Topic:"Cost Recovery" in M12412

approach, we expect that the annual 13 expenditure forecast and revenue requirement of the NSIESO will increase over the first three 14 fiscal years reflecting the increasing scope during this period. 15 As part of this Application, the NS...

AI summary The NSIESO is seeking approval from the Nova Scotia Energy Board for its ongoing OM&A expenses forecast of $6.75M, with $5.3M expected to be recovered in rates. The difference is attributed to a provincial grant funding one-time transition costs. The focus is on ongoing expenses, while one-time costs are fully funded by the province and not subject to regulatory approval.

18 2. Statutory Context of Application - 19 This initial revenue requirement application is being made pursuant to Subsections 29(1) and (2) - 20 of the Act. The Act requires the NSIESO to submit its proposed expenditures and revenue - req...

AI summary The NSIESO submitted a revenue requirement application under Subsections 29(1) and (2) of the More Access to Energy Act, citing delays due to its new status and lack of historical data. It deferred costs to a Net OM&A Deferral and Variance Account, planning future rate recovery mechanisms once approved by the Nova Scotia Energy Board.

14 3. Phased-Approach to Organizational Functions - 15 As a newly constituted organization, the NSIESO is in the early stages of setting up its internal - 16 capabilities to perform its executive, administrative and operational functions....

AI summary The NSIESO is implementing a phased transition of organizational functions from NSPI, starting with system planning and procurement in Q4 2025, followed by real-time dispatch in Q2 2027. Initial setup costs are fully funded by the Province, with a Transition Committee and consulting services aiding the process. Financial forecasts will increase due to the phased approach.

5 5. Operational, Maintenance & Administration - 6 The forecast funding necessary for the NSIESO to carry out its statutory mandate for the period - 7 ending March 31, 2026 is reflected in the following OM&A cost categories set out in Tabl...

AI summary The NSIESO outlines its forecasted OM&A funding needs through March 31, 2026, distinguishing between one-time transition costs (to be fully funded provincially) and ongoing OM&A costs. The Application excludes seeking approval for the one-time transition costs.

- 2 Because the NSIESO does not yet have a mechanism in place that is approved by the Nova Scotia - 3 Energy Board to recover fees from customers, the NSIESO is not seeking approval for any such - 4 fees as part of this application. As par...

AI summary The NSIESO is not seeking approval for fee recovery mechanisms in this application because it does not yet have an approved mechanism. It plans to seek approval for such a mechanism in a future rate fiscal year application.

A. Operating, Maintenance and Administration (OM&A) Overview 3 The NSIESO's initial OM&A budget for the period ending March 31, 2026, is comprised of both 4 ongoing OM&A expenses ("Ongoing OM&A") and one-time transition OM&A expenses. In t...

AI summary The NSIESO's OM&A budget for the period ending March 31, 2026, includes ongoing and one-time transition expenses. The NSIESO seeks approval for ongoing OM&A costs of $6.75M, but expects to recover only $5.30M after using provincial funding for transition costs. The difference will be recorded in a deferral account for future disposition.

7 A. Net OM&A Deferral and Variance Account - 8 The NSIESO is seeking approval to establish the Net OM&A Deferral and Variance Account to - 9 defer the recovery of its approved and forecasted Net Ongoing OM&A costs (i.e., net of Provincial...

AI summary NSIESO seeks approval to establish a Net OM&A Deferral and Variance Account to defer recovery of approved and forecasted Net Ongoing OM&A costs (net of Provincial Funding) and record variances between forecast and actual expenses through March 31, 2026, including transition costs exceeding Provincial funding.

- 3 proposal to defer the approval of a rate recovery mechanism until a future application. In addition, - 4 the NSIESO developed its OM&A forecast using a detailed bottom-up approach. However, the - 5 NSIESO does not have historical organ...

AI summary The NSIESO is proposing to defer the approval of a rate recovery mechanism until a future application. It uses a bottom-up approach for its OM&A forecast but lacks historical data. A new account is proposed to record forecasted and actual OM&A costs, as well as one-time transition costs.

- costs exceeded available Provincial funding, the NSIESO proposes that the unfunded amount of - one-time transition costs would also be recorded in Sub-account No.2 as one-time transition costs - would typically be recoverable in the abse...

AI summary The NSIESO proposes handling unfunded one-time transition costs in Sub-account No.2 and seeks full recovery of such costs. It plans to recover actual Net Ongoing OM&A plus unfunded transition costs in the April 2027 test year application. Illustrative examples detail how the Net OM&A Deferral and Variance Account operates under different scenarios, including approved forecast amounts and variances.

rral and variance, the difference between the deferred amount ($100 in Account #1) and the variance of approved Net Ongoing OM&A ($10 in Account #2) is recorded as a balance of $90 in Account #3 and will be sought for rate - recovery. - b....

AI summary This text discusses the accounting treatment of deferred amounts and variances in Ongoing OM&A costs. It outlines two scenarios where differences between deferred amounts and approved variances are recorded in specific accounts and may be subject to rate recovery.

- 1 deferred amount and the variance of Net Ongoing OM&A $110 ($100 − (−10)) is 2 recorded in Sub-account #3 and will be sought for rate recovery. - 3 c. In the third scenario, during the test period, the NSIESO incurs more Ongoing OM&A 4...

AI summary The document outlines scenarios where NSIESO's Ongoing OM&A costs exceed forecasts, leading to adjustments in Provincial funding and variance accounts. Account #2 reflects funding reductions and overspending, while Account #3 records deferred amounts for rate recovery. Scenarios include varying levels of funding availability and additional costs, impacting Net Ongoing OM&A calculations.

3. Timing of recovery of the 25/26 revenue requirement IESO Nova Scotia would also like to clarify its request as it relates to the timing of recovery of the revenue requirement for 2025/26. For reference, the Board sought the following in...

AI summary IESO Nova Scotia seeks to recover its 2025-2026 revenue requirement starting April 1, 2026, concurrent with the fiscal year beginning April 2026. It plans to submit an application for the Expenditure Forecast and Revenue Requirement for April 1, 2026, to March 31, 2027, by December 31, 2025.

Response IR - 2 - a) The only OM&A costs incurred for the year ended March 31, 2025 are the pro-rata - remuneration for the Board of Directors who were appointed on February 18, 2025. For - clarity, the NSIESO is not seeking the recovery o...

AI summary The only OM&A costs for the year ended March 31, 2025, are pro-rata remuneration for the Board of Directors appointed on February 18, 2025. NSIESO clarifies it is not seeking recovery of pre-April 1, 2025 costs through this application, referencing Response to NSEB IR-18.

3.0 PROVINCIAL FUNDING 3.01 Subject to Articles 3.02, 3.03, 6.0 (Termination) and 7.0 (Relationship), the Province agrees to provide funding up to the amount of one-hundred-seventy-five-thousand Canadian dollars ($175,000.00) to the IESO w...

AI summary The Province of Nova Scotia agrees to fund the IESO up to $175,000 for a project, with funds to be transferred by March 31, 2025. The IESO must return unspent funds if the Transition of Work in Progress isn't completed, cannot commit to additional payments beyond the specified amount, and must invest unused funds in short-term Canadian securities rated AA or higher.

3.0 PROVINCIAL FUNDING 3.01 Subject to Articles 3.02, 3.03, 6.0 (Termination) and 7.0 (Relationship), the Province agrees to provide funding up to the amount of two-point-five million Canadian dollars ($2,500,000.00) to the IESO which will...

AI summary The Province agrees to fund the IESO with $2.5 million by March 31, 2025, contingent on completing the Startup Phase. Funds must be invested in AA-rated securities if unused for 90 days, with income added to project funds. The IESO cannot commit additional funds beyond the agreed amount.

1 Request IR - 20 - 2 Reference: Exhibit B-2 (page 24 of 36, line 5, Table 11) - 3 a) Please provide a breakdown of the $0.55 million allocated to regulatory proceedings - 4 including the source of any assumptions. What portion is expected...

AI summary The request seeks a breakdown of the $0.55 million allocated to regulatory proceedings, including the source of assumptions and the distribution between intervenor payments and internal legal support.

1 Request IR - 23 - 2 Reference: Exhibit B-2 (page 25 of 36, lines 1-3)…"Legal and Compliance: These costs are for - 3 advice from external legal counsel regarding legal compliance and in connection with various - 4 agreements that the NSI...

AI summary The document text from Request IR-23 inquires about legal costs related to NSIESO's compliance and agreements, specifically asking which legal firms are expected to be retained and their hourly rates or retainer agreements.

Request IR - 30 - Reference: Exhibit B-2 (page 28 of 36, line 1, Table 14 & lines 6-8)…"The NSIESO will address - the Net OM&A Deferral and Variance Account for the 2025/2026 test year and will seek a - revenue requirement and a recovery m...

AI summary The NSIESO is seeking a revenue requirement and recovery mechanism for 2026 to 2027 to repay a line of credit, which was funded through rates. The request includes questions about the supporting calculations for a $0.10 million financing cost forecast and the structure and terms of the line of credit.

7 Response IR - 33 - 8 Actual costs will be tracked and measured against the forecast in the Net OM&A Deferral and - 9 Variance Account. Please also see Response to NSEB-IR6. Date filed: October 7, 2025 NSIESO (DGT) IR – 33 Page 1 of 1

AI summary The response outlines tracking actual costs against the Net OM&A Deferral and Variance Account forecast, referencing another response (NSEB-IR6) in a regulatory proceeding by NSIESO.

Response IR - 34 - a) The NSIESO, a start up with no financial operating history, is working diligently to forecast all OM&A expenses. The NSIESO has requested the Net OM&A Deferral and Variance Account to account for all variances against...

AI summary NSIESO acknowledges its limited financial history but emphasizes transparent OM&A expense forecasting and basic financial controls. It states that transition costs exceeding provincial funding will be recovered via customer revenue. The organization plans to enhance financial processes as it matures.

NON-CONFIDENTIAL 1 Request IR - 35 2 Reference: Exhibit B-2 (page 30 of 36, lines 1-3)…"if one-time costs incurred during the test 3 period exceed the Provincial funding, the NSIESO proposes to record the unfunded amount in 4 the Net OM&A...

AI summary The NSIESO proposes recording unfunded one-time costs in the Net OM&A Deferral Account. Questions ask about caps on recoverable costs and use of excess funding. NSIESO responds there is no cap and excess funds are used to offset OM&A costs, referencing exhibits.

NON-CONFIDENTIAL 22 million, rather it is intended to offset for the NSIESO, and by extension electricity 23 customers in Nova Scotia, the costs of effecting the transition of responsibilities 24 contemplated by the More Access to Energy A...

AI summary The NSIESO clarifies that transition costs related to the More Access to Energy Act are intended to offset expenses for NSIESO and Nova Scotia electricity customers. Planning for the transition is ongoing, with unknown full costs. References are made to prior responses (DGT IR-5, NSEB IR-11), and potential government funding opportunities are noted.

Request IR - 3 - Reference: N-01, Notice of Application, page 2, Iines 3-7. - The NSIESO is not yet in a position to propose a mechanism for rate recovery. It is the - NSIESO's proposal to defer the approval of a rate recovery mechanism un...

AI summary The NSIESO cannot propose a rate recovery mechanism due to being a newly established corporation lacking historical data. It plans to defer approval until a future application. The request asks if the NSIESO has an anticipated recovery mode and when the mechanism will be ready for submission.

1 Request IR - 8 - 2 Reference: N-01(i), Application Exhibits, page 28. - 3 Please provide the actual, or anticipated, interest expense that will apply to the line of credit - 4 sought by NSIESO for the test period and confirm whether NSIE...

AI summary NSIESO is seeking clarification on the anticipated interest expense for a line of credit and whether the same rate recovery will apply to its Deferral and Variance Account. The response indicates an anticipated expense of $0.03M based on Prime + 0.75%, with recovery sought if expenses are incurred.

NON-CONFIDENTIAL 1 Request IR - 3 2 The NSIESO states "It is the NSIESO's proposal to defer the approval of a rate recovery 3 mechanism until its application for the period April 1, 2026 to March 31, 2027." However, in its 4 Notice of Appl...

AI summary The NSIESO is requesting clarification on its proposal to defer the recovery of its 2025-2026 revenue requirement until the 2027-2028 test year, and whether it intends to recover the NET OM&A Deferral and Variance Account over a single or multi-year period.

Revenue Requirement, which will be the subject of a separate application to the NSEB before December 31, 2025. Any true up amounts resulting from the Net OM&A Variance and Deferral Account would be collected or returned on a lagging one ye...

AI summary The NSIESO plans to apply for approval of a revenue requirement before December 31, 2025, and intends to recover the approved revenue requirement over a single year. It will collect the approved 2025/26 and 2026/27 revenue requirements starting in April 2026, with variance adjustments confirmed later.

1 Request IR - 4 - 2 The NSIESO notes that its proposed "NET OM&A Deferral and Variance Account" will serve - 3 three specified functions. Please confirm that the underlying intent is to establish a deferral - 4 account for all costs the N...

AI summary The NSIESO proposes a 'NET OM&A Deferral and Variance Account' to manage fiscal year 2025-2026 costs, net of surplus from its Provincial grant for one-time transition costs. The request seeks confirmation that the account's intent is to defer all incurred costs, excluding surplus funds from the grant.

Response IR - 6 - The NSIESO was established on October 24, 2024, with its Board of Directors appointed on - February 19, 2025. The NSIESO was operating without staff and incurred OM&A costs in its - first fiscal year ending March 31, 2026...

AI summary The NSIESO, established in October 2024, operated without staff during its first fiscal year, incurring OM&A costs. To manage uncertainty in cost forecasting and funding, it prioritized establishing a revenue requirement forecast and a deferral account to hold 2025/26 costs until a recovery mechanism is approved, ensuring ratepayer protection and statutory compliance.

6. Costs All costs of the transition incurred by NS Power will be reimbursed by the IESO Nova Scotia, except to the extent that internal resource costs incurred by NS Power are accounted for within NS Power's approved revenue requirement....

AI summary NS Power will be reimbursed by IESO Nova Scotia for transition costs, excluding internal resource costs covered by its approved revenue requirement. NS Power must obtain IESO Nova Scotia's agreement before incurring third-party or incremental internal costs beyond the approved revenue requirement.

NON-CONFIDENTIAL b) No, upon having approved a forecast revenue requirement, any incremental actual cost over the approved revenue requirement would be the subject of a prudence review. This will ultimately be reflected in the balance in t...

AI summary The NSIESO (NSEB) states that incremental costs exceeding the approved revenue requirement will undergo prudence review, with variances recorded in the Net OM&A Deferral and Variance Account. One-time transition costs are expected to exceed $1.23 million, with further costs anticipated post-March 2026. An update on forecast expenses will be provided in the 2026/27 revenue requirement application, to be filed in Q4 2025.

Request IR - 22 - Reference: Exhibit N-1(i), pp. 27 of 36 - With respect to the 'Technology Needs Assessment and Business Case", "Office Lease", and - "Control Centre Planning", wouldn't these be better classified as one-time transition co...

AI summary The document addresses whether 'Technology Needs Assessment and Business Case', 'Control Centre Planning', and 'Office Lease' should be classified as one-time transition costs. The response explains that the first two are Phase 1 of ongoing operational costs for NSIESO, while the Office Lease is an annual operational expense for NSP's Halifax office.

Request IR - 6 - Refer to the Application and Exhibit B-2 Ongoing OM&A Cost Category Detail, subsection F, - Procurement ($0.99M), on pages 25-26 of 36 and respond to the following: - a) Please provide rationale for the 50/50 split in capi...

AI summary Request IR-6 seeks rationale for a 50/50 split of capitalization and expenses for procurement and project management costs, and clarification on which components of the 300 MW RFP costs apply a 20% contingency fee. The request references Exhibit B-2, pages 25-26, and focuses on cost allocation and contingency fee justification.

Response IR - 9 - a) One-time transition costs incurred during the 2025/26 fiscal year will be reported when - the NSIESO seeks disposition of the Net OM&A Deferral and Variance Account balance. - There may be additional one time transitio...

AI summary The NSIESO notes one-time transition costs during the 2025/26 fiscal year tied to the disposition of the Net OM&A Deferral and Variance Account balance. Additional costs beyond this period may exist.

4.2 Procedures - Our review of NSIESO's test year budget for the test year ending March 31, 2026 included the following specific procedures: - Reviewed all operating expense cost categories detailed in the Application and prepared IRs. Cos...

AI summary The review of NSIESO's test year budget (ending March 31, 2026) involved evaluating operating expense categories, recalculating forecasts, cross-referencing data, comparing budgets to GUP standards, and assessing reasonableness. Key areas included administrative costs, IRP consulting, and one-time transition expenses.

10 4.3.1.3.4 Overall trends - 11 The above Canadian ISOs all have different markets, operating scales, and environments as well as differing 12 accounts and expense types and groupings. Therefore, they are not direct comparisons. However,...

AI summary Canadian ISOs share common general operating expenses driven by compensation and administration costs, with other expenses being minor. NSIESO's forecasted cost categories align with those of other ISOs, despite differences in market scales and expense groupings.

28 4.3.2.2 Overview of OM&A budget Per the Application, the NSIESO is seeking approval for its ongoing Operations, Maintenance, and Administration ("OM&A") expenses forecast for the test period of $6,750,000 ( "Ongoing OM&A"). Subject to a...

AI summary The NSIESO is seeking approval for its ongoing OM&A expenses of $6,750,000, with a net amount of $5,300,000 expected to be recovered in rates. The remaining $1,440,000 is from a provincial grant covering one-time transition costs, which the NSIESO does not seek NSEB approval for.

4.3.2.4 NSPI employee transfers (including IRP consulting costs) - Per the Application, the NSIESO is forecasting $1,610,000 in expenses as part of the transitioned operations cost - category. These expenses are the portion of NSPI operati...

AI summary The NSIESO forecasts $1.61 million in transitioned operational costs from NSPI, which are already approved by the Utility and Review Board and recovered in NSPI rates. These costs are not incremental to customers. NSPI plans to apply for recovery/refund of differences post-transition, with phased responsibility transfers by 2026 and 2027. Matter M12451 is referenced.

4.3.2.11.1 Transition cost overruns - The NSIESO is not forecasting to seek NSEB approval for these one- time costs which pertain to the one-time OM&A costs to transition functions from NSPI to the NSESO and to set up the NSIESO's organiza...

AI summary The NSIESO expects one-time transition costs to be covered by provincial funding, but if overruns occur, they will use the Net OM&A Deferral Account. They anticipate costs exceeding initial estimates but cannot provide an exact figure yet. Future overruns would be addressed through revenue requirement applications.

4.3.2.12 Costs incurred prior to the test period - Given the NSIESO was established on October 24, 2024 but the Application covers only the test period ending March 31, 2026, we inquired with the NSIESO in DGT-IR-2 to determine whether the...

AI summary The NSIESO, established in October 2024, confirmed that the only OM&A costs for March 31, 2025, were pro-rata remuneration for the Board of Directors appointed in February 2025. These costs are not being recovered through the application, as the test period (October 2020–March 2025) does not include earlier unaccounted costs.

7. Deferral account

AI summary The document section titled '7. Deferral account' introduces a regulatory proceeding topic related to financial deferral mechanisms, though no substantive content is provided in the text snippet.

7.3.1 Good utility practice and comparable organizations - Deferral accounts and adjustment mechanisms are a commonly used practice amongst utilities and ISOs across - Canada. They are typically implemented to stabilize rates, align cost r...

AI summary Deferral accounts and adjustment mechanisms are commonly used by utilities and ISOs in Canada to stabilize rates and align cost recovery. The IESO Ontario uses a Forecast Variance Deferral Account (FVDA) to manage financial variances between forecasted and actual revenues and expenditures.

7.3.1.2 The AESO – Alberta The AESO uses two primary deferral mechanisms to manage financial variances, the Deferral Account Reconciliation ("DAR") and the Rider C – Deferral Account Adjustment Rider ("Rider C").

AI summary The Alberta Electric System Operator (AESO) employs two deferral mechanisms, the Deferral Account Reconciliation (DAR) and Rider C – Deferral Account Adjustment Rider, to manage financial variances.

7.3.2.1.1 Purpose and intention Per the Application, the NSIESO is seeking approval to establish A Net OM&A Deferral and Variance Account to defer the recovery of its approved and forecasted Net Ongoing OM&A costs, record any variance betw...

AI summary The NSIESO seeks approval to create a Net OM&A Deferral and Variance Account to defer recovery of forecasted OM&A costs and record variances through March 31, 2026. It clarifies the intent to defer actual 2025-26 OM&A costs, net of provincial grant surpluses. The NSIESO explains its lack of staff and financial history as reasons for not seeking rate recovery mechanisms, emphasizing the need for a deferral account to ensure fair cost recovery and statutory compliance.

7.4 Conclusion Overall, the implementation and use of deferral accounts and mechanisms is a common practice among utilities and ISOs across Canada. They are important to help ensure stabilization of rates, alignment of cost recovery with s...

AI summary The NSIESO's proposal for a Net OM&A Deferral and Variance Account aligns with industry practices but requires enhanced cost controls, accounting policies, overrun thresholds, and regulatory guidelines to ensure ratepayer fairness and compliance. Key recommendations include prudence reviews, standardized accounting, and defined recovery limits.

- new transmission supplies of Maritimes area energy into the New England region; analysis of thermal fleet utilization and optimization. Analysis of interconnection issues. - Analysis of Eastern Interconnection Planning Collaborative proc...

AI summary The text outlines analyses on transmission planning, renewable energy integration, demand-side management, and market issues across multiple regions, including Maine, New Jersey, PJM, and others. Key areas include transmission facility needs, energy efficiency programs, and economic modeling of new transmission effects.

PRESENTATIONS Fagan, R., R. Tabors. 2003. "SMD and RTO West: Where are the Benefits for Alberta?" Keynote paper prepared for the 9th Annual Conference of the Independent Power Producers Society of Alberta, March 2003. Fagan, R. 1999. "A Pr...

AI summary The document lists presentations by R. Fagan and others on energy topics including transmission tariffs, congestion pricing, market restructuring, and demand-side management. Presentations span Alberta, Ontario, New England, and other regions, with discussions on net billing, stranded costs, and generation market power.

n cost allocation issues on PJM Regional Transmission Expansion Plan (RTEP) Cost Allocation issues. On behalf of the New Jersey Division of the Ratepayer Advocate. January 23, 2008 and April 16, 2008. State of Maine Public Utilities Commis...

AI summary Testimony addressing PJM RTEP cost allocation, DSM's role in reducing transmission needs, and environmental considerations in multiple states. Involves regulatory bodies, advocacy groups, and utilities in proceedings related to transmission expansion, certificate of need applications, and carbon regulation impacts.

Deferral account – financial controls Report reference: Page 5, bullet 1 and Page 51, lines 31-39 • "While the NSIESO has basic financial controls in place, they do not have established cost management controls for monitoring expenditures....

AI summary The NSIESO lacks established cost management controls, risking excessive ratepayer burdens from unmanaged cost overruns. The recommendation emphasizes creating prudence review processes for budget overruns to align with GUP's cost-effectiveness principles, ensuring efficient and transparent resource allocation.

Deferral account – accounting policies Report reference: Page 5, bullet 2 and Page 51 (lines 31-39) to Page 52 (lines 1-3) • "At the time of this report, the NSIESO has not yet developed accounting policies. It is recommended that the NSIE...

AI summary The NSIESO lacks developed accounting policies, prompting a recommendation to prioritize their creation before the 2027 test year to ensure compliance with standards for revenue and expense recognition. Alignment with NSPI's policies is suggested to avoid misrepresenting deferral account amounts and ensure consistency with GUP practices.

Request IR-6: - Reference: Page 51, lines 15-23. - Preamble: DGT states that all cost categories that exceed budget should be subject to a prudence review of all costs within that category. - (a) Considering this recommendation, should the...

AI summary Request IR-6 seeks clarification on prudence reviews for cost categories exceeding budget and the process for OM&A reviews. DGT recommends prudence reviews for all such costs, prompting questions about removing 'net' from DVR and the methodology for OM&A reviews.

ive and governance-related functions, as well as the operational costs, for the first phase of its duties under the More Access to Energy Act , namely its first integrated resource planning exercise. - [13] The Board issued a Hearing Order...

AI summary The IESO Nova Scotia's first integrated resource planning exercise under the More Access to Energy Act is under regulatory review. The Board issued a Hearing Order in August 2025, with evidence filed by Doane Grant Thornton and Synapse. The IESO did not initially request a rate recovery mechanism, citing future filings. Section 28 of the Act defines the IESO's fiscal year, with Board authority outlined in sections 29, 30, 78, and 79.

Cost recovery - 30 (1) The IESO shall apply to the Energy Board for the recovery of costs for energy resource supply contracts, and any costs incurred by the IESO for the administration of those contracts, respecting settlements or payment...

AI summary The IESO must apply to the Energy Board for recovering costs related to energy supply contracts and administrative expenses. The Energy Board is required to establish a mechanism for ratepayers to cover these costs, with public utilities collecting and remitting funds to the IESO.

[25] The current application requests approval of the Net Ongoing OM&A costs, after accounting for the provincial funding of $2.68 million (i.e., $1.23 million applied to one-time transition costs and $1.44 million applied to initial OM&A...

AI summary The IESO seeks approval for a Net OM&A Deferral and Variance Account, deferring rate recovery until a future application. Doane Grant Thornton found the budget's cost categories reasonable but noted a lack of formal support for assumptions, recommending stronger filing requirements. The IESO acknowledges these concerns and notes ongoing efforts to implement financial controls.

meworks". However, it noted that the IESO's proposed Net OM&A Deferral and Variance Account lacked cost management controls and accounting policies. Accordingly, it made the following recommendations:

AI summary The IESO's proposed Net OM&A Deferral and Variance Account was criticized for lacking cost management controls and accounting policies. The analysis highlights deficiencies in the proposed framework, prompting recommendations to address these gaps in oversight and financial governance.

mportant that they be re-established in an efficient and effective manner. Thus, the Board concurs with Doane Grant Thornton that the IESO must develop specific cost management controls as a priority. [44] Further, while the Board agrees w...

AI summary The Board agrees with Doane Grant Thornton that the IESO must prioritize developing cost management controls. It supports the Net OM&A Deferral and Variance Account but requires specific guidelines for cost recovery. The IESO's accounting policies must align with NS Power's Fuel Adjustment Mechanism and Decarbonization Deferral Account standards. The More Access to Energy Act mandates prudence reviews for forecast costs, with the Board referencing its 2025 NSEB 10 decision on prudence tests.

3.6 Reporting on the Transition from NS Power [78] IESO Nova Scotia stated that it will assume the system operator responsibilities under the More Access to Energy Act in a two-phased transition. In the first phase of the transition, it wi...

AI summary IESO Nova Scotia outlined a two-phase transition from NS Power, with Phase 1 (system planning, procurement) to begin in Q4 2025 and Phase 2 (real-time dispatch) in Q2 2027. The IESO proposed monthly transition reports, but the Industrial Group requested expanded details on costs and milestones. The IESO argued that Phase 1 was largely complete and that cost reporting would increase regulatory burden.

3.6.1 Findings [84] The Board agrees that reporting should occur to update the Board and interested parties on the status of the transition, generally, including the transfer of responsibilities from NS Power to the IESO and various initia...

AI summary The Board agrees that quarterly reports from IESO Nova Scotia are necessary to update stakeholders on the transition from NS Power to the IESO, including progress on the IRP, procurement, and rate recovery mechanisms. Reports must cover transition phases, financial controls, and material operational changes, starting May 15, 2026, with Phase 2 of the transition expected in Q2 2027.

Request IR-3: - Reference: Exhibit N-1(i), p. 2 of 36 - The NSIESO states "It is the NSIESO's proposal to defer the approval of a rate recovery - mechanism until its application for the period April 1, 2026 to March 31, 2027." However, in...

AI summary The NSIESO proposes deferring rate recovery approval until 2026-2027 but plans to recover OM&A costs in the 2027-2028 test year. Questions challenge this deferral, asking if recovery will be single/multi-year and why 2025-2026 costs are deferred despite partial known expenses by April 2026.

Request IR-4: - Reference: Exhibit N-1(i), p. 2-3 of 36 - The NSIESO notes that its proposed "NET OM&A Deferral and Variance Account" will serve three - specified functions. Please confirm that the underlying intent is to establish a defer...

AI summary The NSIESO proposes a 'NET OM&A Deferral and Variance Account' to defer fiscal year 2025-2026 costs, net of surplus funds from its Provincial grant for one-time transition costs. The request seeks confirmation of this intent.

Request IR-6: - Reference: Exhibit N-1(i), p. 7 of 36 - The NSIESO states: "…because the NSIESO does not yet have an approved mechanism to - recover rates from customers, the NSIESO is not seeking approval for any such fee as part of - thi...

AI summary The NSIESO explains that it did not seek approval for a rate recovery mechanism in this proceeding because it currently lacks an approved method to recover rates from customers. This omission is highlighted in Exhibit N-1(i), p. 7 of 36, where the NSIESO explicitly states it is not pursuing such approval at this time.

Request IR-11: - Reference: Exhibit N-1(i), p. 13 of 36 - The NSIESO notes that any one-time transition costs during the test period exceeding the - Provincial funding will be recorded as a shortfall in the Net OM&A Deferral and Variance A...

AI summary The NSIESO notes that one-time transition costs exceeding provincial funding during the test period will be recorded as a shortfall in the Net OM&A Deferral and Variance Account, recoverable in a future application after prudence review. Questions seek clarification on the review's scope, cost consideration, updated estimates, and future costs post-2026.

Request IR-15: - Reference: Exhibit N-1(i), p. 19 of 36 - The NSIESO notes it is forecasting $1.61 million in expenses as the portion of NS Power - operational costs that will be transitioned to the NSIESO during the test period and states...

AI summary The NSIESO forecasts $1.61 million in expenses from NS Power's operational costs during a test period, claiming these costs are already approved and recovered in NSPI's rates, so transferring them wouldn't be incremental. The request challenges this, asking why customers would pay again, why the costs are being transferred, and the likelihood of employee transfers by 2025.

Request IR-6: Refer to the Application and Exhibit B-2 - Ongoing OM&A Cost Category Detail , subsection F, Procurement ($0.99M), on pages 25-26 of 36 and respond to the following: - a) Please provide rationale for the 50/50 split in capita...

AI summary Request IR-6 seeks rationale for a 50/50 split of capitalization and expenses in procurement and project management costs, and clarification on which components of the 300 MW RFP costs apply a 20% contingency fee. The request references Exhibit B-2, subsection F, pages 25-26.

does not have historical organizational and operational data. As a result, there may be circumstances that may not be readily foreseeable that have not formed the basis of its financial forecasting. - 10 Recognizing these explanations for...

AI summary The NSIESO acknowledges limited historical data affecting financial forecasting and explains its current lack of a proposed rate recovery mechanism. Requests focus on recovery timelines, rate impacts, and transition costs, with the NSIESO stating some expenses will be fully funded by provincial funds without Board approval. The NSIESO also outlines transitioned operational costs from NSPI.

1 Given that the costs under this category are to pay for functions that are 2 currently carried out by NSPI, these costs have already been approved by 3 the Utility and Review Board and are recovered in NSPI's rates. - 4 (a) Does this mea...

AI summary The text discusses overlapping costs between NSPI and the NSIESO, noting that costs already approved by the Utility and Review Board are recovered in NSPI's rates. A question is raised about the expected overlap of $1.61M during the NSIESO's first six years of operation.

- 7 (b) How does the NSIESO account for the fact that these costs are already 8 embedded in existing rates, without requiring ratepayers to pay twice (i.e., 9 in existing rates and as part of the NSIESO costs)? - 10 (c) Has the NSIESO vali...

AI summary The text presents a series of questions and requests related to the NSIESO's accounting for embedded costs, employee transition validation, and updates on procurement progress and interest expenses. It focuses on financial and operational considerations within a regulatory proceeding.

Deferral Account The Industrial Group does not oppose establishment of a Deferral Account given that IESO-NS has been newly created and its responsibilities have not yet stabilized. However, clear parameters and limits to a Deferral Accoun...

AI summary The Industrial Group supports a Deferral Account for IESO-NS but emphasizes the need for clear parameters to protect ratepayers. DGT recommends financial controls, prudence standards, and a 10% overrun threshold for cost categories, citing ISO analogies. IESO-NS disagrees with the 10% threshold, arguing it is premature given their early operational stage and requests flexibility in setting benchmarks.

IESO-Nova Scotia Transition Status In its Application, IESO-Nova Scotia advises that it is in the process of scaling its organization in a phased manner so the test year amounts requested should not be considered as representative of the o...

AI summary IESO-Nova Scotia is scaling its organization in phases, noting test year costs do not reflect ongoing OM&A expenses. It expects rising costs over the first three fiscal years, with responsibilities including transitioning operational functions from NSPI and planning system operations. Full transition is expected by Q2 2027, beyond the test year.

Please refer to: David Roberts Email: [[email protected]](mailto:[email protected]) Assistant: Alissa Whalen Assistant's email: [[email protected]](mailto:[email protected]) January 15, 2026 Via Secure File Transfer C...

AI summary The Consumer Advocate submits that the IESO-NS's revenue requirement and deferral account request should be approved with clear guidelines reflecting Doane Grant Thornton's concerns. IESO-NS is a new organization still establishing its internal capabilities.

ropose a rate recovery mechanism. It proposed to defer the approval of a rate recovery mechanism until a later application for its revenue requirement for the period April 1, 2026, to March 31, 2027. - [4] The Board considered the matter i...

AI summary The Board approves the IESO's proposed expenditure and revenue requirement for the initial test year ending March 31, 2026, approving an amount of $6,751,287, with a net amount of $5,306,824 after provincial funding. It also concludes that a Net OM&A Deferral and Variance Account should be established, with specific guidelines and accounting policies to be developed and approved before recovery of amounts from the account.

ive and governance-related functions, as well as the operational costs, for the first phase of its duties under the More Access to Energy Act , namely its first integrated resource planning exercise. - [13] The Board issued a Hearing Order...

AI summary The IESO Nova Scotia's integrated resource planning under the More Access to Energy Act is under review. The Board issued a Hearing Order in August 2025, with evidence submitted by consultants and the IESO. No oral hearing was requested. The IESO's costs will be recovered via transmission tariffs, and the Board's authority to approve rate recovery mechanisms is outlined in specific sections of the Act.

Cost recovery - 30 (1) The IESO shall apply to the Energy Board for the recovery of costs for energy resource supply contracts, and any costs incurred by the IESO for the administration of those contracts, respecting settlements or payment...

AI summary The IESO must apply to the Energy Board for cost recovery related to energy resource supply contracts and their administration. The Energy Board must establish a mechanism for ratepayers and public utilities to collect and remit these costs to the IESO.

Application for approval of transmission tariff - 79 (1) The IESO shall make application to the Energy Board for approval of a transmission tariff for the provision of transmission services or ancillary services, or both, and the applicati...

AI summary The IESO must apply for a transmission tariff, including the transmitter's revenue requirement. The Energy Board must approve the tariff based on revenue projections and cost recovery mechanisms for ancillary services. The Board can set timelines for tariff implementation.

3.2 Proposed Revenue Requirement [22] IESO Nova Scotia forecasts its OM&A expenses for the test period to be $6.75 million (Ongoing OM&A). The IESO stated it will incur one-time transition costs forecast at $1.23 million, including costs t...

AI summary IESO Nova Scotia forecasts OM&A expenses of $6.75 million, including $1.23 million in one-time transition costs covered by a $2.68 million provincial grant. The IESO expects to recover $5.31 million in rates, with the remaining $1.44 million from the grant.

3.3 Deferral and Variance Account [33] This Net OM&A Deferral and Variance Account is being requested to defer the recovery of the IESO's approved and forecasted Net Ongoing OM&A costs (i.e., net of provincial funding). [34] The IESO defer...

AI summary The IESO proposes a Deferral and Variance Account to defer recovery of Net OM&A costs, structured into three subaccounts. Sub-Account 1 holds approved forecast costs, Sub-Account 2 records variances, and Sub-Account 3 reflects adjusted actual costs. A $5.31M deferral is anticipated upon approval of forecast OM&A costs. The IESO deferred a rate recovery mechanism until its 2026-2027 revenue application due to data gaps.

mportant that they be re-established in an efficient and effective manner. Thus, the Board concurs with Doane Grant Thornton that the IESO must develop specific cost management controls as a priority. [44] Further, while the Board agrees w...

AI summary The Board agrees with Doane Grant Thornton on the need for IESO to develop cost management controls and the creation of the Net OM&A Deferral Account, but requires guidelines and policies before cost recovery. Prudence reviews for overruns are mandated under the More Access to Energy Act, with specific references to past Board decisions.

3.6.1 Findings [84] The Board agrees that reporting should occur to update the Board and interested parties on the status of the transition, generally, including the transfer of responsibilities from NS Power to the IESO and various initia...

AI summary The NSEB mandates quarterly reporting by IESO Nova Scotia starting May 15, 2026, to update the Board and stakeholders on the transition from NS Power, including rate recovery mechanisms, financial controls, and system operator function transfers. Reports must address new costs, operational changes, and progress on minimum filing requirements, with Phase 2 grid operations expected by Q2 2027.