Topic:"Forecasting Methodology" in M12663

AFFIDAVIT OF MICHAEL McFETERS - I, Michael McFeters, of Fall River, Nova Scotia, affirm and give evidence as follows: - 1. I am Michael McFeters, the Director, Finance of the Nova Scotia Independent Energy System Operator ("IESO Nova Scoti...

AI summary Michael McFeters, Director of Finance at IESO Nova Scotia, affirms that based on analysis of financial records, the IESO will be unable to meet its financial liabilities by May 2026. The analysis included banking statements, budgets, payroll records, and credit facility data.

Response IR – 10 (a) The budgeting methodology for employees (administration) relied on peer reviews and the use of market information for each of the 23 positions. The administrative positions were aligned with peer organizations with sim...

AI summary The IESO Nova Scotia's budgeting methodology for administrative roles uses peer reviews and market data from organizations like NS Power and NB Power. Compensation targets the 50th percentile in Atlantic Canada, relying on recruitment site analyses and third-party market data from HUB International and KBRS for senior and administrative roles.

NON-CONFIDENTIAL 40 by the Board of approximately $200,000 for a full regulatory proceeding, including 41 payments for intervening parties to participate in such proceedings. 42 43 Note, IESO Nova Scotia does not yet have an exact breakdow...

AI summary IESO Nova Scotia explains that a $200,000 budget allocation covers regulatory proceedings, including intervenor payments. Exact 2025/2026 cost breakdowns are unavailable due to submitting the 2026/2027 Revenue Requirement Application before the 2025/2026 hearing process. The NSEB had not assessed expenses because IESO's initial application was unapproved (per the More Access to Energy Act). Legal/compliance subcategory estimates used 2025/2026 actual costs.

NON-CONFIDENTIAL 20 (a) IESO Nova Scotia used an Activity Based methodology for procurement costs. Scopes 21 typically associated with electricity procurements were identified and costed based on the 22 estimated use of the listed external...

AI summary IESO Nova Scotia explains its use of an Activity-Based methodology for procurement costs, detailing budget allocations for legal, technical, and project management support across initiatives like the Capacity Contract, 300 MW RFP, and Additional Capacity Procurement. The response addresses DGT's information requests, citing contingency reserves and cost breakdowns.

NON-CONFIDENTIAL (a) The budgeting methodology used for the Operations (system planning) category cost assumed 21 roles were being transferred from NS Power and, because employees transferred from NS Power must be compensated at least the...

AI summary The document outlines budgeting methodologies for Operations (system planning) costs, including compensation alignment with NS Power, salary adjustments for technical staff, and FTE changes between 2025/2026 and 2026/2027. Adjustments include excluding a 3% annual increase and adding a $300k benefit adjustment. Third-party recovery costs were doubled due to original budgeting for half a year.

1 Request IR - 1 2 (a) Please provide the financial forecast document used to prepare the total expense 3 forecasts. 4 5 Response IR - 1 6 7 (a) Please refer to Attachment 1. Please also refer to NSEB IR-11 and NSEB IR-21 for 8 information...

AI summary A request asks for the financial forecast document used in total expense forecasts. The response directs to Attachment 1 and references NSEB IR-11 and NSEB IR-21 for employee compensation details.

1 Request IR - 22 2 (a) Regarding Table 16 on page 32 of the application, please provide a version adding a 3 column for actual 2025/2026 to date and the 2025/2026 annualized amount based on the 4 2025/2026 budget and not adjusted based on...

AI summary An information request (IR-22) asks for revisions to Table 16 in the application, specifically adding columns for actual 2025/2026 data and annualized amounts based on the 2025/2026 budget, excluding adjustments related to employee numbers and salaries as of 2025/2026.

NON-CONFIDENTIAL 1 Request IR - 7 2 Refer to the Application and Exhibit A-1 – Introduction, which states at page 5, Lines 14 – 19: 3 IESO Nova Scotia notes that actual expenditures for fiscal year 2025/2026 are materially 4 tracking again...

AI summary IESO Nova Scotia states actual 2025/2026 expenditures are 'materially tracking against' its proposed Revenue Requirement, with no further amendments planned. Variances will be addressed through the Net Revenue Requirement Deferral and Variance Mechanism. The SBA requested clarification on 'materially tracking against,' with a reference to NSEB IR-07.

7 3.2 Procedures - 8 Our procedures with respect to IESO Nova Scotia's revenue requirement calculations were focused on the - 9 assessment of the accuracy and reasonableness of the calculation, the reasonableness of the underlying - 10 ass...

AI summary The NSEB evaluated IESO Nova Scotia's revenue requirement calculations for mathematical accuracy, reviewed forecast methodologies, and assessed internal consistency in M12412 as of March 26, 2026. Focus was on verifying assumptions and ensuring alignment within the application.

4.2 Procedures - Our procedures with respect to OM&A costs included the following: - Summarized expenses by category above including 2025/2026 budget, 2025/2026 annualized budgeted expenditures, and 2026/2027 proposed budget. - Performed a...

AI summary The procedures detail analysis of OM&A costs, including budget comparisons, trend analysis, and review of IESO Nova Scotia's budgeting methodologies. Variances were investigated through requests for explanations and reasonableness assessments. Actual 2025/2026 expenses were compared to the budget approved in M12412.

est salary in that band was applied to the number of - 5 roles in that band/level. This approach was taken to ensure the ability to secure the skill sets and experience - sought.[13](#page-16-0) 6 21 - 7 In the Application, IESO Nova Scoti...

AI summary IESO Nova Scotia outlines staffing and compensation assumptions for 2025/2026 and 2026/2027, including 23 roles with 15% fringe benefits covering insurance, pensions, and professional development. Nine of 23 positions are filled, with vacancies expected to be addressed by March/April 2026. A $4.34M compensation breakdown is referenced, assuming full staffing for budgeting purposes.

- were unaudited, however, NSEB has directed IESO Nova Scotia to include audited financial - statements in future applications ". Further, at pdf page 4, DGT states: " Except as stated, - we have not audited or otherwise attempted to verif...

AI summary The document raises concerns about the reliability of forecasts and assessments due to reliance on unaudited actuals, questioning whether this limited DGT's ability to evaluate OM&A cost trends and variance explanations, and asking about compensating procedures undertaken by DGT.

Response - IR-3: - (a) We did not test or examine whether IESO selected the least-cost means of achieving its objectives. - (b) Yes, being satisfied that a cost is "reasonable" should be distinguished from a finding that it is optimal or n...

AI summary The response discusses the distinction between reasonableness and prudence reviews, noting that the current procedures did not assess management decisions or least-cost options. It also highlights deficiencies in the IESO-NS forecasting processes and the impact on transparency and risk of future variances.

Request IR-10: - Reference: Exhibit B-2 (page 14, lines 11-16, Employees administration) - IESO Nova Scotia states that " The 2026/2027 fiscal year assumes 23 administration employees - actively employed for the entire fiscal year- from Ap...

AI summary Request IR-10 seeks details on IESO Nova Scotia's budgeting for administration employees, including methodology, compensation increases, and staffing levels. The 2026/2027 budget includes additional IT and compliance roles to meet cybersecurity and regulatory standards.

Request IR-16: - Reference: Exhibit B-2 (page 28, lines 11-13, Finance) - IESO Nova Scotia states that "The greatest change in the Finance cost category between - 2025/2026 budget and the 2026/2027 budget is the interest costs. There is a...

AI summary Request IR-16 seeks clarification from IESO Nova Scotia on finance cost budgeting methodology, interest cost drivers, and subcategory increases (payroll/accounting subscription services). The 2026/2027 budget shows significant jumps (306% vs. 2025/2026) attributed to financing costs from the Province's operating line of credit. Questions also address temporary financial reliance impacts and payroll/service cost increases.

Request IR-17: - Reference: Exhibit B-2 (page 31, lines 8-18, Operations) - IESO Nova Scotia states that "The difference between the estimated annualized expenditures - under the 2025/2026 test year and the proposed 2026/2027 budget are ba...

AI summary IESO Nova Scotia explains discrepancies between 2025/2026 and 2026/2027 budgets due to changes in full-time employees (FTEs), compensation increases, and burden assumptions. The request seeks clarification on budgeting methodology and cost breakdowns for specific operational categories.

Request IR-1: Please provide the financial forecast document used to prepare the total expense forecasts.

AI summary Request for the financial forecast document used in preparing total expense forecasts as part of a Nova Scotia regulatory proceeding.

Request IR-12: - Regarding Table 3 on page 15 of the application, please provide a version adding a column for - actual 2025/2026 to date and the 2025/2026 annualized amount based on the 2025/2026 budget - and not adjusted based on "the mo...

AI summary Request IR-12 asks for modifications to Table 3 on page 15 of an application, specifically adding columns for actual 2025/2026 to date and annualized amounts based on the 2025/2026 budget. The request specifies that these figures should not be adjusted using the most recent assumptions about employee numbers and salaries by the end of 2025/2026.

27 1 (iii) quantitative testing of underlying assumptions. 26 prudence review? Please explain. 27 (d) If not, what additional evidence and analysis would be required for DGT to 28 opine meaningfully on prudence? 1 Request IR-4: 2 Reference...

AI summary The text outlines requests for clarification regarding prudence review and forecasting processes, specifically addressing deficiencies in IESO-NS's forecasting that led to recommendations for more detailed forecasting. It also asks whether these deficiencies impacted the reasonableness of the 2026/2027 revenue requirement and the risk of future variances or reliance on deferral mechanisms.

13 Submissions 15 This Application was filed pursuant to s. 29 of the Act . In what follows below, the CA intends to 16 first provide some discussion of this provision in relation to the IESO's Application. Following 17 that, the CA will h...

AI summary The Commissioner of the Environment and Sustainable Resource Development (CA) filed an application under s. 29 of the Act in response to the IESO's Application. The CA outlines concerns regarding transparency, forecast accuracy, OM&A budget cost reasonableness, the transition from NS Power to IESO NS, and issues related to the net revenue requirement deferral and variance account.

33 3) Forecast Accuracy 35 The CA is concerned about the limited information that has been provided as well as the reliability 36 and accuracy of the IESO's lack of transparency in this proceeding. 38 First, we note that IESO NS has been c...

AI summary The Commissioner of the Environment and Sustainable Resource Development (CA) is concerned about the limited information and lack of transparency in the IESO's Application, particularly regarding the accuracy of forecasts. The IESO acknowledges that the Application was prepared with limited resources and based on prior submissions, with some forecasts lacking detailed justification.

2 On July 24, 2026, the Independent Energy System Operator of Nova Scotia ("IESO Nova Scotia"), 3 the Consumer Advocate ("CA"), the Small Business Advocate ("SBA"), the Industrial Group 4 ("IG"), and Port Hawkesbury Paper ("PHP") filed Clo...

AI summary IESO Nova Scotia submitted a reply to closing submissions in a revenue requirement application, addressing recommendations for staffing budget adjustments, removal of procurement costs, and interim approval of the DVM. Intervenors emphasized the need for improved forecasting, transparency, and administrative processes in future applications.

INTERNATIONAL REPORTING INC. CERTIFIED COURT REPORTERS Q. I guess what would you say to the concern that, you know, the Board approves X-dollars to be spent in a certain category, based on a forecast or an estimate that IESO Nova Scotia pr...

AI summary The concern is raised that the Board may approve funds for specific categories based on forecasts that may be inaccurate, allowing shortfalls in one area to be covered by underspends in another. The response acknowledges the concern and emphasizes the need for accurate forecasting and managing overall operational costs.

IESO NOVA SCOTIA PANEL 121 Cr-ex, (Murphy) INTERNATIONAL REPORTING INC. CERTIFIED COURT REPORTERS accurate in your forecasts? [11:29:59] MR. JOHNSTON: You absolutely should expect us to be accurate in our forecasts. And I think what we're...

AI summary The discussion revolves around the accuracy of forecasts provided in the Application, with Mr. Johnston acknowledging that while initial forecasts were based on best guesses, future forecasts will improve with operational experience and increased diligence in obtaining third-party cost information.

IESO NOVA SCOTIA PANEL 125 Cr-ex, (Murphy) 1 from living in a different jurisdiction that does things a 2 little differently, but my understanding of the regulatory 3 compact is that the Board approves the revenue requirement 4 based on a...

AI summary The discussion revolves around the regulatory process for approving revenue requirements, emphasizing that decisions should be based on forecasts made at the time they were submitted, rather than real-time updates. The speaker argues that requesting new forecasts during hearings could lead to procedural issues and challenges related to new evidence.

IESO NOVA SCOTIA PANEL 129 Cr-ex, (Murphy) 1 forecast, and so they focus on one item that they believe 2 they can demonstrate that, and then everything else goes 3 to the wayside. And that results in a misleading picture 4 for the Board. A...

AI summary The discussion centers on the challenges of forecasting and the importance of focusing on the reasonableness of forecasts at the time they were made, rather than requiring updates on specific items. Concerns are raised about the potential for misleading the Board if forecasts are revised based on current conditions rather than original assumptions.

IESO NOVA SCOTIA PANEL 509 Questions, (Chair) 1 (SHORT PAUSE) 2 MR. JOHNSTON: I'm always nervous when 3 I commit to providing more information to the Board, 4 because you can imagine there's a whole incremental set of 5 work that is that g...

AI summary The discussion centers on the potential for providing more detailed financial reporting to the Board, including monthly filings for the Fuel Adjustment Mechanism. The speaker highlights challenges related to organizational size and resource constraints, suggesting a preference for quarterly reporting. There is also a mention of the need for stringent forecasting and tracking processes for the deferral and variance account.