Topic:"Cost Recovery" in M13007

The Independent Energy System Operator of Nova Scotia ("IESO Nova Scotia") applies to the Nova Scotia Energy Board ("NSEB", "Board") pursuant to subsection 29(1) of the More Access to Energy Act , SNS 2024, c 2, Sch B, ("MAEA") for approva...

AI summary IESO Nova Scotia seeks approval from the NSEB to implement a new fee recovery mechanism to recover its revenue requirement from applicable LSEs. The mechanism includes a fixed monthly charge and options for annual true-up adjustments. The proposal is based on expert advice and stakeholder engagement, with a four-step cost recovery framework identified by FTI.

ystem operator ("ISO") cost recovery: determining the revenue requirement, allocating that revenue requirement to market participants, setting ISO fees, and applying collection and true-up mechanisms. - 1 IESO Nova Scotia's proposal applie...

AI summary The document discusses the revenue requirement and cost recovery for the system operator in Nova Scotia, focusing on the framework applied by IESO Nova Scotia and the fee calculation model proposed by Power Advisory. It outlines the timeline for recovery and assumptions made for the 2025/26 and 2026/27 periods.

2. INTRODUCTION 2 IESO Nova Scotia is the recently established independent system operator for Nova Scotia, taking 3 over the system planning, energy resource procurement, and interconnection functions of NSPI. 4 Currently, IESO Nova Scoti...

AI summary IESO Nova Scotia, the independent system operator for Nova Scotia, is seeking temporary financial relief while developing a permanent fee and cost recovery mechanism. It plans to submit this mechanism for NSEB approval by Q2 2026 and recover its remaining revenue requirement from March 2027, the end of its 2026/2027 fiscal year.

IESO Nova Scotia 2026/27 Revenue Requirement Application (M12663), January 20, 2026, p.41, lines 19-27. IESO Nova Scotia provided a progress update to the NSEB on July 6, 2026, noting that its application for a fee recovery mechanism would...

AI summary IESO Nova Scotia provided an update to the NSEB regarding its application for a fee recovery mechanism, which was planned for submission in July 2026. The update was part of the IESO Nova Scotia 2026/27 Revenue Requirement Application (M12663).

- IESO Nova Scotia engaged FTI to conduct a jurisdictional scan of cost recovery mechanisms used - by other ISOs to inform the development of IESO Nova Scotia's fee recovery mechanism. Please - refer to Appendix 1 for a copy of the jurisdi...

AI summary IESO Nova Scotia engaged FTI to research cost recovery mechanisms used by other ISOs, resulting in a four-step framework for revenue requirement determination, allocation, fee setting, and collection. The report defines ISO Core Costs and distinguishes between inseparable and direct costs.

15 Figure 4 – Market Participants Source: FTI Analysis. Note: OATT = Open Access Transmission Tariff. Therefore, the Proposed Mechanism applies its fees to NSPI and the MEUs[8](#page-14-0) as the applicable market participants in Nova Scot...

AI summary Figure 4 outlines the market participants subject to the Proposed Mechanism in Nova Scotia, including NSPI and various municipal electric commissions. The Proposed Mechanism uses direct charges rather than incorporating costs into existing tariffs to recover inseparable costs from transmission system users.

3.5. Collection and True Up True-Up Mechanism this information. Most ISO tariff frameworks include true-up mechanisms to reconcile over- or under-recovery in varies, this solution is less administratively burdensome for the LSEs who will h...

AI summary The section discusses the true-up mechanism within ISO tariff frameworks, which reconciles over- or under-recovery of costs between forecasted and actual expenses, reducing administrative burdens for Load Serving Entities (LSEs).

Revenue stability - Ability to adjust charges to ease volatility in cash flows - Allows for quicker reaction to changes in billing determinants (demand/usage), in internal costs, or exogenous factors (inflation, interest rates, regulations...

AI summary The text discusses revenue stability strategies, including the ability to adjust charges to manage cash flow volatility and the application of cost causation principles. It emphasizes minimizing distortion and administrative complexity, with a focus on selecting a fee recovery mechanism that is flexible and suitable for IESO Nova Scotia's early-stage operations.

The Proposed Mechanism allows for minimal set-up costs because it allows for an initial filing for a relatively straightforward application using straightforward allocation methods (annual load) and 1 clearly defined market participants (L...

AI summary The Proposed Mechanism offers minimal set-up costs due to straightforward application processes and defined market participants. However, it highlights concerns about revenue stability when compared to the OATT process, which may lead to under- or over-recovery due to budget variances. Economic principles suggest that cost allocation for inseparable ISO core costs should minimize distortions.

13 11 In discussions with LSEs it is recognized that not all LSEs would have a detailed forward looking FY load forecast, and so based on the relatively stable load growth seen in the province that historic actuals from the most recent cal...

AI summary The document discusses the need for a Revenue Requirement Deferral and Variance Mechanism (DVM) to ensure IESO Nova Scotia can recover actual costs incurred, given its not-for-profit status. This mechanism would allow for truing up revenue requirements based on actual loads and account for fiscal year variances, as outlined in the 2026/27 Revenue Requirement application and referenced in FTI's Jurisdictional Report.

3 Figure 15 - Monthly Fees with 2025/26 True-Up by Compliance Filing Total 2025/26 and 2026/27 Revenue Calculation 2025/26 True-Up Total Monthly Fee Market Participant Total Fees (2025/26 + 2026/27) Interim Fee Recovered before Implementat...

AI summary Figure 15 outlines monthly fees with a 2025/26 true-up by compliance filing, detailing revenue calculations and allocations for various market participants. NSPI and other entities are listed with their respective fees, unrecovered amounts, and monthly charges.

DATE FILED: July 31, 2026 Page 46 of 48 1 7. CONCLUSION IESO Nova Scotia respectfully submits that the Proposed Mechanism is fair, reasonable, and appropriate for approval. It provides a practical and necessary means of recovering IESO Nov...

AI summary IESO Nova Scotia submits that the Proposed Mechanism is fair, reasonable, and appropriate for approval. It provides a means of recovering revenue from market participants, consistent with its statutory mandate and not-for-profit status. The mechanism includes a fixed monthly direct charge to LSEs, with adjustments based on annual load served and true-up processes.

ISO Costs While there are important benefits from the IESO transition, it must be acknowledged that certain costs are inherent to running the IESO in Nova Scotia. These include: - Capital, operating, maintenance and administrative costs (r...

AI summary The IESO transition in Nova Scotia involves inherent costs such as core operational and procurement expenses. These costs are not incremental for consumers and are currently recovered through a temporary mechanism. IESO NS is seeking an enduring cost recovery mechanism and has engaged FTI Consulting LLP to assess international approaches to cost recovery.

The remainder of the report is structured as follows: - In Section 2, we summarise our findings; - In Section 3, we describe the process of how ISO costs are recovered by each benchmarked ISO in the jurisdictional scan; - In Appendix 1, we...

AI summary The report outlines its structure, detailing sections that summarize findings, describe ISO cost recovery processes, and provide appendices with additional information on ISO tariffs and benchmarked ISOs.

Process Figure 2: Summary of typical process for setting tariffs and recovering costs The process for setting ISO tariffs to recover Core Costs typically involves four steps: - 1) Determining the revenue requirement : Typically, the revenu...

AI summary The process for setting ISO tariffs to recover Core Costs involves four steps: determining revenue requirements, allocating costs to market participants, setting tariff rates, and collecting tariffs with periodic true-ups. The methodology varies by jurisdiction and includes energy-based, demand-based, and hybrid approaches.

sultations/2025/participant-fee-structure-review/final-determination-documents/nem-participant-fee-structure-review-final-determination overview.pdf?rev=ad5fd69f696842d29fe5f27b07f6b7c9&sc_lang=en). 39 Prior to April 2023, cost recovery ch...

AI summary Prior to April 2023, cost recovery charges were split between load and generation. Ofgem decided to apply charges only to load to remove distortions, as charging generation led to unnecessary risk premiums and transaction costs in wholesale prices.

Types of Charges - Charges that also recover non-Core Costs are marked ( ) Load Generation Intertie traders Transmission owner consumption (MWh); and a tiered, MW-based proportion of substation costs. Other Transmission Service Charges : a...

AI summary The document outlines various types of charges related to transmission services, including those that recover non-Core Costs. These include Demand Opportunity Service (DOS), Export Opportunity Service (XOS), Export Opportunity Merchant Service (XOM), Energy Market Trading Charge, and Balancing Services Use of System (BSUoS), among others. Each charge is associated with specific cost recovery mechanisms and customer classes.

for the IESO while aligning with best practice cost allocation principles, as observed in other jurisdictions; and - Align with economic principles, which seek to limit distortionary behaviours. The recommendation for the fee recovery mech...

AI summary The report outlines a recommended fee recovery mechanism for the IESO, considering it does not own the OATT or perform system operation functions. It aligns with economic principles and best practices in cost allocation, and suggests revisiting the decision if the OATT or system operation functions are transferred to the IESO. The report is structured into sections defining core costs, the cost recovery process, and the recommended mechanism, with supporting appendices.

2.Key definitions In this section, we outline three key concepts : (i) the costs to be recovered ('Core Costs'), (ii) from whom, the different types of relevant MPs to be charged IESO fees ('Market Participants'), and (iii) and on what bas...

AI summary This section introduces three key concepts: Core Costs, Market Participants, and Billing Determinants, which are essential for understanding the financial and operational framework of the proceeding.

mes, any reduction in exports would simply shift recovery of the revenue requirement to other market participants, creating a potential welfare loss through a distortion of efficient trading patterns. that the billing determinant should re...

AI summary The text discusses how billing determinants should reflect the underlying cost drivers of activities or assets for which costs are being recovered. It highlights that coincident peak load charges are used to recover transmission costs, linking who pays to who causes the cost, promoting economic efficiency. However, for inseparable Core Costs of an ISO, there is no clear cost driver, making it difficult to establish a similar billing determinant.

Step 2 Considerations for Nova Scotia Inseparable costs (which include integrated resource planning, employees, and administrative costs for example) are inherent to the running of the IESO, from which the broader customer base (rather tha...

AI summary Inseparable costs, such as those related to integrated resource planning and administrative expenses, are recovered across the Nova Scotia transmission system customer base. Only third-party recoveries for interconnection study procedures are considered direct costs with identifiable beneficiaries.

Steps 3 and 4: Set ISO fees and collection and true-up Once step 1, determining the revenue requirement (and associated ISO Core Costs), as well as step 2 to allocate between direct costs and inseparable costs are complete, step 3 will set...

AI summary Steps 3 and 4 involve setting ISO fees for recovering inseparable Core Costs and defining collection and true-up mechanisms. ISOs charge MPs directly for specific services, and true-up mechanisms are necessary due to variations between forecasted and actual Core Costs and billing determinants.

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

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

Actual load above forecast (undercharged) [Figure 17](#page-28-0) [below](#page-28-0) illustrates an example Year 3 charge for MP1. MP1 was undercharged in Year 2 because its forecast load share was lower than its actual load, so its month...

AI summary The text explains how an MP (Market Participant) was undercharged in Year 2 due to a discrepancy between forecast and actual load share, resulting in a higher monthly bill in Year 3. The base allocation, year 2 adjustment, and year 1 true-up are calculated to determine the final charge.

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

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

Revenue stability The revenue stability criterion shows i) how the recovery mechanism can adjust charges to reduce cash flow variability, and ii) whether it enables a quicker response to changes in billing determinants (demand/usage), inte...

AI summary The revenue stability criterion evaluates how a recovery mechanism can adjust charges to reduce cash flow variability and enable a quicker response to changes in billing determinants, internal costs, and external factors such as inflation and regulatory changes. This is important for the IESO to ensure it can meet cash flow needs for large investments.

NON-CONFIDENTIAL fees. Otherwise, IESO Nova Scotia will obtain load served forecast and actuals from LSEs for all LSE served load irrespective of the source from which the load is being served. c) Please refer to NSEB IR-21. Entities wheel...

AI summary IESO Nova Scotia outlines its fee recovery mechanism, clarifying that it does not apply to intertie traders and that interconnection study costs are billed to customers. The proposed mechanism differs from the OATT, and the term 'netted out' refers to direct costs not being included in the Revenue Requirement.

22 23 b) Yes, alternate recovery periods were considered. Fees with different recovery periods can 24 be calculated in Appendix 3 – IESO Fee Calculation Model by changing the green-shaded 25 cell under "# Months of Revenue Collection" in t...

AI summary Alternate recovery periods for fees were considered, and the IESO Fee Calculation Model in Appendix 3 allows for adjusting the recovery period by modifying the green-shaded cell under '# Months of Revenue Collection' in the 'Fee Recovery Calculation' tab.

- 23 Overhead costs related to these activities include a portion of the costs listed in the cost categories - 24 shown in Exhibit B-1, Page 9, Table 1. A portion of these costs is allocated and recovered through - 25 direct billing of int...

AI summary The text discusses overhead costs related to activities, referencing Exhibit B-1 and Table 15, and mentions direct billing of interconnection customers. It also refers to LEI IR-3 for direct costs and notes the involvement of the Nova Scotia Independent Energy System Operator and London Economics International LLC.

vig ; Byers, Conleigh ; John Esaiw Subject: [External]RE: Jurisdictional Scan Workshop \ \ \ Exercise Caution - This is an external email - Beware of links or attachments from external sources. If you are unsure, click 'Report Phishing/Rep...

AI summary The email contains six questions posed to FTI Consulting regarding the jurisdictional scan, covering topics such as cost recovery, rate design, stakeholder engagement, and the treatment of core costs by the IESO-NS. The questions focus on prudence, cost allocation, and regulatory processes.

WHEREAS - A. The Nova Scotia Independent Energy System Operator (IESO NS), along with [PARTIES TO SETTLEMENT], (collectively the "Stakeholders", who along with IESO NS are referred to herein as the "Parties") have engaged in a collaborativ...

AI summary The Nova Scotia Independent Energy System Operator (IESO NS) and stakeholders have reached a consensus on a cost recovery mechanism through collaborative meetings and the submission of a Draft Fee Recovery Application, which includes a report and fee calculation model from FTI Consulting.

Terms of Settlement IESO Fee Recovery Settlement Terms B i l l De te in t rm an G I 1. F T I r ds d ire t c ha to ke t ec om m en a c rg e m ar t ic ip ts t io l to h M P 's p ar an p ro p or na e ac , fo te d ha f s te lo d d fra re ca s...

AI summary The document outlines the terms of settlement regarding the IESO fee recovery, including the proposed flat fee for participants and discussions about cost allocation and recovery mechanisms. It also references the involvement of various entities in the process.

NON-CONFIDENTIAL are more important considerations. Existing market structure, such as ownership of the OATT, were additional considerations when reviewing cost recovery mechanisms in the Benchmarking Group. How system size relates to the...

AI summary The document discusses considerations for cost recovery mechanisms in the Benchmarking Group, focusing on the impact of system size on market distortions and revenue stability. It highlights that larger systems experience lower per-participant costs and that Nova Scotia's small system size may lead to greater fluctuations in energy consumption.

NON-CONFIDENTIAL 35 b) The requested scenario is provided in the tables below. The monthly fees reflect a 12-month 36 recovery period of 2025/26 and 2026/27 revenue requirements from April 2027 to March 37 2028 assuming NS Power has paid t...

AI summary The text outlines a scenario where monthly fees are based on a 12-month recovery period for 2025/26 and 2026/27 revenue requirements, assuming NS Power has paid the interim fee until March 2027.

NON-CONFIDENTIAL 21 c) No. The impact of over- or under-recovery in a year to carrying costs will be reflected in 22 the "Finance" line item of revenue requirements in those years. Please refer to CA IR-5. Date Filed: September 22, 2026 IE...

AI summary The response indicates that the impact of over- or under-recovery in a year on carrying costs will be reflected in the 'Finance' line item of revenue requirements. This information is referenced in CA IR-5.

NON-CONFIDENTIAL 1 Request IR - 20 - Reference: Appendix 2 – IESO Enduring Fee Cost Recovery Recommendation Report

AI summary The document references an appendix titled 'IESO Enduring Fee Cost Recovery Recommendation Report,' which discusses the cost recovery of enduring fees by the Nova Scotia Independent Energy System Operator (IESO).

- On pdf pg. 5, FTI Consulting lays out four potential fee recovery mechanisms, the first of which - is a new schedule in the Open Access Transmission Tariff. If this option were utilized, would NS - Power pay the full amount to the IESO a...

AI summary The text raises a question regarding a potential fee recovery mechanism involving the Open Access Transmission Tariff and how costs would be allocated between OATT customers and other customers if implemented.

Pros - Consistent with method costs are recovered under the OATT

AI summary The text indicates that the method for recovering costs is consistent with the OATT, suggesting alignment with established procedures for cost recovery.

LEI was retained by the NSEB to provide an independent expert assessment of the fee recovery mechanism application filed by IESO Nova Scotia on July 31st, 2026 (Matter M13007). This report presents the results of LEI's review of key aspect...

AI summary LEI was retained by the NSEB to assess IESO Nova Scotia's fee recovery mechanism application. The report reviews the fixed nature of IESO's costs and suggests that revenue should be allocated based on MWh load served by LSEs, with a recommendation for more detailed cost allocation in Phase 2.

ase 1 mandate. Once Phase 2 is implemented, the NSEB may wish to direct IESO Nova Scotia to undertake a more granular, function-level cost allocation exercise, including explicit treatment of exports. - iii. Flat monthly fee (as opposed to...

AI summary The text discusses interim measures for fee recovery during Phase 2 implementation, suggesting a flat monthly fee based on load served as a temporary solution. It also recommends re-evaluating the fee recovery mechanism, including potential changes to the Open Access Transmission Tariff (OATT), after Phase 2 steady-state operation.

I recommends that this re-evaluation, including recovery through OATT schedules, form part of its first revenue requirement application after the Phase 2 transition, rather than a separate proceeding. - v. True-up application options, i.e....

AI summary LEI recommends integrating re-evaluation and recovery through OATT schedules into the first revenue requirement application post-Phase 2 transition. It also prefers a two-year lag via annual revenue requirement application for regulatory efficiency and finds the fee calculation methodology reasonable, aligning with cost allocation and rate design principles.

LEI assessment Principles applied Key observations Interim mechanism (Sections 5.2-5.4) Accept the flat monthly fee, allocated Administrative simplicity and transparency Fixed monthly charges recover IESO Nova Scotia's largely fixed costs...

AI summary The document discusses the interim mechanism for cost recovery, including a flat monthly fee allocated to LSEs, granular cost allocation for Phase 2, billing determinants based on MW/MWh, and the recovery mechanism through OATT schedules. It also addresses true-up and fee calculation methodology.

ESO Nova Scotia committed to develop a permanent fee recovery mechanism, informed by jurisdictional research and stakeholder engagement, and to submit it for the NSEB's approval in 2026.[3](#page-5-3) On July 31st, 2026, IESO Nova Scotia f...

AI summary IESO Nova Scotia has proposed a fee recovery mechanism to recover its revenue requirement through fixed monthly charges to LSEs, with approval sought from the NSEB. The mechanism includes interim payments, a true-up process, and future fee approvals as part of annual revenue applications.

5 Reasonableness review for proposed recovery of IESO Nova Scotia's revenue requirement This section assesses the reasonableness of IESO Nova Scotia's fee recovery proposal. Specifically, it presents the results of LEI's review of the foll...

AI summary This section evaluates the reasonableness of IESO Nova Scotia's proposed fee recovery, focusing on components of the revenue requirement, allocation methods, fee structures, recovery mechanisms, true-up application options, and calculation methodologies.

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

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

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

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

ponses to Industrial Group (IG) Information Requests. IR-1, Attachment 1. September 22nd, 2026; Nova Scotia Energy Board. Matter M13007. Appendix 3 – Fee calculation model . July 31st, 2026. As such, a MW or MWh based fee is a more economi...

AI summary The text discusses the recommendation of a MW or MWh based fee for recovering revenue requirements, emphasizing economic efficiency and alignment with cost causation principles. It also suggests that the OATT may be a suitable avenue for revenue recovery as IESO Nova Scotia takes on Phase 2 responsibilities.

5.4 Is the proposed recovery mechanism (direct invoicing vis-à-vis other options) appropriate? For recovering its costs, IESO Nova Scotia (based on FTI recommendations) proposed four potential mechanisms, grouped into two OATT-based proces...

AI summary The document evaluates the appropriateness of the proposed cost recovery mechanism, specifically direct invoicing, compared to other options. IESO Nova Scotia has proposed four mechanisms, including introducing a new schedule in the OATT and embedding costs in the transmission revenue requirement. A usage-based fee is suggested to align customer payments with long-term system costs.

5.6 Review of fee calculation methodology IESO Nova Scotia has provided its fee calculation model as Appendix 3 to the fee recovery application (prepared by Power Advisory). [Figure 5](#page-22-0) illustrates the mechanics of that model. T...

AI summary The document discusses the fee calculation methodology used by IESO Nova Scotia, including adjustments for over-recovery and carrying costs. It outlines the revenue requirements for 2025/26 and 2026/27, the deduction of interim fees collected from NS Power, and the calculation of monthly fees for the remaining balance. LEI calculated carrying costs for two options, with Option 1 having higher costs.

6 Concluding remarks LEI has assessed IESO Nova Scotia's fee recovery mechanism application against the rate design principles set out in Section [3,](#page-7-0) and in light of IESO Nova Scotia's current Phase 1 mandate described in Secti...

AI summary LEI evaluates IESO Nova Scotia's fee recovery mechanism and finds it reasonable as an interim measure. It recommends a granular cost allocation and a billing determinant based on MW or MWh once IESO Nova Scotia's Phase 2 mandate is implemented. LEI also suggests incorporating variances into the revenue requirement application and recommends Option 1 for true-up due to regulatory efficiency.

NOVA SCOTIA ENERGY BOARD IN THE MATTER OF: More Access to Energy Act – and – IN THE MATTER OF: AN APPLICATION by the INDEPENDENT ENERGY SYSTEM OPERATOR OF NOVA SCOTIA made pursuant to Section 29 of the More Access to Energy Act for the rev...

AI summary This document is part of a regulatory proceeding under the More Access to Energy Act, involving the Independent Energy System Operator of Nova Scotia's application for the review of its Fee Recovery Mechanism. John D. Wilson of Grid Strategies, LLC provides evidence on behalf of the Consumer Advocate.

I. Identification & Qualifications - Q: Mr. Wilson, please state your name, occupation, and business address. - A: I am John D. Wilson. I am the Vice President of Grid Strategies LLC, Bethesda, MD. - Q: Summarize your professional educatio...

AI summary John D. Wilson, Vice President of Grid Strategies LLC, provides his background, including education and experience in energy and environmental policy, regulatory work with utilities, and expertise in cost-effectiveness, prudency review, and ratemaking.

II. Introduction and Summary - Q: Please summarize the scope of your evidence. - A: My evidence reviews the IESO Nova Scotia proposal for a fee recovery mechanism for costs - related to system planning, energy resource procurement, and int...

AI summary The evidence reviewed evaluates the IESO Nova Scotia fee recovery mechanism for system planning, energy resource procurement, and interconnection functions. It finds the mechanism reasonable except for the true-up process, which is recommended to be revised to align with budget cycles and prudency reviews. A unified proceeding is suggested to ensure timely and equitable cost recovery.

A. Per-MW Allocation Should Not Be Used - Q: Do you agree with IESO NS and FTI that a demand-based, or per-MW allocation, should not be used? - A: Yes. FTI provides sound reasons against (a) allocating the charge on a per-MW basis and (b)...

AI summary The response agrees with IESO NS and FTI that a per-MW allocation should not be used due to revenue variability and equity concerns. The OATT mechanism is criticized for potential over- or under-recovery of costs, especially in Nova Scotia’s smaller system with less load diversity. Alternative recovery methods, such as direct LSE invoicing, are suggested.

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

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

Q: Why does IESO NS require a true-up mechanism? A: The proposed true-up mechanism, or Deferral and Variance Mechanism (DVM), is necessary to ensure accurate revenue recovery. IESO NS's proposed base allocation is straightforward – allocat...

AI summary The IESO NS proposes a true-up mechanism, or Deferral and Variance Mechanism (DVM), to ensure accurate revenue recovery. The mechanism is necessary due to a disconnect between costs and rates, especially during the first half of the fiscal year when fees are not yet approved. True-ups may be needed in years with significant changes in responsibilities, costs, or market shifts.

Q: What is the IESO NS recommendation for the true-up design? A: IESO NS recommends that the true-up should occur immediately; in IESO's terminology, the true-up for FY1 would occur through rates set for FY2. Compared to the other true-up...

AI summary The IESO NS recommends that the true-up should occur immediately, with the true-up for FY1 taking place through rates set for FY2, as this aligns revenue recovery with the year costs are incurred, avoiding a one-year deferral.

Q: Do you support the IESO NS proposal for a true-up mechanism? A: No. The IESO NS proposal for the true-up schedule neither aligns cost recovery with the IESO NS budget for up to six months, nor is it likely to be aligned with LSE's perio...

AI summary The response opposes the IESO NS proposal for a true-up mechanism, citing misalignment with the IESO NS budget and LSE rate adjustments, and the lack of prudence review during true-up setting. Concerns are raised about the implications of disallowance on the nonprofit entity's function.

Q: What is your recommendation for a true-up mechanism? - A: I recommend that the IESO NS recovery fee be updated annually on January 1. This has three advantages: - Assuming IESO NS does, in fact, have "well known" actual costs by mid-Jul...

AI summary The recommendation is to update the IESO NS recovery fee annually on January 1, allowing time for prudence challenges and aligning with retail rate adjustments. This approach avoids further true-up of FY1 costs and facilitates a more convenient schedule for rate changes.

Q: Why is a timely prudency review important? A: The IESO NS proposal to base its fees on the basis of a budget-based test year rather than a historical test year creates the need for a distinctive process for prudency review. Furthermore,...

AI summary A timely prudency review is important because the IESO NS proposal to use a budget-based test year requires a distinctive process. Disallowing cost recovery could create a deficit, necessitating alternative funding sources. A management directive from the Board is an alternative consequence for imprudent actions and must be implemented promptly to prevent repetition of imprudent behavior.

Q: How do you recommend aligning the fee with costs so that fees go into effect on January 1, at the beginning of Q4? - A: Instead of basing the recovery fee on a budget year that begins at approximately the same time as the IESO NS applic...

AI summary The response suggests aligning the fee with costs by having IESO NS submit a budget one year in advance, including estimated true-up costs, FY2 and FY3 budgets, and CY3 fees based on load forecasts and approved costs. This approach aligns with NS Power's annual load forecast method and reduces misalignment between costs and fee recovery.

C. Treatment of Carrying Costs - Q: How would carrying costs be considered in your recommendation? - A: As confirmed by IESO NS, there is no need for the complexity of the NS Power FAM AA/BA process. The FAM true-up is complicated due to m...

AI summary The discussion focuses on how carrying costs would be treated in the recommendation, with IESO NS stating that carrying costs would be fully recovered through approved fees via the Revenue Requirement, Proposed Expenditures, and Fees applications. It also notes that carrying costs are not anticipated to be applied to the true-up balance.

EXPERT TESTIMONY 2008 South Carolina PSC Docket No. 2007-358-E, surrebuttal testimony on behalf of Environmental Defense, the South Carolina Coastal Conservation League, Southern Alliance for Clean Energy and the Southern Environmental Law...

AI summary The text outlines expert testimony from multiple regulatory proceedings in South Carolina, North Carolina, and Florida, focusing on energy efficiency cost recovery mechanisms and the adequacy of energy efficiency considerations in integrated resource plans, with various environmental and consumer advocacy groups as stakeholders.

IN THE MATTER OF the MORE ACCESS TO ENERGY ACT - and - IN THE MATTER OF AN APPLICATION by the INDEPENDENT ENERGY SYSTEM OPERATOR OF NOVA SCOTIA made pursuant to Section 29 of the More Access to Energy Act for the review of its Fee Recovery...

AI summary This document pertains to a regulatory proceeding involving the Independent Energy System Operator of Nova Scotia, seeking a review of its Fee Recovery Mechanism under the More Access to Energy Act. The proceeding is before a panel of officials including the Chair, Vice Chair, and a Member.

Request IR-11: - Reference: 4.2. The Proposed Fee Recovery Mechanism - The IESO notes that the monthly fee charged to MPs will have a base allocation for that year's - revenue requirement, a true-up for the variance in the previous revenue...

AI summary The IESO is questioned about its proposed fee recovery mechanism, specifically regarding how true-ups for revenue requirement variances will be handled, whether refunds will be issued immediately or over time, and if carrying costs will be incurred by LSEs.

Request IR-18: - Reference: Appendix 1 ISO Cost Recovery Mechanism Jurisdictional Scan - On pg. 12, FTI notes that most ISOs, like IESO Nova Scotia, do not operate for profit. Of the - jurisdictions considered in the scan, how many apply f...

AI summary The document references Appendix 1 of the ISO Cost Recovery Mechanism Jurisdictional Scan, asking how many jurisdictions apply fixed fees versus variable fees based on a fixed rate for energy sold, as proposed by IESO Nova Scotia.

Request IR-19: - Reference: Appendix 1 ISO Cost Recovery Mechanism Jurisdictional Scan - On pg. 17, FTI states: - Even for LSEs that are levied a usage-based charge (per MWh, which could theoretically be linearly passed through to customer...

AI summary The text discusses the challenges of passing through ISO fees to customers via load serving entities (LSEs), noting that differing customer classes may contribute unevenly to ISO costs. It raises questions about whether any jurisdiction passes ISO Core Costs as a linear usage-based charge and references Ontario's 2026 Interim Usage Fees approved by the Ontario Energy Board.

Request IR-20: - Reference: Appendix 2 IESO Enduring Fee Cost Recovery Recommendation Report - On pdf pg. 5, FTI Consulting lays out four potential fee recovery mechanisms, the first of which is - a new schedule in the Open Access Transmis...

AI summary The text raises a question about whether Nova Scotia Power would pay the full amount of an enduring fee to the IESO and then use its approved Cost of Service methodology to allocate the costs between OATT customers and all other customers, if a new schedule in the Open Access Transmission Tariff were utilized.

Request IR-22: - Reference: Appendix 2 IESO Enduring Fee Cost Recovery Recommendation Report and - Appendix 3 Fee Calculation Model - The detailed example of the direct charge for Option 2.a. in the report contemplates that an - allocation...

AI summary The text discusses the timing and methodology for calculating fees related to the IESO's enduring fee cost recovery, including the use of forecast versus actual load data for different fiscal years and the implications for fee applications.

1 2026 M13007 2 NOVA SCOTIA ENERGY BOARD 3 IN THE MATTER OF: The More Access to Energy Act (the "MAEA") 4 IN THE MATTER OF: An Application by the Independent Energy System Operator of 5 Nova Scotia ("IESO Nova Scotia") made pursuant to Sec...

AI summary The Nova Scotia Energy Board has issued an information request to the Independent Energy System Operator of Nova Scotia (IESO-NS) asking for all hypothetical cost recovery scenarios and related analyses used during the stakeholder engagement process for its Fee Recovery Mechanism application under the More Access to Energy Act.

14 Reference: Application, Section 3.4, p. 16, lines 19-22. - 15 (a) Please describe the milestones for "Phase 2 steady state operation" and 16 outline the anticipated timing for accomplishing these milestones. - 17 (b) Does IESO-NS commit...

AI summary The text includes two questions from a regulatory proceeding. The first asks for milestones and timing for 'Phase 2 steady state operation.' The second inquires whether IESO-NS will consult with interested parties during the re-evaluation of the fee recovery mechanism.

6 Request IR-11: - 7 Reference: Application, Section 4.3 (Revenue Requirement True-up Option 2), p.31-32; - 8 Section 5, p.39, footnote 17. - 9 Preamble: IESO-NS's preferred true-up methodology (Option 2) would see revenue - 10 requirement...

AI summary The text outlines a request for detailed information on IESO-NS's preferred true-up methodology (Option 2), including the process for compliance filings, stakeholder scrutiny, prudency review timelines, and the impact of carrying costs on fee amounts for different true-up options.

21 Request IR-5: 22 23 Regarding both options, please comment on whether carrying costs on over- or under-recovered 24 amounts from FY1 (see p. 31 of the Application) that are incurred in FY2 or FY3 would be (i) 25 fully recovered through...

AI summary The text requests comments on whether carrying costs from FY1 over- or under-recovered amounts, incurred in FY2 or FY3, would be fully recovered through a true-up adjustment or recovered as costs in the respective year through approved fees or true-up adjustments.

Request IR-5: Refer to M13007, Exhibit N-1, Application, Section 4.2 The Proposed Fee Recovery Mechanism, which includes descriptions of Revenue Requirement True-Up Option 1 on pages 29-30 of 48 and Option 2, on pages 30-33 of 48. And refe...

AI summary The text requests information regarding IESO-NS's financial statements, under-spending in specific categories, carrying costs, and the application of the true-up mechanism under the More Access to Energy Act. It also seeks an illustrative example of true-up calculations including carrying costs.

Request IR-6: - Refer to M13007, Exhibit N-1, Application, Section 4.2 The Proposed Fee Recovery Mechanism, - which includes Figures 10 and Figure 12, illustrating the timeline for Revenue Requirement True- - Up Option 1 and Option 2, on p...

AI summary The text outlines several regulatory inquiries regarding the proposed fee recovery mechanism, load allocation adjustments, and ISO core costs. It asks about the impact of missed deadlines, verification methods, penalties for non-compliance, and the classification of interconnection study costs under core costs.

Request IR-9 Refer to M13007, Exhibit N-1, Application, Page 31 of 48, Lines 12-15 a) There is reference to carrying costs for under-recovery, but what would happen if there was over-recovery? Request IR-10 Refer to M13007, Exhibit N-1, Ap...

AI summary The text outlines several regulatory requests related to over-recovery, fiscal year references, true-up mechanisms, and discrepancies between requests in a proceeding. It raises questions about carrying costs, timing of payments, and references to figures and options in the application.

Request IR-3: - Reference: IESO Nova Scotia fee recovery mechanism application (page 13 of 48) - IESO Nova Scotia states the following: "The only IESO Nova Scotia costs identified as being a - potential 'direct cost' benefitting an easily...

AI summary The IESO Nova Scotia is applying for a fee recovery mechanism, distinguishing between direct costs (e.g., interconnection study procedures) and inseparable core costs. Direct costs are recovered via third-party cost recovery, while inseparable core costs are not included in the proposed fees. The request seeks detailed breakdowns of both cost types and clarification on their recovery mechanisms.

Request IR-6: - Reference: Appendix 1 Jurisdictional scan (PDF page 22) - Most of AEMO's participant charges are recovered from load through a 50% consumption-based - charge (per MWh) and a 50% fixed charge per connection point, and from g...

AI summary The text asks for an explanation of AEMO's rationale for dividing participant charges evenly between variable and fixed components, with 50% recovered from load and generation through consumption-based and capacity charges.

\ \ EXTERNAL EMAIL / COURRIEL EXTERNE \ \ Exercise caution when opening attachments or clicking on links / Faites preuve de prudence si vous ouvrez une pièce jointe ou cliquez sur un lien Ms. Henwood, To clarify my previous email, the corr...

AI summary Karlie MacPherson is revising IG IR-1 Attachment 1 to correct a formula error in Cell C105. The correction affects several calculations, but the overall fee recovery amount and analysis conclusions remain unchanged. The revised attachment is being refiled in Excel and PDF formats.