Topic:"Cost Recovery" in M03413

File #5911·S17·2 - "Expected Annual Production" means the expected annual production as stipulated by the Proponent in the Proposal and as agreed by the Minister and as specified in Schedule A; - "Fiscal Year" means the period beginning on...

AI summary The document defines key terms for a project agreement, including incentives, repayment mechanisms, and production thresholds. It outlines the Minister of Natural Resources' role, schedules for calculations, and the Standard Threshold Price of $120 per megawatt hour. The agreement specifies incentives at $10 per megawatt hour or $0.01 per kilowatt hour.

9. INCENTIVE - 9.1 Subject to the tenns and conditions ofthis Agreement, Canada shall pay an Incentive to the Proponent for the Eligible Production of the Project in accordance with At1icle 10 (Method of Payment) and Schedule A of this Agr...

AI summary The incentive structure outlines Canada's payment terms for project production, including a liability cap of $9,205,560 over 10 years, eligibility criteria tied to Point of Interconnection measurements, and a credit system for over/under production. Projects must be commissioned by March 31, 2011, and total government assistance cannot exceed 75% of capital costs.

12. REPAYMENT OF CONTRIBUTION - 12.1 As per Schedule C, the Proponent shall report to the Minister the Cumulative Revenue, Cumulative Production and Net Cumulative Incentive Received from the Project on an annual basis determined as of eac...

AI summary The Proponent must annually report cumulative revenue, production, and incentive data to the Minister, calculate repayable amounts using ecoENERGY methodology, and repay excess incentives if the Current Unit Value exceeds the Standard Threshold Price. Repayment cannot exceed net cumulative incentives received.

6. PURPOSE 6.1 The obligations evidenced by this Note have been drawn by the Undersigned as partial payment of the consideration owed to the Holder for the purchase of the Assets (as defmed in the Agreement) and payment of Development Cost...

AI summary This Note serves as partial payment for the purchase of Assets and Development Costs under an Agreement, with obligations adjusted as per the Agreement's terms. The payment structure is tied to the Holder's consideration for acquiring these assets.

5.5 Other Costs Unless otherwise expressly provided herein, the Seller shall pay all taxes, levies, charges, costs and expenses whatsoever in respect of the Facility or the Facility Assets, and shall be solely responsible for all liabiliti...

AI summary The Seller is obligated to pay all taxes, levies, and costs associated with the Facility and its assets, including real property taxes, municipal taxes, land use fees, and expenses related to the Facility's design, construction, and maintenance. This responsibility encompasses all liabilities arising from the Seller's obligations under the agreement.

2.4 Termination Costs If a Party elects to terminate. this Agreement pursuant to Article 2.3 above, each Party shall pay all costs incurred (including any cancellation costs relating to orders or contracts for Interconnection Facilities an...

AI summary The section outlines termination cost responsibilities under a GIA, requiring parties to mitigate costs and specifying that the terminating party bears associated expenses. It details obligations for canceling or returning uninstalled interconnection facilities, retention rights for the Transmission Provider, and the Interconnection Customer's liability for removal/relocation costs of installed facilities.

5.19.3 Modification Costs Interconnection Customer shall not be directly assigned for the costs of any additions, modifications, or replacements that Transmission Provider makes to the Transmission Provider's Interconnection Facilities or...

AI summary The section outlines cost responsibilities for interconnection modifications. The Transmission Provider does not assign costs for modifications to their facilities, while the Interconnection Customer bears costs for modifications to their own facilities to comply with regulations and reliability standards.

6.1 Pre-Commercial Operation Date Testing and Modifications Prior to the Commercial Operation Date, the Transmission Provider shall test the Transmission Provider's Interconnection Facilities and Network Upgrades and Interconnection Custom...

AI summary Prior to the Commercial Operation Date, the Transmission Provider and Interconnection Customer must test respective facilities for safety and reliability. Modifications are required if testing identifies issues, with the Interconnection Customer covering all associated costs. Test energy generation is conditional on prior arrangements with the Transmission Provider.

7.1 General Each Party shall comply with the Applicable Reliability Council requirements. Unless otherwise agreed by the Parties, Transmission Provider shall install Metering Equipment at the Point ofInterconnection prior to any operation...

AI summary The section outlines obligations for compliance with reliability council requirements, specifying that the Transmission Provider must install and maintain metering equipment at the Point of Interconnection. The Interconnection Customer is responsible for associated costs, and all revenue metering must comply with Electricity and Gas Inspection Act regulations.

9.9.2 Third Party Users Ifrequired by Applicable Laws and Regulations or ifthe Parties mutually agree, such agreement not to be unreasonably withheld, to allow one or more third parties to use the Transmission Provider's Interconnection Fa...

AI summary The section outlines compensation and cost allocation mechanisms for third-party use of interconnection facilities. Compensation for capital expenses is based on pro rata usage, with ongoing costs similarly allocated. Disputes are resolved by the Board. Key terms include pro rata cost distribution and regulatory oversight.

12.2 Final Invoice Within six months after completion of the construction of the Transmission Provider's Interconnection Facilities and the Network Upgrades, Transmission Provider shall provide an invoice ofthe final cost ofthe constructio...

AI summary The Transmission Provider must issue a final invoice within six months of completing interconnection facilities and network upgrades, detailing costs for comparison with estimates. Overpayments by the Interconnection Customer must be refunded within 30 days if actual costs are lower than estimated.

GENERAL - 01 Overhead expenses are integral costs associated with the construction of capital assets. Generally accepted accounting principles state that the cost of a capital asset not only includes direct construction or development cost...

AI summary Overhead costs are essential to capital asset construction and must be allocated to projects using methods like direct labour costs. Regulatory approvals from the Public Utilities Board and UARB support this approach.

Request to Proceed in Advance of Work Order Approval It is the Company's plan to file a work order for UARB approval of the Digby Wind Project in the near future. Project construction has already begun by NSPI's affiliate. Wind turbines ha...

AI summary NSPI seeks UARB approval to continue constructing the Digby Wind Project before Capital Work Order approval, noting construction has already begun by its affiliate. Costs will not be included in the rate base until Board approval, subject to potential changes.

produced from wind, biomass, tidal, wave, in-stream hydro as well as combined heat and power projects will be eligible for COMFIT rates that reflect basic cost-recovery, including the cost of capital. - • COMFIT-eligible projects will conn...

AI summary The Community-Based Feed-In Tariff (COMFIT) program in Nova Scotia provides eligible renewable energy projects (wind, biomass, tidal, etc.) with rates covering capital costs. Projects connect at the distribution level, with the UARB setting rates per government criteria. The program aims to boost energy diversity, public acceptance, and rural economic activity through job creation. A 2012 review will assess its effectiveness.

- .1 stantial completion of the work. - .2 (6) months following delivery to the Place of the Installation. - .2 Owner, through the Engineer, shall promptly give the Vendor notice in writing of observed defects and deficiencies that occur d...

AI summary The text outlines warranty obligations and factory test requirements for electrical equipment, including procedures for reporting defects, correcting issues, and assigning warranties. It also specifies testing standards for circuit breakers, current transformers, and bushings.

- .2 CSA Standards - .1 C156.1, Ceramic and Glass Station Post Insulators - .2 G164, Hot Dipped Galvanized or Irregularly Shaped Articles - .3 W59, Welded Steel Construction (metal-ark welding) - .3 NEMA Standards - .1 Std. SG-6, Power Swi...

AI summary This document outlines the standards and submittal requirements for electrical components, including CSA, NEMA, ANSI/IEEE, and ISO standards, as well as specifications for operation and maintenance data and manufacturer drawings for disconnect switches.

4.1 General - 4.1.1 Prior to shipment, the following values shall be tested and recorded: - .1 Ambient temperature in °C. - .2 SF6 Gas Pressure in PSI (if applicable). - 4.1.2 Responsibility for delivery shall belong to the Vendor, who sha...

AI summary This section outlines the responsibilities of the Vendor regarding the testing, delivery, and offloading of equipment, including SF6 gas pressure and ambient temperature checks, transportation arrangements, and compliance with regulatory permits.

5.1 General - 5.1.1 Responsibility for delivery shall belong to the Vendor, who shall provide for all delivery costs from factory to the Place of Installation, including but not limited to the following: - .1 Complete delivery from the Pla...

AI summary The document outlines the Vendor's responsibilities for delivering a Pad Mounted Transformer assembly to Digby County, Nova Scotia, including delivery costs, transportation, regulatory compliance, and penalties for late delivery or damage. It also specifies the process for offloading, follow-up procedures, and liquidated damages in case of breach.

- .8 Formwork: - .1 Forms: to CSA-A23.1, plywood and lumber, clean and free of loose knots, splits or metal. - .2 Form Ties: to CSA-A23.1, removable or snap-off metal ties, fixed or adjustable length. Form ties, tie wire, spacers or other...

AI summary The text outlines specifications for formwork and concrete mix, referencing various Canadian standards and testing methods. It details requirements for materials such as form ties, release agents, and curing compounds, as well as specifications for concrete mix proportions and air content.

Protocols - 6.1 NSPI will provide access to regulated utility services on a non-discriminatory basis and will not in respect of those utility services directly or indirectly state, imply or offer any preference or favored treatment to NSPI...

AI summary The document outlines protocols for NSPI to ensure non-discriminatory treatment of affiliates, maintain financial separation, and apply fair market value pricing for goods and services exchanged with affiliates. It also emphasizes the need for Board approval for asset transfers and fair allocation of corporate support costs.

h review and analysis, this Decision will be based on the answers to the following straightforward, commonsense questions: - 1. Is NSPl's acquisition of the DWP necessary for customers and for NSPI? - 2. Is the $82.8 million cost of the DW...

AI summary The Board has determined that NSPI's acquisition of the DWP is necessary for customers and NSPI. However, the $82.8 million cost of the DWP requires reductions, including a $1 million reduction in a bonus payment to EUS due to non-compliance with the Code of Conduct. The Board also finds that the acquisition provides the best available deal after cost reductions.

Submissions - Intervenors [89] The CA argued that there was a failure on the part of NSPI to determine that the EUS contract was the best option available. He submitted: According to the evidence, EUS must have begun work by either the end...

AI summary The CA argues that NSPI failed to properly evaluate the EUS contract, which was selected without proper negotiation and based on a price picked from the market range. The CA also claims that NSPI did not investigate whether the contract price could be reduced and did not confirm that the EUS price excluded markups by EUS on subcontractor charges.

Submissions - Intervenors [133] Avon commented on the embedded costs in the overall cost of the DWP and their affect on NPV and levelized energy cost: Since the time of the filing, NSPI entered into an Operation Support Agreement with GE,...

AI summary Avon discusses the impact of updated costs and production forecasts on the Net Present Value (NPV) of the DWP project. While lower operation and construction costs improved NPV, using the PPA's energy output instead of the P50 forecast reversed the economic advantage, favoring the original PPA. The Board acknowledges the traditional use of P50 for equity and P90 for debt sizing but does not take a stance on future applications.

Findings [137] The Board has reviewed all the information provided and finds that NSPI customers will benefit by including the Project in the rate base. However, the amount to be included in the rate base requires reduction. The Board unde...

AI summary The Board has approved the DWP project with a reduced cost of $79.8 million, noting that the project is in the best interest of ratepayers compared to the PPA. The Board also encourages NSPI to provide energy output data in the FAM filing and acknowledges the economic analysis showing the project's superiority if expected energy output is achieved.

NON-CONFIDENTIAL 1 Request IR-9: 2 3 4 For each labour category in Appendix 2, please explain whether the labour is by NSPI employees, EUS employees, or someone else. 5 6 a. If the labour is by NSPI employees, is it removed from NSPI's cos...

AI summary The document contains several requests related to cost breakdowns and labour categories from Appendix 2. These requests include explanations on whether labour is performed by NSPI employees, a breakdown of materials exceeding $1 million, a breakdown of power production contracts exceeding $1 million, and a breakdown of consulting services with contractors and service types.

ECONOMIC ANALYSIS If NSPI's economic analysis is accepted, the levelized cost of energy for the next 20 years compares favourably to the SkyPower PPA. However, prudence requires careful scrutiny of the embedded costs. NSPI asserts that acc...

AI summary NSPI's economic analysis shows a favorable NPV of $4.9 million for a capital project compared to the SkyPower PPA, but this changes when using a comparable output level. The use of P50 versus P90 assumptions in energy production forecasts is discussed, with the Board expressing hesitation to make a general ruling on the matter.

EUS contract would be CBCL's re-scoped engineering estimate given that the bids are not an apples to apples comparison. The variance between the engineering estimate and the EUS contract is marginal. Is the EUS contract a "reasonable" deal...

AI summary The Avon Group argues that the EUS contract with NSPI is not the best available option due to preferential treatment of the affiliate and lack of competitive bidding. They recommend disallowing a $1.5 million contingency allowance and reducing the contingency allowance to match the bids, as the project came in under budget.

original price estimate provided by 28 EUS by the amount of the incentive – in other words, the only way EUS 29 could get the negotiated price was by completing the Project on time and 30 earning its "bonus". This behaviour transferred som...

AI summary NSPI argues that the original price estimate provided by EUS required them to complete the project on time to earn a bonus, thereby transferring project completion risk to EUS.

1 non-compliance and, quite frankly, it's just our practice and policy and 2 desire to comply with the laws and regulations. So we work hard to do 3 that. 4 5 The Digby project is only one example of the hard work that we've done 6 to ensu...

AI summary The speaker emphasizes the company's commitment to compliance with regulations and laws, highlighting the Digby project as an example of their efforts. They argue that the project was necessary to meet the Renewable Energy Standard and provide economic and environmental benefits, including eco-energy credits. The speaker also claims the project's cost is reasonable and among the lowest in the province.

ApPLICABILITY OF THE CODE There is no disagreement that the construction contract awarded to EUS, including the payment of the bonus, must meet the standards set by the Code in order for the cost to be included in rate base and ultimately...

AI summary The document discusses the requirement that the construction contract awarded to EUS, including a bonus, must meet the standards of the Code to be included in rate base and recovered from ratepayers. The Code mandates that affiliate transactions benefit customers and require sound analysis. NSPI has not adequately demonstrated this, and the process lacked transparency.

WRONG TEST We can only speculate as to how the original price was obtained for the contract. It is not probable that EUS and Emera did any negotiating. It certainly was not the situation oftwo unrelated parties each pushing the other to ob...

AI summary The document discusses concerns about the lack of proper negotiation and due diligence in the EUS contract pricing. It suggests the price was selected based on an engineering analysis rather than competitive bidding, and that NSPI did not adequately verify the price or investigate potential reductions from other bidders, leading to potential affiliate transaction issues.

CONSULTING FEES Included in the project costsfor which NSPI seeks recovery isthe amount for professional consulting (see response to CA IR-12, Exhibit N-l, Appendix 2, p. 3). According to Mr. Bennett, those fees related to work performed b...

AI summary NSPI is seeking recovery of consulting fees related to legal work for acquiring and reselling a project. However, NSPI acknowledges that some fees should not be passed on to ratepayers as they resulted from a two-step acquisition process.

REMEDYSOUGHT In the circumstances, the evidence does not justify NSPI being able to recover the full costs relating to the EUS construction contract. Further, the inability ofthe Board and stakeholdersto be able to have a true presentation...

AI summary The Consumer Advocate argues that NSPI should not recover full costs from the EUS construction contract due to insufficient evidence and failure to meet affiliate transaction criteria. They request denial of a $1M bonus and reaffirmation of compliance with the Affiliate Code.

Date Filed: January 21, 2011 Page 2 of 15 1 aspects of NSPI's request for approval be denied. NSPI's reply to the arguments raised 2 by the Avon Group and the Consumer Advocate is set out below in this submission. 3 4 2.0 FACTUAL CORRECTIO...

AI summary NSPI disputes a statement made by the Consumer Advocate regarding the recovery of costs from ratepayers. NSPI argues that the costs incurred through the two-step acquisition process were prudent and cost-effective, and that no additional costs were passed on to customers. NSPI's position is based on its response during the hearing.

19 MR. BENNETT: 17 an appropriate market range: 29 33 21 different today than it was even contemplated at the time of these 22 bids and we have re-analyzed the bids and done a comparison that 23 shows that the final cost of the project con...

AI summary NSPI argues that the final cost of the project construction is significantly lower than initial bids and is within an appropriate market range. They emphasize that conclusions should be based on factual evidence, not generalizations.

22 4.0 CONCLUSION 23 24 NSPI has brought forward a low cost renewable project which is required for 2013 RES 25 compliance. NSPI's evidence confirms that its actions and those of its affiliates have 26 preserved the value in an otherwise f...

AI summary NSPI has completed a low-cost renewable energy project ahead of schedule and under budget, benefiting customers. The affiliate transactions associated with the project align with the Code of Conduct, which emphasizes demonstrable benefits to customers. NSPI requests approval for a $82.8 million capital expenditure and confirmation of compliance with the Code of Conduct.

h review and analysis, this Decision will be based on the answers to the following straightforward, commonsense questions: - 1. Is NSPl's acquisition of the DWP necessary for customers and for NSPI? - 2. Is the $82.8 million cost of the DW...

AI summary The Board has determined that NSPI's acquisition of the DWP is necessary for customers and NSPI, but the $82.8 million cost requires reduction due to non-compliance with the Code of Conduct and insufficient evidence for a $1 million bonus payment. The total cost will be further reduced by at least $2 million based on final construction costs. Despite affiliate transactions, the acquisition is considered the 'best available deal.'

[56] NSPI indicated that EUS advised: it was aware of the pricing information received under the solicitation conducted by SkyPower and the CBCL pricing summary, which were based upon the original design and layout for the project as tende...

AI summary NSPI explained that EUS's contract with 324 NSL was based on initial project designs and that the revised cost estimate was not available at the time of contract execution. NSPI argued that a competitive solicitation was not required for the affiliate transaction and that stopping work would pose risks to project completion and incentives.

tances and complications of the last couple of years that we've worked it. THE CHAIR: And I guess that's your response to my third question, which was, "Is this the best deal NSPI could have gotten?" MR. BENNETT: I believe it's a very good...

AI summary The discussion centers on the value and transparency of a project undertaken by Nova Scotia Power Inc. (NSPI), with emphasis on ensuring that affiliate transactions and expenditures are in the best interests of ratepayers. Mr. Bennett affirms his commitment to transparency and customer service, while the Chair underscores the need for accountability and ensuring that ratepayer costs are justified.

his is lower than the 2008 PPA between NSPI and Skypower. [Exhibit N-1, p. 25] [125] NSPI summarized the advantages which, in its view, would result in benefits to ratepayers if the DWP is approved: NSPI's investment in the Project will co...

AI summary NSPI outlines benefits of the DWP project, including adding 30 MW of wind generation, achieving RES compliance, and cost savings for customers. The project's costs are lower than the original PPA, and revised estimates show a lower levelized energy cost and higher NPV due to reduced O&M and construction costs.

Submissions - Intervenors [133] Avon commented on the embedded costs in the overall cost of the DWP and their affect on NPV and levelized energy cost: Since the time of the filing, NSPI entered into an Operation Support Agreement with GE,...

AI summary Avon Group comments on the DWP project's embedded costs and their impact on NPV and levelized energy cost. NSPI has updated its costs, but Avon argues that using the PPA's output level results in the original PPA being more economically favorable. The Board acknowledges the use of P50 estimates but does not take a position on whether P50 or P90 should be used for future applications.

[134] Avon suggested that: .... it may be appropriate to reduce the percentage contingency allowance used in the CBCL engineering estimate to the comparable level allocated to the bids, noting that none of the bids had an allowance which a...

AI summary Avon suggested reducing the contingency allowance in the CBCL engineering estimate for the Digby Wind Project, recommending a disallowance of $1.5 million due to the project coming in under budget. Avon also recommended that NSPI submit a report correlating actual wind output to assumed output for economic analysis. NSPI responded, arguing that the Garrad Hassan report provides the best evidence for long-term wind production and that actual results will be reported in FAM monthly reports.

Findings [137] The Board has reviewed all the information provided and finds that NSPI customers will benefit by including the Project in the rate base. However, the amount to be included in the rate base requires reduction. The Board unde...

AI summary The Board has reviewed the DWP project and found that including it in the rate base benefits NSPI customers, though the amount requires reduction. The Project is deemed favorable compared to the PPA when considering revised construction costs, O&M savings, and higher energy output. The Board also notes that the economic analysis does not account for infrastructure benefits beyond a 20-year horizon.

VI SUMMARY OF FINDINGS [161] In general, the Board finds that the acquisition of the DWP by NSPI from 324 NSL is necessary, subject to a disallowance of a $1 million bonus payment to EUS due to non-compliance with the Code and inadequate e...

AI summary The Board finds that the acquisition of the DWP by NSPI from 324 NSL is necessary, despite non-compliance with the Code in the construction contract between 324 NSL and EUS. The Board also approves the contract with EUS for transmission interconnection and accepts the economic analysis provided by NSPI, subject to cost reductions.