 2020 Nova Scotia UARB Matter No. M09...

AI summary The text outlines expert testimony provided by Paul Chernick on various regulatory matters, including renewable energy integration, decommissioning, and cost management in Nova Scotia and California. Topics include IRP adequacy, project scope changes, and EV charging programs.

12 Reference: Application, Section 3.3, p. 13, lines 1-3 and footnote 7. - 13 (a) Please distinguish between "inseparable costs" and "direct costs" including 14 those associated with interconnection studies, with specific examples, and 15...

AI summary The text requests clarification on the distinction between 'inseparable costs' and 'direct costs,' including those related to interconnection studies, and asks whether wheeling transactions are anticipated on the Nova Scotia transmission system and how they are accounted for in the Fee Calculation Model.

11 Request IR-2: 12 13 Regarding the proposal for Option 2, as described on p. 30-37 of the Application, please confirm 14 the following statements. If not confirmed, please explain. 15 16 (a) The compliance filing would include the follow...

AI summary The text requests confirmation of details related to a compliance filing for Option 2, including the inclusion of FY1 expenditure reports, recalculated fees, timing of the filing, assumptions required for reporting, and the handling of fees for FY2. It also notes that the filing will not undergo a hearing process and defers prudence review to the FY3 application.

41 Request IR-3: 42 43 Regarding Option 2, please explain how errors in assumptions about actual expenditures and load 44 during the final weeks of FY1 (see IR-2 parts d and e) would be considered, if at all, in any filings. 45 46

AI summary The request asks for an explanation of how errors in assumptions about expenditures and load during the final weeks of FY1 would be considered in any filings, referencing IR-2 parts d and e.