Topic:"Fuel Adjustment Mechanism" in M12451

4 LOAD FORECAST

AI summary The document section '4 LOAD FORECAST' outlines the methodology for predicting electricity demand, referencing key acronyms such as FFO, CFFO, DBRS, GRA, COSS, CA, FAM, BCF, and AA/BA. These terms are integral to regulatory proceedings involving utility rate applications and cost-of-service analyses.

7 OPERATING COSTS

AI summary Section 7 of the regulatory proceeding document outlines operating costs, referencing key acronyms such as FFO, CFFO, and DBRS. It highlights the involvement of entities like the Nova Scotia Energy Board (NSEB) and programs including the Fuel Adjustment Mechanism (FAM). The section sets context for cost analysis and regulatory considerations.

Cost of Capital

AI summary The section discusses the Cost of Capital, with relevant acronyms such as FFO, CFFO, DBRS, and others. Key entities include regulatory bodies and programs involved in the proceeding.

Treatment of Fuel Costs - As part of this GRA, the Company is seeking to update the BCF in the 2026 and 2027 test years. - Nova Scotia Power is adjusting the BCF rates in 2026 and 2027 to facilitate smoothing the overall - rate impact for...

AI summary Nova Scotia Power is adjusting the Base Cost of Fuel (BCF) for 2026 and 2027 as part of a General Rate Application (GRA) to smooth customer rate impacts. The Fuel Adjustment Mechanism (FAM) Plan of Administration (POA) mandates resetting BCF every two years through GRA or as directed by the Nova Scotia Energy Board (NSEB), with changes aligned to the Cost-of-Service Study (COSS).

NS Power 2026-2027 General Rate Application NON-CONFIDENTIAL PR-01 Attachment Description PR-01 Attachment 2 n Medium Industrial Tariff PR-01 Attachment 2 o Large Industrial Tariff PR-01 Attachment 2 p Municipal Tariff PR-01 Attachment 2 q...

AI summary NS Power is proposing 2026-2027 rate changes, including tariffs for industrial, municipal, and outdoor lighting services, along with the Fuel Adjustment Mechanism (FAM) and Demand Side Management Cost Recovery Rider (DCR). Attachments detail various rate structures and cost recovery mechanisms.

FUEL ADJUSTMENT MECHANISM (FAM) The FAM Actual Adjustment (AA) and Balance Adjustment (BA) charges or credits (in cents per kilowatt-hour) applicable to the Tariff for the current rate year, shown in the FAM Tariff, shall apply, in additio...

AI summary The Fuel Adjustment Mechanism (FAM) applies Actual Adjustment (AA) and Balance Adjustment (BA) charges or credits in cents per kilowatt-hour to the Tariff for the current rate year, in addition to the energy charge. These adjustments are outlined in the FAM Tariff.

FUEL ADJUSTMENT MECHANISM (FAM) The FAM Actual Adjustment (AA) and Balance Adjustment (BA) charges or credits (in cents per kilowatt-hour) applicable to the Tariff for the current rate year, shown in the FAM Tariff, shall apply, in additio...

AI summary The Fuel Adjustment Mechanism (FAM) outlines Actual Adjustment (AA) and Balance Adjustment (BA) charges or credits (in cents per kilowatt-hour) applicable to the Tariff for the current rate year, as detailed in the FAM Tariff. These adjustments apply in addition to the energy charge.

APPLICABILITY This schedule is a mandatory rider to all electric rate schedules, except the following tariffs: Generation Replacement and Load Following, Extra High Voltage Time-of-Use Real Time Pricing, High Voltage Time-of-Use Real Time...

AI summary The schedule applies as a mandatory rider to all electric rate schedules except specified tariffs, including Generation Replacement and Load Following. FAM adjustments apply to the Standard Energy Charge of the Extra Large Industrial 2P-RTP tariff and Additional Energy under the Mersey System Agreement when priced at applicable tariffs.

(b) From non-FAM classes When a customer transitions its load, whether in whole or in part, to a FAM class from a non-FAM class, the customer will pay (or be reimbursed) outstanding FAM balances outside of the Fuel Adjustment Rider, on rea...

AI summary When customers transition from non-FAM classes to FAM classes, they pay or are reimbursed outstanding FAM balances outside the Fuel Adjustment Rider on reasonable terms agreed between the customer and NS Power, subject to NSEB approval. The process outlines charge structures by rate class.

(2) Incentive For a total fuel cost variance of up to $50 million dollars (Actual Fuel Costs - [(Actual Sales) x (Base Fuel Cost $/MWh)]), 90% of any savings or increase in cost will be credited or charged to customers. The portion of any...

AI summary The incentive structure for fuel cost variances up to $50 million involves crediting or charging customers 90% of savings or costs, with excess variances applied to the Actual Adjustment (AA). Credits/charges are applied to energy rates on a cents per kWh basis.

BA = Balance Adjustment The BA is comprised of two components: (1) BA1 = Annual Volume Variance Adjustment – is calculated for each rate class separately on a previously completed calendar year basis and is used to reconcile the difference...

AI summary The Balance Adjustment (BA) comprises two components: BA1, which reconciles revenue differences using a two-year lag, and BA2, which adjusts for DSM program costs. These mechanisms ensure accurate billing based on actual usage and expenditures.

1 1.2.8 Renewable Energy 2 3 1.2.8.1 NS Power-Owned Renewables 4 5 The renewable energy generated by NS Power comes from hydro, wind, biomass and solar. The 6 level of hydro generation forecast for 2026-2027 is based on a 23-year rolling a...

AI summary NS Power's renewable energy includes hydro, wind, biomass, and solar. Hydro forecasts for 2026-2027 use a 23-year average (925 GWh), while wind forecasts use a 3-year average (224 GWh). The Port Hawkesbury Biomass Plant (PHB) supplies renewable energy and steam to Port Hawkesbury Paper (PHP), with biomass management practices aligned with FAM guidelines and a 2016 Board letter. Revision 14 of the Fuel Manual is in OE-01F.

Appendix 6A FAM Framework

AI summary Appendix 6A discusses the Fuel Adjustment Mechanism (FAM) framework, a regulatory component for managing fuel cost fluctuations in energy pricing. It outlines methodologies for adjusting rates based on fuel expenses, ensuring alignment with operational costs and compliance with Nova Scotia's energy regulatory guidelines.

1.1 FAM Plan of Administration The POA outlines the application and administration of the FAM. It includes descriptions of the base cost of fuel, adjustment components, calculation methodologies, audit provisions, and stakeholder review an...

AI summary The Fuel Adjustment Mechanism (FAM) Plan of Administration (POA) outlines procedures for resetting the Base Cost of Fuel (BCF) and adjusting rates. NS Power seeks approval for an updated POA as part of the 2026-2027 General Rate Application (GRA), including a new BCF. The current POA, approved by the Nova Scotia Energy Board (NSEB) in January 2024, allows BCF resets via GRA, legislation, or NSEB orders.

2026-2027 GRA Direct Evidence Appendix 6A Page 7 of 10 REDACTED (CONFIDENTIAL INFORMATION REMOVED) The last paragraph of the application stated: The on-bill credit related to the Community Solar Program, and other emerging customer renewab...

AI summary NS Power seeks approval for a Community Solar Energy Credit Rider and plans to revise the FAM POA to include on-bill credits from renewable programs as FAM costs. The NSUARB approved the rider, and the SWG had no comments on the POA revisions.

NS Power FUEL ADJUSTMENT MECHANISM PLAN OF ADMINISTRATION IN EFFECT FOR 2026-2027

AI summary NS Power's Fuel Adjustment Mechanism Plan of Administration for 2026-2027 outlines the framework for managing fuel costs and related adjustments. The plan is subject to regulatory oversight by the Nova Scotia Energy Board (NSEB) and involves mechanisms like the DSM Cost Recovery Rider (DCRR) and General Rate Application (GRA).

2.0 FAM COMPONENTS Each January 1 through December 31 period shall constitute a distinct FAM year. Under the FAM, an adjustment will normally be calculated once per year to reflect the over/-under recovery. The FAM adjustment will consist...

AI summary The Fuel Adjustment Mechanism (FAM) establishes annual adjustments (January 1–December 31) to recover fuel and purchased power costs. Adjustments are calculated yearly and consist of two components for cost recovery.

1. The Actual Adjustment Component (AA) a. Established at a rate expected to recover the amount of the difference between the prior FAM year's actual fuel and purchased power costs and those recovered through the Base Cost of Fuel Componen...

AI summary The Actual Adjustment Component (AA) is established to recover discrepancies between prior year's actual fuel and purchased power costs and amounts recovered via the Base Cost of Fuel Component. It covers 12 months: September of the prior year and October-December of the year before, aligning with Fuel Adjustment Mechanism (FAM) calculations.

3.0 CALCULATION OF THE FAM RATE NS Power's FAM is a forecasted base fuel rate operating on an annual cycle that includes an over/under recovery mechanism consisting of an Actual Adjustment (AA) and Balance Adjustment (BA). The following fo...

AI summary NS Power's Fuel Adjustment Mechanism (FAM) uses an annual formula combining Actual Adjustment (AA) and Balance Adjustment (BA) to reconcile fuel costs. AA reflects over/under recovery of Base Cost of Fuel (BCF) at specific dates, with October-December adjustments deferred. BA manages prior adjustments and deferred costs approved by the Board.

2026-2027 GRA Direct Evidence Appendix 6B (Clean) Page 9 of 33 REDACTED (CONFIDENTIAL INFORMATION REMOVED) relative share of the total fuel costs. - 6. The interest amount on the over- or under-recovery of fuel costs is apportioned to the...

AI summary The document outlines the methodology for apportioning interest on fuel cost variances to rate classes annually, distinguishing between over/under recovery scenarios. It details the calculation of the Actual Adjustment (AA) component for the Fuel Adjustment Mechanism (FAM), using forecast energy sales to determine credits or charges applied to customer bills for the subsequent year.

2026-2027 GRA Direct Evidence Appendix 6B (Clean) Page 10 of 33 REDACTED (CONFIDENTIAL INFORMATION REMOVED) 2026 will be used to determine the AA charge or credit for 2027. The Balance Adjustment (BA) component of the FAM will be set to re...

AI summary The text outlines that 2026 data will determine the Actual Adjustment (AA) charge or credit for 2027. The Balance Adjustment (BA) component of the Fuel Adjustment Mechanism (FAM) recovers or refunds under/over-recovery from prior adjustments, including sales volume variances, Base Cost of Fuel (BCF) discrepancies, and interest. Other fuel-related factors require Board approval.

NS Power FUEL ADJUSTMENT MECHANISM PLAN OF ADMINISTRATION IN EFFECT FOR 2023- 20242026-2027 May 8,XXXXX 20232025

AI summary NS Power's Fuel Adjustment Mechanism (FAM) plan of administration is effective from 2023 to 2027, outlining procedures for fuel cost adjustments. The document includes dates spanning 2023-2024 and 2026-2027, though specific details about the mechanism's parameters or regulatory approvals are not provided in the text.

1. The Actual Adjustment Component (AA) a. Established at a rate expected to recover the amount of the difference between the prior FAM year's actual fuel and purchased power costs and those recovered through the Base Cost of Fuel Componen...

AI summary The Actual Adjustment Component (AA) is established to recover discrepancies between prior year's actual fuel and purchased power costs and amounts recovered via the Base Cost of Fuel Component. It covers 12 months: September of the prior year and October-December of the year before, aligning with Fuel Adjustment Mechanism (FAM) calculations.

2026-2027 GRA Direct Evidence Appendix 6B (Redline) Page 7 of 35 REDACTED (CONFIDENTIAL INFORMATION REMOVED) The BA rate is calculated for the following year (year 2) on the basis of the overor under-recovery of the Actual Adjustment and B...

AI summary The document outlines the methodology for calculating Balancing Adjustment (BA) and Actual Adjustment (AA) rates for the 2026-2027 General Rate Application (GRA). It references Appendix A for sample Fuel Adjustment Mechanism (FAM) calculations and emphasizes fuel cost allocation across bundled and unbundled service classes, including Generation Replacement and Load Following (GRLF), Extra-Large Industrial Active Demand Control (ELIADC), and tariffs like Open Access Transmission Tariff (OATT).

2026-2027 GRA Direct Evidence Appendix 6B (Redline) Page 11 of 35 REDACTED (CONFIDENTIAL INFORMATION REMOVED) following approach: - a. In a year where the interest amount owed to customers by NS Power at the end of September coincides with...

AI summary NS Power outlines methods for apportioning interest expenses/credits tied to fuel cost variances and explains how the Fuel Adjustment Mechanism (FAM) calculates Actual Adjustment (AA) and Balance Adjustment (BA) components. Interest is allocated based on fuel cost variance shares, while AA/BA charges are determined using forecast energy sales and BCF variances.

3.2 Allowable Fuel and Purchased-Power Costs This section of the POA provides a framework for the fuel and purchased-power costs eligible for recovery through the FAM. Those costs will include allowable fuel expenses plus purchased-power e...

AI summary The POA outlines a framework for allowable fuel and purchased-power costs recoverable via the FAM, including allowable expenses minus revenues from exports and other sales.

Annual Filing Requirements for Base Cost of Fuel Forecast For each year in which NS Power applies to adjust the Base Cost of Fuel, a load forecast, Base Cost of Fuel and net system requirement forecast filing for the upcoming FAM year (Jan...

AI summary NS Power must submit annual, quarterly, and monthly filings using standardized templates for Base Cost of Fuel forecasts, with stakeholder input required for revisions. The Board considers fuel forecasts and stakeholder comments when setting annual rates. Templates are approved by the Board's May 15, 2007 order.

5.0 AUDIT AND OVERSIGHT The amounts charged through the FAM shall be subject to periodic audit to assure completeness and accuracy and to assure fuel and purchased power costs were incurred reasonably and prudently. The results of any audi...

AI summary The Fuel Adjustment Mechanism (FAM) charges are subject to periodic audits to ensure accuracy and prudence in fuel and purchased power costs. Audit results influence future Board hearings for adjusting Base Cost of Fuel or Fuel Adjustment Factor, or initiating a General Rate Case. The Board may adjust existing balances or recovered amounts, including interest, based on audit findings.

Audit Process The Board shall provide for the conduct of a Fuel Adjustment Mechanism (FAM) audit during the 2023-20242026-2027 GRA Period as it deems appropriate. The Board shall have a qualified independent firm conduct the audit. The aud...

AI summary The Board mandates an audit of Nova Scotia Power's Fuel Adjustment Mechanism (FAM) during the 2023-2024 and 2026-2027 General Rate Application (GRA) periods. A qualified independent firm will assess financial and management aspects of fuel procurement and recovery under the FAM, covering two-year audit cycles from January 1 to December 31 of each year.

2026-2027 GRA Direct Evidence Appendix 6B (Redline) Page 29 of 35 REDACTED (CONFIDENTIAL INFORMATION REMOVED) The Board will monitor the operation of the FAM closely and reserves the right to intervene in any circumstance where it believes...

AI summary The Nova Scotia Energy Board (NSEB) will monitor the Fuel Adjustment Mechanism (FAM) and retain authority to intervene if customer class rate increases are deemed unacceptable or against public interest, potentially deferring portions of increases to future periods.

the smoothed amounts over the two years. - 3. Non-substantive amendments that are administrative in nature to the FAM Plan of Administration and the Hedging Plan of the Fuel Manual. Document: 325174

AI summary NS Power is proposing non-substantive administrative amendments to the FAM Plan of Administration and the Hedging Plan within the Fuel Manual. The text references smoothed fuel cost amounts over a two-year period as part of the regulatory proceeding.

3.2 Fuel and Purchased Power [45] Fuel and purchased power expenditures are direct pass-through costs paid by NS Power's customers. Under the Fuel Adjustment Mechanism (FAM), those costs are identified as the Base Cost of Fuel (BCF). Actua...

AI summary Fuel and purchased power costs are pass-through expenses managed via the Fuel Adjustment Mechanism (FAM), with actual costs tracked against forecasts. Over/under recoveries are adjusted through AA and BA riders. NS Power provides regular updates, and an independent Board-appointed auditor conducts biennial audits reviewed in public proceedings.

competition in two ways. It sets an unrealist benchmark of posted retail rates for comparison purposes, and it creates an ongoing fuel liability for customers looking to leave NSPI bundled service. … REI respectfully requests that the Boar...

AI summary REI argues that NSPI's fuel cost forecasts are inaccurate and requests adherence to the FAM POA for annual recovery of overages. NS Power counters that its methods are audited by Bates White and compliant with the POA, thus no directive is needed.

of this mechanism being proposed by an investor-owned regulated utility in Canada. A form of securitization was applied in Ontario a few years ago for Ontario Power Generation, a Crown-owned utility. [287] A successful securitization shoul...

AI summary The text discusses securitization as a potential cost-saving mechanism for ratepayers, contrasting the current weighted average cost of capital (6.65%) with projected bond issuance rates (5%). It notes NS Power's historical reluctance to adopt securitization, despite previous regulatory encouragement and its use in addressing FAM balances and coal plant retirement costs. The Board and intervenors have urged NS Power to explore this option.

principle that deferrals should only apply prospectively. [312] In its reply submissions, NS Power submitted that the intervenors' concerns about "overcollection or double recovery are unwarranted": - First, the current rates are based on...

AI summary NS Power argues that concerns about overcollection or double recovery are unfounded, citing capped rates, below-allowed returns, unrecovered winter costs, and FAM safeguards. It emphasizes that deferrals should apply prospectively and that current costs are not recoverable under existing frameworks.

ce captured under the FAM; - The EIFEL deferral, allowing NS Power to defer incremental tax expense of about $7 million if an exemption is not enacted by the Government of Canada as it has announced; - The inclusion of four Maritime Link t...

AI summary The Nova Scotia Utility and Review Board approved adjustments to Nova Scotia Power Inc.'s rate base, including Maritime Link transmission projects, revised Storm Cost Recovery Rider terms, OATT rate updates, and tariff language changes. Amendments to the General Rate Application and cost allocation among customer classes were also mandated.

Request IR-26: Reference: Exhibit N-3 GRA Direct Evidence, Section 5 Fuel and Purchased Power - On page 27 of the application, NS Power states, "To facilitate having more uniform increases - across the two test years, NS Power has adjusted...

AI summary NS Power adjusted fuel rates to smooth increases over two years, leading to overcollection in 2026 and undercollection in 2027. The regulator requests confirmation on whether non-fuel costs were smoothed, the impact on FAM balance, future fuel cost adjustments, and necessary rate increases in 2028.

Request IR-35: - Reference: Exhibit N-5, Appendix 6A Fuel Adjustment Mechanism Plan of Administration, Section - 3.1 - Why has NS Power removed the reference to carrying costs being paid by customers paying a - balance owing over time?

AI summary The document raises a question about NS Power's removal of a reference to carrying costs being paid by customers with outstanding balances in the Fuel Adjustment Mechanism Plan of Administration, specifically in Exhibit N-5, Appendix 6A, Section 3.1.

note, however, that NS Power is requesting to maintain its existing ROE of 9 percent in order to mitigate rate impacts on customers of this GRA filing. DATE FILED: January 30, 2026 Page 44 of 55 National Energy Board RH-2-2004 Reasons for...

AI summary The document discusses potential impacts on the GRA if PHP remains below-the-line, with NS Power ensuring appropriate tariff arrangements post-ELIADC Tariff expiration. A $18.2M PHP deferral and $5.7M fuel balance are forecasted if PHP stays on ELIADC. The need for a deferral mechanism is emphasized due to uncertainty and significant revenue/cost impacts.

competition in two ways. It sets an unrealist benchmark of posted retail rates for comparison purposes, and it creates an ongoing fuel liability for customers looking to leave NSPI bundled service. … REI respectfully requests that the Boar...

AI summary REI requests NSPI to improve fuel cost forecasting accuracy and adhere to the FAM POA for recovering fuel overages annually. NS Power argues compliance with the POA and bi-annual audits by Bates White validate their forecasting methods.

3.2.2.1 Plan of Administration [60] In its application, NS Power requested approval of amendments to the FAM Plan of Administration as described in Section 6 and Appendix 6A and set out in Appendix 6B. On page 32 of the application, NS Pow...

AI summary NS Power seeks amendments to the Fuel Adjustment Mechanism (FAM) Plan of Administration (POA) for the 2026-2027 General Rate Application (GRA) period, including aligning fuel costs with the Cost-of-Service Study (COSS), adding renewable program credits, and moving OM&G expenses to FAM. The Nova Scotia Energy Board (NSEB) requested clarification on language in the proposed changes, which NS Power addressed. The Board's 2024 FAM AA/BA decision also influenced the amendments.

principle that deferrals should only apply prospectively. [312] In its reply submissions, NS Power submitted that the intervenors' concerns about "overcollection or double recovery are unwarranted": - First, the current rates are based on...

AI summary NS Power argues that deferrals should apply prospectively, countering intervenors' concerns about overcollection or double recovery. It asserts that current rates are based on outdated forecasts, rates were capped in 2023-2024, the company has earned below its allowed return on equity, and unrecovered costs from peak winter periods should not be compounded. The FAM mechanism provides a safeguard against excessive earnings.

an interruptible credit (equal to the Large Industrial Interruptible Rider (LIIR) credit) and the value of priority interruption service provided, if any (modeled as a 10% premium to the LIIR credit). [339] NS Power's GRA requested a PHP D...

AI summary NS Power requested a PHP Deferral account to track revenue differences between GRA cost-of-service study assumptions and the ELID tariff. The deferral applies if the Board's tariff decision differs from GRA assumptions, the tariff isn't available by 2026, or PHP finds the ADC/tariff outcome unsatisfactory. The Industrial Group noted delays in PHP's Goose Harbour Wind Project were unaccounted for in NS Power's estimates.

tter alignment with other jurisdictions and allow for simplification of the COS treatment of these costs. This is also described in more detail within the Elenchus Report. [M12521, Exhibit N-1, p. 5] [690] The proposed BA methodology will...

AI summary The document outlines the proposed Balance Adjustment (BA) methodology for the Demand Side Management Cost Recovery Rider (DCRR), including BA1 (Annual Volume Variance Adjustment) and BA2 (End of Approved DSM Term Adjustment). BA1 reconciles revenue variances with a two-year lag, while BA2 adjusts discrepancies between approved and actual DSM spending over four years. The framework is detailed in the Elenchus Report and NS Power's response to Board IR-143.