Topic:"Cost Recovery" in M11927

CI 50518 CA IR-5 Attachment 19 Page 174 of 423 REDACTED (CONFIDENTIAL INFORMATION REMOVED) 3 # Indicators Condition Choices Data Definitions/Explanations Protection and off road vehicles appear to effectively exclude or divert visitors and...

AI summary The text outlines various indicators and condition choices related to environmental protection, consumptive uses, domestic wells, and calcareous fen within a specific area. It includes data on wildlife disturbance, sustainable consumptive uses, proximity of domestic wells, and calcareous fen identification.

CI 50518 - HYD - Ruth Falls Main Dam Refurbishment ATO (NSUARB M11927) NSPI Responses to The Consumer Advocate Information Requests 1 However, NS Power does not expect this high end estimate to be required by DFO and, as 2 such, the Compan...

AI summary NS Power estimated a budget of $500,000 for offsetting the environmental impact of the Ruth Falls Main Dam Refurbishment Project, based on feedback from DFO. An additional $500,000 was included as a contingency for potential additional offsetting requirements during the regulatory review and Crown consultation process.

23 Year Total Regular, Term and Overtime Labour Administrative Overhead Rate Applied Total Administrative Overhead 1 2017 0F $16,312 51.90% $8,141 2018 $21,446 42.69% $9,155 1 Prior to August 2017, AO was calculated based on individual emp...

AI summary The table presents data on total regular, term, and overtime labour costs and administrative overhead rates and costs for 2017 and 2018. The administrative overhead rate decreased from 51.90% in 2017 to 42.69% in 2018, with corresponding changes in total administrative overhead costs.

REDACTED (a) In addition to the maturity level being of Class 1, please confirm that the cost estimate submitted (excluding the noted DFO permitting portion) also aligns with the above AACE 69R-12 Class 1 classification criteria with respe...

AI summary The response confirms that the Detailed Cost Estimate aligns with AACE 69R-12 Class 1 criteria, noting a reduction in contingency percentage from 13% to 6%, reflecting decreased project risk. Engineering design is complete, and major components like sluice gates and rubber dams have been procured and are ready for installation.

REDACTED 1 Request IR-10: 2 3 Regarding the Account Variance Sheet on pages 5 and 6 of the current Application: 4 5 (a) For the "Materials" Line Item: 6 7 (i) Please identify the percentage increase in materials cost that NS Power has 8 al...

AI summary The text outlines an information request (IR-10) directed at NS Power concerning cost variances in the Account Variance Sheet related to the 2019 ACE Plan Application, specifically focusing on materials, contracts, and additional costs such as archaeological site security and pumping expenses.

Pre – Offset Table 2 Year 1 (2022) Budget Category Description Amount Salaries and Wages (the CMM) Project Manager (70 hrs @ $80/hr = $ 5,600) Field technicians (3 x technicians for 21 hrs @ $45/hr = $2,835) $8,435.00 Training Environmenta...

AI summary The document outlines the Year 1 (2022) budget for a project managed by the Community Management Corporation (CMM), including expenses for salaries, training, travel, professional services, and administrative costs, totaling approximately $21,520.59.

3.2.1 NS Power Submission - In response to IRs, NS Power indicated that $698,000 of the cost increases being applied for in the ATO are - the result of scope changes. [Table 6](#page-20-0) provides a detailed breakdown of the $698,000 incr...

AI summary NS Power explains that $698,000 of the cost increases in the ATO application are due to scope changes, with a detailed breakdown provided in Table 6.

5.1.1 NS Power Submission - The Project involves the refurbishment of the Ruth Falls Main Dam's water-retaining structures, with five - alternatives reviewed during the conceptual design phase: [45](#page-29-1) - 1. Option 1: Replace the e...

AI summary NS Power submitted a proposal for the refurbishment of the Ruth Falls Main Dam, presenting five design alternatives. Option 4 was selected due to its cost-effectiveness. NS Power argues that re-evaluation of the options was unnecessary because all would be similarly impacted by delays in the Fisheries Act Authorization and environmental permitting.

Table 3: Nova Scotia CPI Trend19 Table 4: Canada IPPI Trend20 Table 5: Ruth Falls Archaeological Costs24 Table 6: Comparison of Recent Project Archaeological Costs25 Table 7: Ruth Falls Main Dam Refurbishment Variance Summary28 Table 8: 20...

AI summary The document presents a series of tables detailing various cost-related data, including archaeological costs, labour costs, materials costs, administrative overhead, and other expenses associated with projects such as the Ruth Falls Main Dam Refurbishment and the 2019 ACE and ATO applications.

3.2.1 Analysis In the ATO Application states: "… there have also been increases in the amount of project support labour, technical support labour, and term environmental support labour as a result of the extended construction timeline. " [...

AI summary The ATO Application highlights increased labour and material costs due to extended construction timelines and updated environmental permit requirements. NS Power explained cost minimization strategies, such as using internal labour and applying lessons learned from previous regulatory processes.

5.2.4 Conclusion - As Midgard noted in Section [3.1.2,](#page-19-2) NS Power was facing an environment of dramatically increasing costs - between its Original Application and the ATO Application. On its face this would not appear to fully...

AI summary Midgard highlights an 87% increase in material costs for NS Power between the 2019 ACE Application and the ATO Application, attributing it to inflation and potential misclassification of costs. The increase is in line with the overall project cost increase, but clarity is needed to determine the reasonableness of the material costs.

4 5.3.1 NS Power Submission - 5 NS Power reported contract cost increases from the 2019 ACE to the ATO Application as detailed in [Table 14](#page-33-0) - 6 an[d Table 15,](#page-34-0) which resulted in contract expense overspending of $2,...

AI summary NS Power reported increased contract costs from the 2019 ACE to the ATO Application, leading to an overspending of $2,595,802 as detailed in Table 14 and Table 15.

- 1. Increased Contract Costs: AO charges are directly proportional to total contract costs. These costs rose significantly due to new scope items, higher commodity prices, and additional work required to meet regulatory demands. - 2. Exte...

AI summary The text discusses increased administrative overhead (AO) charges due to rising contract costs, driven by new scope items, higher commodity prices, and regulatory demands. Delays in environmental permits extended the project timeline, increasing AO costs. NS Power highlighted that cost minimization efforts helped control AO variance.

5.4.1 NS Power Submission - NS Power reported consulting cost increases from the 2019 ACE to the ATO Application as detailed in [Table](#page-40-0) - [19](#page-40-0) an[d Table 20,](#page-40-1) which resulted in consulting expense overspe...

AI summary NS Power reported consulting cost increases from the 2019 ACE to the ATO Application, resulting in an overspending of $1,630,672 as detailed in tables referenced in the submission.

5.6.2 Analysis - NS Power attributes $341,503 of its cost increases to Labour AO, driven by increased internal labor and - changes in AO rates. The increase is a result of the original filing's estimation using 2020 AO rates, while the - A...

AI summary NS Power attributes a $341,503 increase in costs to Labour AO, citing changes in AO rates from 2020 to 2024. The original filing used outdated rates, while the ATO filing reflects actual and updated rates. Table 25 provides a detailed breakdown of these costs.

Power states: "Cost minimization will be realized by using internal labour rather than contracted labour at a marked-up rate during the upcoming monitoring during the nine months drawdown of Ruth Falls reservoir. NS Power also sought to mi...

AI summary NS Power implemented cost-saving measures by using internal labor, leveraging regulatory experience, and assigning familiar staff to the Sheet Harbour Hydro Project. The AO variance of $341,503 is justified by project complexities and extended timelines. Midgard concludes that the increased administrative overhead is reasonable.

10 5.7.3 Conclusion - 11 The AFUDC increase reflects extended project duration, expanded scope, and increased costs, all of which - 12 required sustained capital investment. This growth, evidenced by steady AFUDC balance increases from 201...

AI summary The AFUDC increase is attributed to extended project duration, expanded scope, and increased costs, which required sustained capital investment. Midgard concludes that these cost increases are reasonable, citing scope increases and extended timelines as valid reasons for variance.

Table 31: Cost Increase – Other Goods & Services (Contingency)[89](#page-50-1) Description NSUARB Approved ($) ATO Submission ($) Variance ($) Other Goods & Services (Contingency) $842,715 $1,342,714 $499,999 5.9.2 Analysis

AI summary Table 31 shows a significant variance between the NSUARB-approved amount and the ATO submission for Other Goods & Services (Contingency), with the ATO requesting an additional $499,999.

CI 50518 – HYD Ruth Falls Main Dam Refurbishment - $15,445,508 (ATO) (NSUARB M10632) Midgard Consulting Inc. Responses to Industrial Group Information Requests 1 Request IR-4: 20 represent the "lowest reasonable cost to customers." Midgard...

AI summary Midgard Consulting Inc. responded to information requests regarding the Ruth Falls Main Dam Refurbishment project, emphasizing that the project was determined to be the lowest reasonable cost to customers based on industry best practices. The site visit by Midgard staff was conducted to better understand the project and was appreciated by Midgard.

NON-CONFIDENTIAL that while it has suggested that such an option would "likely" not be considered economic, only a proper alternatives analysis could arrive at this conclusion with certainty. b) In Midgard's opinion the Board should always...

AI summary Midgard discusses its position on the evaluation of decommissioning and reinvestment options, emphasizing the need for the Board to assess whether decommissioning is in the best interest of ratepayers. It references NS Power's statement that re-evaluation of cost options was not necessary due to consistent cost increases across all options. Midgard does not independently verify these claims and acknowledges limitations in its expertise regarding sunk costs and regulatory mandates.

CI 50518 – HYD – Ruth Falls Main Dam Refurbishment ATO – Reply Evidence Redacted 1 2.0 MATERIAL COSTS 2 3 Midgard's analysis supports the assertion that there was significant inflationary escalation that 4 contributed to the increase in co...

AI summary Midgard's analysis highlights significant inflationary escalation in material costs for the Ruth Falls Main Dam Refurbishment project, but notes discrepancies between NS Power's 2019 ACE Application and the ATO Application. It also points out inconsistencies in cost categorization and suggests that some cost increases may be due to changes in scope rather than extended timelines.

1 3.0 ARCHAEOLOGY COSTS 2 - 3 Midgard is of the opinion that the Company's 2019 ACE estimate for archaeology was too low - 4 and states that NS Power should have been aware that archaeological costs for the Project would - 5 be several ord...

AI summary Midgard argues that NS Power's 2019 ACE estimate for archaeology costs was too low, citing its direct experience with similar projects and providing a table comparing archaeological costs across comparable projects.

12 While Midgard ultimately concludes that the archaeological costs sought for approval in the Ruth 13 Falls ATO are not overstated, and are in line with other projects, Midgard concludes that NS Power 14 ought to have known the archaeolog...

AI summary Midgard concludes that NS Power's archaeological costs for the Ruth Falls ATO are not overstated but were significantly underestimated, particularly in categories such as Contracts, Consulting, and Mi'kmaq Engagement, suggesting there may not be a valid reason for the variance.

CI 50518 – HYD – Ruth Falls Main Dam Refurbishment ATO – Reply Evidence Redacted - 1 with a broad range of accuracy ranging from -50 to +100 percent. Please refer to Appendix A for - 2 a detailed breakdown of the contingency and management...

AI summary The reply evidence argues that refurbishing the Ruth Falls Main Dam is the most economical option for NS Power, emphasizing that decommissioning would lead to higher costs for customers due to the need to replace lost renewable energy generation.

E application. As such, the Company asserts that the need for an FAA, driven by the 2019 amendments to the Fisheries Act and changing regulatory expectations, added substantial costs to the project. [14] Another reason cited by NS Power in...

AI summary NS Power attributes the need for an Authorization to Overspend (FAA) to changes in the Fisheries Act and extended construction timelines due to additional environmental permitting requirements, resulting in increased project costs of approximately $2 million.

rk. Going forward, the Company said it will consider its broader hydro fleet and lessons learned concerning the potential for requirements and costs to change significantly in relation to archaeology. [51] NS Power's reply submissions also...

AI summary NS Power addressed concerns regarding decommissioning costs, prudency of the project, and the cost-effectiveness of Option 4. It acknowledged the need to provide decommissioning costs in future applications and emphasized that prudency can be challenged with evidence during the IR process.

3.3 Approval of Refurbishment Project Costs [67] The Board recognizes that the current ATO application represents a significant cost increase compared to the original Board-approved project cost. However, Midgard concluded that project cos...

AI summary The Board acknowledges a significant cost increase in the ATO application for the refurbishment project but finds that increases related to environmental permitting and the FAA are reasonable. However, Midgard highlights ongoing risks related to environmental, archaeological, and geotechnical costs that could exceed the contingency allocation.

estimated cost of decommissioning the entire Sheet Harbour system, even accounting for inflation. This is suggestive of a much broader issue with the potential for dam decommissioning in Nova Scotia. The Industrial Group expressed similar...

AI summary The text discusses concerns raised by the Industrial Group regarding the estimated costs for decommissioning the Sheet Harbour system and the lack of justification for offsetting unit costs used by NS Power. The group recommends using the original cost estimate and managing the project within the approved budget, referencing a past Board decision and regulatory requirements.

Request IR-5: - With reference to Page 9 of the Application: - With reference to AACE Recommended Practice No. 69R-12, "Cost Estimate Classification - System As Applied in Engineering, Procurement, and Construction for the Hydropower - Ind...

AI summary The text refers to a request for clarification regarding the maturity level and accuracy of a project cost estimate submitted by NS Power, referencing AACE Recommended Practice No. 69R-12. The request asks whether the estimate aligns with Class 1 classification criteria and whether firm bids or price commitments support the estimate.

Request IR-11: - Regarding the Capital Project Detailed Cost Estimate on pages 7 and 8 of the current Application: - a) Has construction of the project been tendered? - i. If so, please provide a copy of each tender submission. - ii. If no...

AI summary The text outlines a series of requests related to the Capital Project Detailed Cost Estimate in the current Application, focusing on tendering processes, cost breakdowns, and explanations for discrepancies compared to the 2019 ACE Plan Application.

Although the costs of the Project have increased since receiving Board approval, the primary justification of the Project remains the same: refurbishment of the Ruth Falls Main Dam water-retaining structures (embankments, spillway and slui...

AI summary The text discusses the increased costs of a dam refurbishment project and requests clarification on the justification for the project, the consideration of alternative options such as selling or decommissioning the asset, and the calculation of additional contingency costs related to potential offsetting costs from DFO.

Date Filed: November 12, 2024 CA (NSPI) Page 4 of 7 1 associated with the lowering of the Ruth Falls Reservoir 18 feet below the minimum operating 2 level. This has led to additional costs of approximately $400,000." (ATO, p. 3) 3 (a) 4 Pl...

AI summary The document outlines several requests for information regarding additional costs incurred by NS Power, including engagement with the Mi'kmaq of Nova Scotia, cost increases due to labor, materials, contracts, and consulting, as well as cost minimization efforts.

4 - 2 (b) Please elaborate upon any cost minimization efforts NS Power has made with respect to 3 these costs. - 5 (c) If not otherwise addressed in part (a), please provide details of the required offsetting 6 programs and explain why off...

AI summary The text includes two questions directed at NS Power regarding cost minimization efforts and offsetting programs, particularly consulting costs. The questions are part of a regulatory proceeding and seek detailed information from NS Power.

Request IR-3: Refer to N-1 ATO page 3 of 10, para 2. Extended Construction Timeline, in which the Company concluded that the extended timeline led to increased project costs, associated with Contracts and Consulting detailed on page 5 of 1...

AI summary The text requests Nova Scotia Power Inc. to explain how variance amounts in Contracts and Consulting are allocated between extended timeline, delay in work, and additional work scope, and to describe the nature of the work and reasons for the cost increases.

1 (f) Please elaborate on what Midgard means when it says "subsequent data 2 (a 2006 bathymetric map) suggested the estimate incorporated elements 3 beyond subjective evaluation", and how Midgard reached this conclusion? 4 Request IR-4: 5...

AI summary The text includes requests for clarification on Midgard's interpretation of data and its evaluation of an ATO application, focusing on economic justification, customer best interests, and lowest reasonable costs. It also references a site visit to the Ruth Falls Main Dam and seeks details on its purpose and outcomes.

33 is related to interactions with the DFO, rather than the NSECC? 1 Please elaborate, and explain how this may or may not have impacted the 10 of these explanations would lead to a conclusion that the variance is 11 reasonable. Which are...

AI summary The text raises questions about the reasonableness of cost increases, specifically regarding the inclusion of additional construction costs and the basis for calculating potential disallowances. It references the 2019 ACE application and discrepancies in information provided by NSPI.

4156-4407-7910 v3 32 to managing expenses. - 1 (a) Please elaborate on the "allocation of costs across regular labour 2 categories", as listed, within the ATO, and why that allocation is viewed as 3 reasonable? Please specifically address...

AI summary The text contains a series of questions regarding the allocation of costs across regular labour categories in an ATO, the consideration of inflation rates, and the impact of overtime labour on project timelines and progress.

1 2 reasonable; what is Midgard's recommendation to the Board on how to proceed? 3 4 (g) Does Midgard have any recommendation on how cost estimates for archeological costs can be improved on future hydro projects? 5 Request IR-20: 6 Refere...

AI summary The document contains requests for clarification regarding cost estimates, confidentiality of contract amounts, and the reasonableness of increased contract costs in a 2019 ACE application. Midgard concludes that the increased costs are reasonable, citing expanded project scope and regulatory delays.

- 33 (d) On what basis has Midgard concluded this would not have "materially 34 affected the outcome" of the original approval of this project? 1 (e) Does Midgard view the estimated engagement costs included in the ATO 2 to be reasonable?...

AI summary The text raises questions about Midgard's reasoning regarding the impact of a project on prior approvals, the reasonableness of engagement costs in an ATO, and the increase in the AO rate. It also references cost management practices by NS Power and asks about lessons learned from previous regulatory applications.

- 28 (f) How are offsetting measurements usually determined on hydro projects 29 such as this? (g) Has Midgard considered the DFO's concerns with respect to "high 14 opinion that the Board requires this information on decommissioning of 15...

AI summary The text discusses questions raised about offsetting measurements on hydro projects, decommissioning considerations, and the reliability of cost estimates for a project. It references Midgard's response and NS Power's implication that the estimated cost of $15.4 M is reliable and unlikely to increase further.

is $84.5 million but there are limited details on how this was calculated, and the data used is outdated. There is further reference to the Depreciation Study, which is not yet available for review. The Industrial Group further submits tha...

AI summary The Industrial Group argues that there is insufficient evidence to support that the project remains in the best interest of ratepayers, citing outdated cost data and a lack of updated cost comparisons. NSPI claims that re-evaluation was unnecessary due to uniform cost increases from environmental permitting, but the Industrial Group and Board staff have requested this information, which remains unanswered.

ed on the justification from the original application "which was outside of Midgard's review scope". However, as outlined, this justification and cost analysis as between options has not been updated. Beyond the comparison of the possible...

AI summary The document highlights concerns about the significant cost increases in a refurbishment project, with NSPI attributing the increases to an extended construction timeline and inflation. However, the explanation provided does not fully account for the reported 87% increase in material costs or the additional $2.6M increase in contract costs.

been in a position to provide any type of reasoned estimate of the additional cost as a result of those potential changes, but that docs not mean that they should not have identified it as a concern. The uncertainty as to the future approv...

AI summary The SBA argues that NS Power should provide regular updates to the Board regarding project delays and costs related to fisheries infrastructure and archaeological expenses. Concerns include uncertainty about DFO approval and past overspending on archaeological work.

3.3 Approval of Refurbishment Project Costs [67] The Board recognizes that the current ATO application represents a significant cost increase compared to the original Board-approved project cost. However, Midgard concluded that project cos...

AI summary The Board acknowledges a significant cost increase in the ATO application for the refurbishment project but accepts that increases related to environmental permitting and the FAA are reasonable. However, risks such as environmental compensation, archaeological, and geotechnical costs remain, which could add millions to the project cost beyond the allocated contingency.

- has an NPV that is approximately $50.4 M greater than the decommissioning alternative: Alternative After Tax WACC PV of Revenue Requirement PV of EVA / NPV Rank (based on PV of RR) IRR Disc Pay Α Dam Refurbishment 5.81% -21,926,086 12,51...

AI summary The text presents a comparison of two alternatives—Dam Refurbishment and Partial Decommissioning—based on financial metrics such as NPV, IRR, and discount payback period. The Dam Refurbishment alternative has a significantly higher NPV compared to the decommissioning option, which is highlighted as a key consideration in the analysis.

Project Budget Approval Amount NS Power respectfully disagrees with the Industrial Group's recommendation for the Company to be required to manage the project expenses within the envelope approved by the Board, before accounting for any al...

AI summary NS Power disagrees with the Industrial Group's recommendation to manage the Ruth Falls Main Dam project expenses within the approved budget before accounting for AFUDC. It argues that all prudently incurred costs should be recoverable through the rate base, unlike the Lower Water Street project, which had viable alternatives and higher risks.

M11927 – Nova Scotia Power Incorporated – CI 50518 – HYD Ruth Falls Main Dam Refurbishment – $14,839,116 (Amended ATO) On June 18, 2025, the Nova Scotia Energy Board (Board) issued a decision in Matter M11927 Nova Scotia Power Incorporated...

AI summary The Nova Scotia Energy Board (Board) has put the Authorization to Overspend (ATO) application for the Ruth Falls Main Dam Refurbishment on hold until the Fisheries Act Authorization is obtained. NS Power has now submitted an amended ATO application with a reduced cost estimate of $14,839,116 and a Net Present Value (NPV) analysis showing that the refurbishment option is more economically favorable than decommissioning.

ial decommissioning". NS Power also confirmed that its cost estimate for the decommissioning option in the amended ATO application is only for the Ruth Falls portion of the Sheet Harbour Hydro System. NS Power also addressed Midgard's conc...

AI summary NS Power addressed concerns regarding the decommissioning costs of the Ruth Falls portion of the Sheet Harbour Hydro System, clarifying that its updated 2024 estimate includes exclusions such as archaeology and Mi'kmaq engagement. It also responded to recommendations for providing more decommissioning options, stating that it does not see a need for multiple alternatives due to differences in NPV.

ncrease in project cost over the cost approved by the Board in NS Power's 2019 ACE Plan, refurbishment of the Ruth Falls main dam is the preferred option over decommissioning of the Ruth Falls assets. Given the above findings, the Board ap...

AI summary The Board approves an Authorization to Overspend (ATO) for the Ruth Falls Main Dam Refurbishment project at a total cost of $14,839,116. It finds that refurbishment is the preferred option over decommissioning. The Board disagrees with the Industrial Group's recommendation to manage costs before accounting for AFUDC, citing significant differences in NPV compared to a previous case.

REDACTED Ruth Falls Main Dam Refurbishment Contingency Report 2 Appendix A Page 1 of 1 REDACTED (CONFIDENTIAL INFORMATION REMOVED) Account NSEB Approved Amount Spend-to-Date Contingency/ Unbudgeted Spend-to-Date Comments Freight/Postage/De...

AI summary The document outlines contingency and unbudgeted spending for the Ruth Falls Main Dam Refurbishment project, including freight, consulting, legal, and meal expenses. It details additional costs incurred due to unforeseen circumstances and adjustments in cost codes.

REDACTED Ruth Falls Main Dam Refurbishment Contingency Report 3 Appendix A Page 1 of 1 REDACTED (CONFIDENTIAL INFORMATION REMOVED) Account NSEB Approved Amount Spend-to-Date Contingency/ Unbudgeted Spend-to-Date Comments Regular Labour (53...

AI summary The contingency report outlines additional labour costs incurred during the Ruth Falls Main Dam refurbishment, including regular, overtime, and term labour expenses. These costs were due to activities such as trap and truck operations, monitoring barn swallows, and responding to trapped deer, all part of NSPI's commitment to the Department of Fisheries and Oceans (DFO).