Topic:"Fuel Cost Adjustment" in M03632

12 Q. HOW ARE YOU PROPOSING TO INDEX BIOMASS FUEL COSTS? 13 A. We are proposing to treat biomass fuel cost in the same general manner that the Board approved in the New Page/Port Hawkesbury proceeding. 1 14 That is, to index 75% of the 15...

AI summary The respondent proposes indexing 75% of biomass fuel costs to the CPI (excluding energy) and 25% to a diesel fuel index, similar to the approach used in the New Page/Port Hawkesbury proceeding. Fuel costs account for 40% of the COMFIT tariff, with a fixed component of $94 per MWh and an escalating component starting at $62 per MWh in 2012.

5 Q. WHAT HAVE YOU ASSUMED ABOUT THE PROJECT'S CAPACITY FACTOR? 6 A. We assume an annual average net capacity factor of 55%. Hatch Energy's Low Head 7 Hydro Market Assessment includes an estimate of 60%, and Seaforth Engineering also sugge...

AI summary The respondent assumes a 55% annual average net capacity factor for the project, citing estimates from Hatch Energy and Seaforth Engineering of 60%, but also referencing a 45% assumption from data in the Vermont FIT proceeding. The FIT rates in Vermont and Ontario are discussed as context for COMFIT rates.

03-01-2011 Nov a S ia C OM FIT Mo del cot Win d ≤ 50 kW Ca sh Flo w W ork she Top et: Syn e E aps xhi bit I Exp ens es Fue l Co st 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 O&M (1,6 42) (1,6 74) (1,7 06) (1,7 38) (1,7 72) (1,8 06) (1,8 41) (...

AI summary The document contains a table with expense details for a Nova Scotia FIT model, including fuel cost, O&M, site maintenance, G&A insurance, land lease, and other expenses over time. The data shows increasing O&M and G&A insurance costs, while fuel cost and other expenses remain at zero.

Scenarios in $2012 Va lue fo r S On ly tea m- Gr s V alu e f CH P os or Ne t V alu e f CH P or $ De bt rvi ( ) se ce re se rve $ 21 3, 49 8 $ 77 7, 90 5 $ 56 4, 40 7 De bt Clo sin Co & Fe sts g es $ 10 9, 64 6 $ 39 9, 50 6 $ 28 9, 86 0 Ca...

AI summary The text presents a table with financial data from 2012, including debt reserves, equity closing values, interest during construction, routine maintenance, labor costs, insurance, and fuel use. It includes values for various categories and some calculations related to fuel costs and efficiency.

Synapse Exhibit L Assumptions: Notes: venu e ,388 ,388 ,388 ,388 ,388 ,388 ,388 ,388 ,388 ,388 ,388 ,388 ,388 ,388 ,388 ,394 ,394 ,394 ,394 ,394 Expe nses Fuel Cos t 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 O&M (50,0 00) (50, 960) (51, 938)...

AI summary The document provides a table of assumptions and expenses related to fuel costs, operations and maintenance, site maintenance and general administrative expenses, insurance, and land lease costs over a multi-year period. The numbers show increasing expenses for O&M, insurance, and land lease over time.

Other Concerns respegffig Board Evidence Fuel Escalator The NSURB consultant are proposing to treat biomass fuel costs in the same general manner that the Board approved in the New Page/Port Hawkesbury proceeding. That is, to index 75% oft...

AI summary The document discusses concerns about the proposed fuel escalator methodology for biomass costs in Nova Scotia, arguing it may not adequately track market trends. STFX advocates for a Fuel Adjustment Mechanism (FAM) tied to CH&PB projects to address fuel cost risks, citing new biomass capacity, supply restrictions, and market pressures. The Board's consultant recommended escalated fuel costs only for CH&PB.

COMMENTS - .1 Scale. At 8 MW (7 MW net) electrical output, the specific capital cost is high. This plant will cost approximately $4,500,000 per 1 MW electrical output. Larger biomass plants can be built for $1.5 - $2.0 million per MW. - .2...

AI summary The comments highlight the high specific capital cost of the biomass plant at $4,500,000 per 1 MW electrical output, the high operating labour costs due to 24/7 staffing requirements, and the potential high cost of fuel, as whole tree chips may not be available and sustainable hardwood is expensive. A sensitivity analysis was conducted on fuel cost, electrical sale price, and capital contribution.

5.5 Boiler Performance and Fuel Usage The assumed fuel for the cogeneration plant is locally harvested white birch. The heating value and ultimate analysis of white birch is estimated from data from Canadian Pulp and Paper Association. The...

AI summary The document discusses the fuel usage and boiler performance of a cogeneration plant, assuming locally harvested white birch as the fuel. The heating value and moisture content of the wood are estimated, with a 50% moisture level used for analysis. The full load fuel rate required for the plant is calculated as 26,550 lb/hr or 290 tonnes/day.

CBCL Limited Scope of Work 20 Efficiency % 68.79 Input in Fuel MKB/HR 131.24 Wet Gas WT MLB/HR 157.08 Total Air to Burn Equip. MLB/HR 130.91 Fuel Rate MLB/HR 26.550 Total annual fuel demand = Hourly fuel rate x average plant load x 8760 h/...

AI summary The document presents technical data related to the efficiency and fuel consumption of a power generation facility. It includes metrics such as efficiency percentage, fuel input, and total air to burn equipment, along with a formula for calculating total annual fuel demand.

6.4 Sensitivity Analysis The financial model was run by varying the fuel costs, electric sales cost and capital costs to see what impacts they had on Return on Equity. Return on Equity vs Delivered Fuel Price Figure 8 Sensitivity Analysis...

AI summary A sensitivity analysis was conducted to evaluate the impact of varying fuel costs, electric sales cost, and capital costs on Return on Equity (ROE). The analysis includes visual representations of how changes in delivered fuel price affect ROE and how electricity sales price interacts with fuel price for a 13% ROE.

DESIGN PARAMETERS Fuel type: Hog HHV of wood fuel: 8,740 BTU/lb Dry Maximum moisture content: 57% Steam flow:88,000 pphOperating pressure:825 psigOperating temperature:900 ° FFeedwater temperature:220 °F

AI summary The document outlines the design parameters for a facility using hog fuel with a higher heating value of 8,740 BTU/lb dry, maximum moisture content of 57%, and operational conditions including steam flow, pressure, temperature, and feedwater temperature.

6 Q: What error did you find in Synapse's computation of the biomass rate? 7 A: Even given all of Synapse's assumptions, I believe that the recommended rate is 8 too high. Synapse computed a levelized rate that would produce Synapse's 9 in...

AI summary The respondent argues that Synapse's computation of the biomass rate is too high, as it incorrectly uses a levelized fuel price of $62/MWh for escalation instead of the first-year fuel cost of $55.6/MWh. The correct first-year price should be $149.5/MWh, with only $93.9/MWh subject to escalation.

19 Q: How much might the Board expect the proposed fuel escalator to rise over 20 time? 21 A: In the 2010 Annual Energy Outlook (AEO 2010), the U.S. Energy Information 22 Administration projects an average real escalation rate of 1.67% for...

AI summary The Board is considering the proposed fuel escalator and its potential increase over time. Based on the 2010 AEO and Synapse analysis, the projected escalation rate for diesel is 3.63% nominally, but a weighted average of 2.2% is suggested. The Synapse proposal may result in an effective fuel escalation rate of about 4.2%.

- 9 In the first table and figure in Confidential Exhibit PLC-2, I show the 10 contract price for each of these projects, as well as the average price. - 11 Q: Are any adjustments in these prices necessary before comparison to 12 Synapse's...

AI summary The text discusses adjustments needed for comparing bid prices from 2010 renewable projects to Synapse's proposed rates, including the impact of ecoEnergy credits, falling turbine costs, reduced risk from feed-in tariffs, and differences in financing models.

18 Q: How did you derive the current system-average rate? 19 A: I calculated the current system-average rate as total system revenues divided by 20 total system sales. For both total system revenues and sales, I used the 21 Company's forec...

AI summary The system-average rate was calculated by dividing total system revenues by total system sales, using the Company's 2011 forecasts for 'Above the Line' rate classes and Synapse's proposed tariff as filed in Case No. P-887(2). The derived rate is $111.73/MWh.

6 Q: What is your estimate for the offsetting reduction in other power costs 7 associated with COMFIT purchases? 8 A: As with my calculation of COMFIT payments, I estimated annual generation from 9 COMFIT resources based on my assumptions...

AI summary The respondent estimates the offsetting reduction in other power costs associated with COMFIT purchases by considering three different measures of market value: export price, average fuel cost, and cost of renewable procurement. The analysis does not include integration costs of renewables, which may affect rate increases.

wer Rate Case; Alloy Foundry; October 3 1983. Industrial rate design. Marginal and embedded costs; classification of generation, transmission, and distribution expenses; demand versus energy charges. 29. MEFSC 83-24; New England Electric S...

AI summary The text references various regulatory proceedings from 1983 to 1984, including rate cases, fuel cost recovery plans, and reviews of nuclear power plant proposals. These proceedings involve entities such as the Massachusetts Attorney General and the Public Interest Research Group in Michigan, and touch on topics like cost-effectiveness, rate design, and the impact of nuclear power on rates.

Certification Criteria CanWEA's submission recommends the Nova Scotia COMFIT program to support certified turbines that meet minimum testing criteria from IEC 614002-2 or IEC 61400-1 for safety, duration and reliability, power performance...

AI summary CanWEA recommends adopting certification criteria for the COMFIT program based on international standards. They suggest using existing lists like NYSERDA's or creating a Nova Scotia-specific list. Seaforth has updated the Synapse model to estimate a small wind COMFIT rate of $469.90/MWh. The submission praises the UARB, government, and Synapse for their transparent process.

1. The text above is taken from an email of February 9, 2011 from Synapse to Jonathan Barry of Seaforth Energy which included a Word document attachment, the text of which appears exactly as above. Nova Scotia Utility & Review Board FIT Mo...

AI summary The document outlines the assumptions and financial details for a small wind project under the Nova Scotia Utility & Review Board FIT Model. It includes capital costs, operating expenses, inflation factors, and energy production estimates.

Parameter Total project cost $2.8 M / MW Helimax review of turbine pricing for small projects O & M costs 2,7 ¢/kWh Values based on input from CanWEA members Capacity factor 33% Based on a sensitivity study made by Helimax Project duration...

AI summary The document outlines assumptions for a small wind project, including total project cost, O&M costs, capacity factor, and financial parameters. These assumptions are based on the experience of CanWEA members and suggest a minimum LCOE of 12.5 cents/kWh indexed at 100%.

price that the UARB should consider for the relatively small (6 MW) COMFIT projects. The UARB should consider that the size of COMFIT projects, limited to 6 MW and with an average of 1.5 MW, won't permit the same economy of scale as commun...

AI summary CanWEA argues that the proposed FIT price for 6 MW COMFIT projects in Nova Scotia is too low, considering the lack of economies of scale compared to larger projects in other provinces. They also highlight issues with Synapse's model, particularly regarding maintenance and equipment costs, and stress the need for a more accurate FIT price to address financing challenges.

Q. WHAT IS THE BASIS FOR YOUR OPINION THAT 100% EQUITY IS REALISTIC FOR A 2.0 MW BIOMASS CHP PROJECT? A. Synapse assumes a capital structure that is 40% equity and 60% debt for a 2.0 MW biomass-fired facility. 4 Due to the risks of biomass...

AI summary The response argues that a 100% equity capital structure is realistic for a 2.0 MW biomass CHP project due to the risks and small size of the facility, while questioning the viability of debt financing. Synapse proposes a fuel cost index, but B&Co doubts its effectiveness in mitigating fuel cost risk.

Q. PLEASE ELABORATE WHY THE CPI/DIESEL INDEX WOULD NOT SATISFACTORILY ADDRESS FUEL COST RISK FOR A LENDER A. First, B&Co understands that the index proposed by Synapse is based on the New Page Port Hawkesbury (NPPH)-NSPI proceeding. Such a...

AI summary The response explains that the CPI/Diesel index proposed by Synapse is not suitable for addressing fuel cost risk for a lender because it does not account for the unique market dynamics of biomass fuel, which are influenced by local factors such as supply and demand, transportation costs, and regional economic conditions.

Q. IF SUCH AN INDEX HAD A PERIODIC REOPENER, WOULD THAT ADDRESS THE FUEL RISK? A. I understand that, in concept, a reopener could be a way to check to see if an index is tracking actual changes in fuel costs and then adjust the power price...

AI summary The respondent explains that while a periodic reopener for a fuel index could theoretically address fuel risk, it would need to be frequent and have clear, non-discretionary adjustment mechanisms. Discretion in the process could undermine its effectiveness by creating disputes and failing to transfer risk.

Q. IN YOUR EXPERIENCE, WHAT WOULD BE AN EFFECTIVE FUEL COST HEDGE? A. The key is that there must be a mechanism that transfers the risk of substantial changes in fuel costs out of the project and thus away from potential lenders and equity...

AI summary An effective fuel cost hedge involves transferring risk from projects to utility ratepayers through mechanisms like those in Michigan, where biomass projects submit cost records and receive payments for overages from utilities.

Q. PLEASE CONTINUE TO EXPLAIN WHY 100% EQUITY FINANCING Is REALISTIC FOR A 2.0 MW BIOMASS CHP PROJECT? A. Financing a biomass-fired power project presents unique and difficult challenges. In particular, the magnitude and potential volatili...

AI summary The response explains that 100% equity financing is more realistic for a biomass CHP project due to the high volatility of fuel costs, which makes debt financing risky. Fuel costs are a major portion of operating expenses and are difficult to hedge, unlike natural gas projects. B&Co highlights the lack of reliable long-term fuel contracts and the financial instability of many biomass fuel suppliers.

Q. DO YOU AGREE WITH SYNAPSE'S JUSTIFICATION FOR RECOMMENDING 13% RETURN ON EQUITY? A. No. There are flaws in the logic above. Although the bases for Synapse' assertions are not clear, asserting that either size or "financing off a balance...

AI summary The respondent disagrees with Synapse's recommendation of a 13% return on equity for CHP biomass projects, citing flaws in financial logic. They argue that the cost of equity should be based on project risks, not financing methods or balance sheet status. They also question the effectiveness of indexing and note that fuel risk significantly impacts lenders' returns.

Q. WHAT IS THE BASIS FOR YOUR FINDING THAT 13.0% IS A REALISTIC AFTER TAX COST OF CAPITAL WITH A FUEL COST HEDGE? A. In addition to the analysis above, ANSS asked B&Co to evaluate the cost of capital for a biomass CHP project whose rate st...

AI summary The response explains that a 13.0% after-tax cost of capital is realistic for a 2 MW biomass CHP project with a fully effective fuel cost hedge. It references market data, risk adjustments, and Synapse's estimate. The analysis contrasts biomass projects with natural-gas fired projects and accounts for development and construction risks.

Q. WOULD YOU PLEASE SUMMARIZE YOUR FINDINGS? A. Yes. I disagree with Synapse' assumed 60% debt, 9.5% cost of debt, and 13% after-tax cost of equity. In my opinion, 100% equity is a realistic capital structure for 2.0 MW biomass CHP project...

AI summary The respondent disagrees with Synapse's assumptions about the capital structure and cost of capital for 2.0 MW biomass CHP projects, suggesting 100% equity is more realistic and a 17.5% after-tax average cost of capital is appropriate without an effective fuel cost hedge.

Q. Were there any particular concerns identified by ANSS in its submissions to Synapse in the development of a biomass CHP tariff? A. Yes. We outlined at the outset that current information on capital cost, fuel supply, O&M estimates and o...

AI summary ANSS expressed concerns about the development of a biomass CHP tariff, emphasizing the importance of accurate capital cost, fuel supply, and O&M estimates. They noted that fuel supply risk is the largest risk to CHP plants and plan to conduct an engineering study with a Nova Scotia-based firm to determine generation costs.

Q. Has Synapse accurately estimated the boiler efficiency of the CHP plant? A. Based on the study done by ESI the efficiency of the boiler, estimated by Synapse at 80%, is an overly optimistic estimate. ESI has calculated that the efficien...

AI summary Synapse's estimate of the boiler efficiency at 80% is challenged by ESI, who estimates it at 69%, supported by USDA data at 67%. This discrepancy affects fuel requirements for electricity generation.

Q. Why does ANSS not consider the New Page/NSPI CPI/Diesel escalator to adequately mitigate fuel escalation risk? The ANSS believes that the CPI/Diesel index is likely an adequate index to track the cost of harvesting wood. The problem wit...

AI summary ANSS acknowledges that the CPI/Diesel index may track wood harvesting costs but argues that it is not directly related to market prices, which are governed by supply and demand dynamics in the forestry industry.

Example 2 – Increase in Demand Where Supply is Constant A University constructs a biomass CHP plant to provide heat to its campus and generate renewable electricity. At the same time two sawmills within range of the university begin to ope...

AI summary A university and two sawmills construct biomass CHP plants, increasing demand for low-grade wood without additional supply, leading to higher prices. The text argues that requiring a biomass CHP COMFIT participant to guarantee electricity prices for 20 years based on CPI or diesel escalators is similar to NSPI guaranteeing rates based on coal mining costs, which are not directly tied to market prices. The fuel risk for biomass CHP is compared to NSPI's, suggesting a need for similar risk management mechanisms.

Q. What mechanism would the ANSS suggest to deal with the fuel risk? - A. We would suggest two possible solutions to mitigate fuel risk: - 1. A fuel adjustment mechanism whereby the cost of fuel is simply passed through to the electricity...

AI summary The ANSS suggests two mechanisms to mitigate fuel risk: a fuel adjustment mechanism similar to NSPI's approach and a CPI/Diesel index with periodic re-openers to adjust fuel prices. The re-opener would require CHP COMFIT participants to submit fuel cost data and ensure consistency and market incentives for cost efficiency.

Data Sources The Vermont model appears to provide reasonable sources to derive data for the model. It is important that capital cost estimates, O&M costs, capital structure estimates, borrowing rates and all other variables are drawn from...

AI summary The text discusses the importance of using current and local data for modeling, particularly for Combined Heat and Power (CHP) generation costs in Nova Scotia. It outlines plans to conduct an engineering study with a local firm and consult the Canadian financial community and the forestry industry to determine key parameters such as fuel costs and capital structure.

Rate of Return on Equity and Risk Assessment Nova Scotia is a jurisdiction whose electricity is supplied by a monopoly utility that is regulated by the NSUARB. The NSUARB has established a rate of return on equity of 9.35% for the electric...

AI summary Nova Scotia's electricity is supplied by a monopoly utility regulated by the NSUARB, which sets a 9.35% rate of return on equity. This ROE is used in electricity rate setting and is considered a fair rate to attract investment. The utility mitigates business risk through rate increase applications and the fuel cost adjustment mechanism, which helps manage fuel expense variability. This setup is seen as a low-risk model for other generators in the province.

Government Policy Risk The risk associated with the development of a biomass CHP plant is in large part greater than other technologies due to the significant influence that government policy has on biomass fuel prices. While all technolog...

AI summary The development of biomass CHP plants in Nova Scotia faces significant government policy risk, particularly due to biomass fuel price caps and land use policies. These policies limit biomass supply, increase market prices, and create uncertainty for developers. The NSUARB has approved a 60MW biomass project, but risks remain due to ongoing policy uncertainty.

ROE for biomass CHP projects is derived with the assumption that developers will undertake size risk, portfolio risk and development risk. (a) What mechanisms are available to account for fuel risk? Answer: At this point we are considering...

AI summary The document discusses mechanisms to account for fuel risk in biomass CHP projects, including escalating fuel costs in the model, indexing to CPI and diesel fuel prices, and retaining an independent third party to assess actual fuel costs. Each mechanism has its own advantages and disadvantages.

ANSS IR 8. Reference p. 4, Risk premium - (a) Please explain qualitatively and quantitatively how Synapse derived the risk premiums assigned to wind farms and hydro projects versus biomass CHP. - Answer: Our assumptions on the cost of both...

AI summary The document discusses Synapse's approach to determining risk premiums for different energy projects, including wind farms, hydro projects, and biomass CHP. It notes that no quantitative analysis was conducted, and that discussions with lenders are ongoing to gather more detailed information on risks and project specifics.

ANSS IR 11. Reference p.11, (cell B44 and Tax Depreciation Worksheet) - (a) Why is it assumed that biomass CHP plants benefit from accelerated depreciation while other technologies do not? - Answer: The biomass CHP rate was calculated assu...

AI summary The document addresses depreciation assumptions for biomass CHP projects under COMFIT, insurance cost assumptions for COMFIT projects, and the allocation of steam-related costs between host facilities and electric ratepayers. Answers clarify that accelerated depreciation applies to taxable corporations, insurance costs are based on preliminary data, and some steam benefits may be shared with ratepayers.

r research. It was calculated as 10% of the sum of turbine and balance of electric plant costs. (g) Please provide the underlying data and analyses to estimate fuel cost expense (FIT Model, line 19). Answer: The last row in Table 7 of our...

AI summary The entity provided data on fuel cost estimation, using a fuel cost of $3.50 per mmBtu and allocating 8% of total losses to electricity production. Annual fuel costs to electricity production were calculated as $74,709, with supporting data in Table 2.

Table 2. Data for Calculation of Fuel Costs Allocated to Electricity Assumption Value Source Boiler fuel use (mmBtu/hr) 35.4 Table 7‐6 Annual operation (hrs) 7,883 Table 7‐6 Annual fuel use (mmBtu) 279,076 Calculated Annual process steam o...

AI summary The table provides data for calculating fuel costs allocated to electricity generation, including assumptions, values, and sources. A transcription error led to the use of a lower fuel cost ($3.00/mmBtu) instead of the intended $3.50/mmBtu, resulting in a slightly lower energy rate calculation. The fuel cost estimate is considered preliminary and subject to further research.

(h) Please provide all available analyses of the assumption fuel costs will escalate at the rate of inflation. What is the projected rate? Answer: The general rate of inflation assumed in the model is 1.92%, taken from NSPI's 2009 IRP Upda...

AI summary The text provides answers to questions about fuel cost assumptions, process heat application details, and calculations for annual process steam out and losses. It references the NSPI's 2009 IRP Update and the EPA 2007 report for data and assumptions, and outlines the methodology used for calculating energy outputs and losses.

7.2. After introducing the aforementioned considerations to the worksheet3 we would obtain the following tariff values for "Large Wind": After Tax Return (year 20) Pre-Tax Return (year 20) Feed in Tariff (year 1) Escalation as of General I...

AI summary The text discusses the calculation of tariff values for 'Large Wind' projects, including considerations such as after-tax and pre-tax returns, feed-in tariffs, escalation based on inflation, and the levelized cost of energy. It also includes details on assessed value, property tax rates, and debt service coverage ratios.

Evidence as Prepared by E3 Analytics 1. The Board has received submissions from numerous interveners over the past months, and each intervener is bringing forward different concerns. Some of these concerns have to do with the access to cap...

AI summary The document discusses concerns raised by interveners regarding access to capital, rate insufficiency, and technical provisions like the fuel adjustment mechanism. It highlights the tradeoff between standardization and customization in feed-in tariff rate design and notes that while the Consultant's submissions are balanced, there are areas for improvement in rates and their design.

Outline of Significant Differences Between the Synapse Model and ANSS Model In cell B6 we can see the single biggest and most influential difference between the two models in the capital cost estimates between Synapse and ESI. On a per MW...

AI summary The text outlines key differences between the Synapse model and the ANSS model, including capital cost estimates, handling of steam-only scenarios, financing assumptions, plant size, capacity factors, fuel requirements, O&M expenses, and overall COMFIT prices. These differences significantly impact the financial and operational analysis of the project.

Scenarios in $2012 Scenarios in $2012 Value for Steam-Only Shared Value Steam Gross Value for CHP Net Value for CHP Property taxes $0 $3,567 Year-10 Turbine overhaul ($) $0 $152,880 $152,880 Year-10 Boiler overhaul ($) $0 $203,840 $203,840...

AI summary The text presents a comparison of financial scenarios in 2012, including costs and values associated with steam-only and combined heat and power (CHP) systems. It details expenses such as property taxes, turbine and boiler overhauls, fuel use, and project costs, with a focus on the differences between scenarios.

The Alliance ofNova Scotia SawlnillersOpeningStatell1ent Mr. Chair, Melnbersofthe Board, thank you for opportunity to provide this Opening Statement...The ANSS is a group ofsawmillers in the province of Nova Scotia with an interestin the d...

AI summary The Alliance of Nova Scotia Sawmillers (ANSS) presents an opening statement emphasizing the need for a reasonable rate to support biomass combined heat and power (CHP) projects. They collaborated with ESI Tennessee and Mr. Jeff Bodington to analyze engineering and financing aspects of a small CHP plant in Nova Scotia.

Table 1 – Differences Between ANSS and Synapse Differences Between ANSS and Synapse Item ANSS Synapse Capital Cost ($/MW) $6.56 million $3.77 million Equity Assumption 100% at 17.5% 40% at 13% Debt Assumption 0% 60% at 9.5% Labour ($/yr) $...

AI summary The text compares the capital cost and financing assumptions between ANSS and Synapse, highlighting that these differences significantly impact the COMFIT rate for small-scale biomass CHP plants. ANSS aimed to establish an accurate cost to support the construction of these plants, supported by expert evidence and analysis.

Biomass CHP (condensing turbine; new boiler in steam-only scenario in year 10) Assumptions Notes: , Loan Life 15 ' ' Interest Rate 9.50% Up-Front Fee (%) 1.00% Up-Front Fee ($) 0 Closing Costs (5% of loan value) (0,70,00,00,00,00,00,00,00,...

AI summary The text outlines a financial and operational analysis of a biomass combined heat and power (CHP) project, including loan assumptions, depreciation allocation, and energy production metrics. It includes details on interest rates, depreciation methods, fuel costs, and capacity factors for the project.

COMFIT goals Synapse repeatedly claimed that it needed to set COMFIT rates to attract commercial, noncommunity investors because it had a mandate to set rates that would result in 100 MW of COMFIT projects. The basis for that purported man...

AI summary Synapse argued that COMFIT rates must be set to attract noncommunity investors to achieve the 100 MW goal for community/small-scale renewable projects. However, the government may adjust the program in 2012, and setting rates too high could negatively impact electricity rates. NSPI has already acquired power from other projects at lower prices.

Estimated Cost of Imported Coal Used to Produce Electricity in Nova Scotia Although coal prices fluctuate, the general trend continues to climb upward. Reliance on imported coal also shackles Nova Scotia to the upward march of internationa...

AI summary The document discusses the increasing cost and environmental impact of imported coal used in Nova Scotia's electricity production, highlighting the need for a transition to renewable energy. It outlines the Renewable Electricity Plan, which aims to address energy challenges and improve affordability through clean energy and efficiency measures.

· 5.5.1.2 Incremental Fuel Price Adjustment For renewable energy resources dependent on a fuel (such as biomass), it is possible to introduce a fuel adjustment clause that allows the market price fluctuations to be tracked in a more flexib...

AI summary The text discusses the use of a fuel price adjustment clause for renewable energy resources dependent on fuel, such as biomass, and cites Spain's practice of applying such adjustments every three months.

Evaluation of Incremental Fuel Price Adjustment By allowing fuel price adjustments to occur more frequently, policy designers can better track the market trends for the resource price and provide investors with a revenue stream that is mor...

AI summary The text discusses the benefits and challenges of more frequent fuel price adjustments in FIT contracts for biomass energy. It highlights the need for flexibility to accommodate unpredictable fuel prices but also acknowledges the difficulty in designing accurate adjustment mechanisms.

Community feed-in tariff qualifications - 20(1) For the purposes of clause 4A(8)(f) of the Act, in addition to the entities listed in clauses 4A(8)(a) to (e) of the Act, each of the following entities qualifies as a generator that may part...

AI summary The text outlines the qualifications for entities to participate in the community feed-in tariff program, including ownership requirements and eligibility criteria for generators. It also discusses the approval process and cost recovery mechanisms for participating generators, with references to the Board's role and the fuel adjustment mechanism.

4.2 Findings [34] Based on the Board's review, and the model's universal acceptance by the parties in this proceeding, the Board accepts the adoption of the FIT model to determine COMFIT tariffs in Nova Scotia. [35] A number of intervenors...

AI summary The Board accepts the FIT model to determine COMFIT tariffs in Nova Scotia, based on universal acceptance by the parties. Intervenors provided comments on Synapse's proposed tariffs, but many inputs were accepted without material challenge and incorporated into the model.

iscounted cash flow model. The intent of this approach is to determine a reasonable tariff which will facilitate a reasonable level of development activity for typical projects in that resource class. [54] The Board is mindful that differe...

AI summary The Board discusses the use of a 'typical cost' approach in determining COMFIT tariffs, aiming to balance reasonable rates for ratepayers with encouraging development activity. This approach considers different project characteristics but sets a single tariff per resource class.

7.1 Submissions - [92] Synapse proposes a tariff of $139 per MWh for wind projects greater than 50 kW. - [93] This proposed tariff is based on a single turbine 1.5 MW in size. Synapse assumed total project costs of $3.8 Million or $2,520 p...

AI summary Synapse proposes a $139 per MWh tariff for wind projects over 50 kW, based on a 1.5 MW turbine and total project costs of $3.8 million. The proposed tariff assumes a capacity factor of 31%, with contested evidence regarding appropriate capacity factors. Synapse also considered financing assumptions and benchmarked against Vermont and Ontario.

8.1 Submissions [113] Synapse assumed a tariff of $452 per MWh for wind projects of 50 kW or less. This proposed tariff is based on a model project with a single 50 kW (0.05 MW) turbine. [114] Synapse assumed an installed cost of $268,000,...

AI summary Synapse assumed a $452 per MWh tariff for small wind projects (50 kW or less), based on data from developers, manufacturers, and industry associations. Installed costs were estimated at $268,000, with financing at 50:50 debt/equity and a 13% return on equity. A 23% capacity factor was assumed for these projects.

8.2 Findings [130] With respect to the capacity factor, Synapse proposed a rate of 23%. The Board considers Seaforth's comments to be reasonable in terms of supporting the 23% recommendation. Based on its review of the evidence, the Board...

AI summary The Board accepts Seaforth's support for a 23% capacity factor for small wind projects. It adjusts Synapse's interconnection cost from $13,300 to $21,550 based on evidence from Scotian WindFields. The Board also increases Routine O&M costs from $1,642 to $4,500 annually, citing evidence from small wind operators. These changes are to be addressed in the Compliance Filing.

9.4 Financing [173] Synapse in its evidence stated: ... In addition, the lenders we talked to who were familiar with biomass felt that CHP projects could be financed with 60% debt if the question of fuel cost risk were addressed in a satis...

AI summary Synapse and Jeffrey Bodington discuss financing for biomass CHP projects, noting that lenders require higher compensation for fuel cost risks. Synapse increased debt and equity rates, but Bodington argues that the adjustments are insufficient to protect lenders from significant losses.

9.4.1 Findings on Financing [183] The Board accepts the wide experience of Mr. Bodington in financing various electric generation projects, of which some are biomass. However, the Board finds it difficult to conclude a Nova Scotia sawmille...

AI summary The Board acknowledges Mr. Bodington's experience in financing electric generation projects but questions the feasibility of a Nova Scotia sawmiller financing a biomass CHP project solely through third-party equity. It concludes that a mix of debt and equity is more likely. The Board also accepts the use of a fuel escalator mechanism and Synapse's rate determination for a biomass CHP project.

[187] Synapse also stated: When we try to put those pieces together for biomass we get a tremendous range and so in the face of that, we feel like you really need to look at the market data, and you really need to make sure that whatever r...

AI summary Synapse emphasizes the importance of relying on market data when determining biomass rates, arguing that the data provides a realistic basis for setting rates and that significant deviations from current rates are unlikely.

9.5.3 Fuel Operating Costs [203] The total fuel consumption is driven by the size and availability of the plant, and the boiler efficiency. The Synapse FIT model is the one being used for turbine size, so any differences would be in availa...

AI summary The text discusses fuel operating costs for biomass CHP plants, focusing on differences in availability and boiler efficiency assumptions between the Synapse FIT model and ANSS. ANSS argues that Synapse's 80% boiler efficiency is inaccurate for woody biomass and that the model underestimates the efficiency of CHP facilities by not accounting for condensate return.

9.5.4 Findings on Fuel Operating Costs [209] The Board finds that in developing fuel requirements for the CHP, it should be on the basis which yields the lowest tariff. It may not make sense to increase availability for a less efficient (b...

AI summary The Board determines that fuel requirements for CHP should be based on the lowest tariff and sets boiler efficiency at 70%. It acknowledges Synapse's calculations of overall efficiency at 51% and 42%, noting that parasitic power may have been included in the latter. The Board accepts Synapse's revised calculation as considering parasitic power.

[215] The CA commented upon ANSS's rate calculation as follows: Since ANSS's proposed biomass COMFIT rate is based on a facility inconsistent with the regulations, the Board should not rely on ANSS's proposal. [CA Reply Submission, p. 3]

AI summary The Consumer Advocate (CA) criticized ANSS's proposed biomass COMFIT rate, arguing that it is based on a facility inconsistent with regulations and should not be considered by the Board.

[217] When discussing the St. FX project, Synapse had problems with it being considered a CHP: ... And frankly, that's one of the concerns I would have about this project because it has an overall efficiency of 28 percent, and I would have...

AI summary The discussion centers on the St. FX project's classification as a CHP and its efficiency concerns, with Synapse criticizing its low efficiency and higher costs. St. FX recalculates the rate using the Synapse model but argues the model is not suitable for a university heating plant. The Board accepts Synapse's conservative COMFIT rate approach and plans a review in three years.

9.7 Fuel Escalator [224] Synapse proposed an index for fuel in recognition that biomass fuel costs will fluctuate over time. They based their adjustment mechanism on one already approved by the Board: We are proposing to treat biomass fuel...

AI summary Synapse proposed a fuel cost index for biomass, combining 75% of the CPI (excluding energy) and 25% of a diesel index. ANSS argued that this index does not effectively hedge fuel cost risk, which is necessary to support a 13% return on equity for a biomass CHP project.

Calculation and Methodology of Biomass Fuel Cost Adjustment For biomass combined heat and power (CHP) plants, the initial base biomass fuel price for purpose of establishing the feed-in tariff rate during the first year shall be set by the...

AI summary The document outlines the methodology for calculating and adjusting the biomass fuel cost for combined heat and power (CHP) plants. The initial base price is set by the NSUARB and escalated in year 2 using a weighted average of the Nova Scotia CPI and a diesel fuel index. Adjustments are made every two years starting from year 3.

Adjusted Biomass Market Price = CD/ED Where: "CD" is the total cost of all Market Biomass delivered to Approved CHP Plants during the Evaluation Period ($). "ED" is the total Gross Energy of all Bone Dry Tons of Market Biomass delivered to...

AI summary The Province supports future biomass fuel price adjustments but opposes Undertaking U-11 due to concerns about enforcement and transparency. The Consumer Advocate and ANSS suggest using the Synapse index and standard power purchase agreements to manage fuel risk and ensure transparency.

9.7.1 Findings on Fuel Escalator [232] The Board accepts the evidence of ANSS and Mr. Couture that there needs to be a periodic review of the biomass fuel cost. It appears it would be difficult, if not impossible, to finance these projects...

AI summary The Board accepts Synapse's proposed fuel escalator index for biomass fuel costs but requires periodic reviews every two years, using the formula from Undertaking U-11. Adjustments will not be automatic and must be agreed upon by parties, with no retroactive changes allowed.

10.1 Submissions [235] Synapse proposed a tariff of $652 per megawatt hour for in-stream tidal projects. They based this tariff on a 500 kilowatt installation employing one or more instream tidal generators. Synapse assumed total project c...

AI summary Synapse proposed a $652 per megawatt hour tariff for in-stream tidal projects, based on estimated costs and a 37% capacity factor. The Consumer Advocate recommended a lower rate of $398 per megawatt hour, while Mr. Couture supported the higher rate but suggested tariff degression. The Province responded by indicating that tariff degression could be considered in future reviews.

11.1 Submissions [245] For run-of-the-river hydroelectricity Synapse proposed a tariff of $140 per megawatt hour. They based this tariff on a one megawatt project of either penstock or in-river type. At a penstock plant, water is diverted...

AI summary Synapse proposed a $140 per MWh tariff for run-of-the-river hydroelectricity, based on a 1 MW project and considering residual value and O&M costs. They compared it to Vermont and Ontario FIT rates. Mr. Chernick recommended a lower rate of $114 per MWh, adjusting for debt, equity, and tax relief, while noting varying rates in other jurisdictions.

Page 2 Large Wind 8-2-11 no tax Nov a S ia C OM FIT Mo del cot Ca sh Flo w W ork she Bot et: tom Syn e C aps lian om p ce Lar Win ge d n o ta x Annual Fuel Cost

AI summary The document appears to be a table related to fuel cost analysis, but the content is incomplete and lacks sufficient context to extract detailed information or arguments.

Page 2 Small Wind 8-2-11 no tax Sc CO No otia MF IT M ode l va Ca sh Flo w W ork she et: Bo tto m Sy nap Co se mp Sm lian ce all Wi nd Tax no Exp ens es Fue l Co st O&M 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

AI summary The document contains a table with headings related to cash flow and expenses, specifically focusing on fuel cost O&M with all values set to zero. The page title indicates a discussion about small wind and tax considerations.

Page 2 Biomass 8-2-11 85% availability no fuel Nova Scotia COMFIT Model Cash Flo w worksh eet: Botto om Synapse Complian ice 85% A vailability No Fuel Cale ndar Yea r De iatio r Cla prec n pe ssific ation (%) 5.00 % 5.00 % 5.00 % 5.00 % 5....

AI summary The text presents a table from the Nova Scotia COMFIT Model, which includes data on cash flow, compliance, and availability for a biomass project with 85% availability and no fuel. The table contains percentages for different time periods and classifications, but no explicit arguments or claims are discussed.

Biomass CHP Cost Scenarios Synapse Compliance 85% Availability No Fuel Capacity I act 013. Net Capacity Factor 60% of time at full extraction, another 30% at full co Net Output in MWhs 13,534 , Annual Operating Expenses Annual Fuel Cost Fu...

AI summary The document presents a biomass CHP cost scenario with 85% availability and no fuel costs. It includes details on net capacity factor, output, operating expenses, tax rates, and financial metrics like IRR and debt service coverage ratio. The analysis assumes no fuel costs and outlines depreciation and maintenance schedules.

Page 2 Biomass 8-2-11 90% availability no fuel Nova Scotia COMFIT Model Cash Flov w workshe et: Botton n Synaps e Complia ance 90% / Availabilit / no Fuel Ope ratin Yea g r 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

AI summary The text provides a table from the Nova Scotia COMFIT Model, which outlines financial and operational data related to a biomass project with 90% availability and no fuel costs. It includes years from 0 to 20 and various financial metrics.

Scenarios in $2012 $ Sc ios in 2 0 1 2 en ar Inte Du ing Co ion t tru t res r ns c $ 8 6, 6 3 2 $ 3 3 0, 4 2 5 $ 2 4 3, 7 9 3 Bo i ler f f ic ien ( ) % e cy 7 0 % 7 0 % $ /y Ro ine Ma inte ( ) t na nce r u $ 1 3 0, 5 5 7 $ 1 7 3, 2 6 4 $ 4...

AI summary This table outlines various financial and operational scenarios from 2012, including figures related to boiler efficiency, maintenance costs, labor expenses, insurance, property taxes, and fuel usage in British Thermal Units (Btu). The data highlights differences between various categories and years.

FUEL ADJUSTMENT The fuel portion ofthe rate will be adjusted automatically on January 1 of each year based on a percentage ofthe change in the Consumer Price Index for Nova Scotia (all items excluding energy) and the full change in the pri...

AI summary The fuel adjustment mechanism for the rate is automatically updated annually on January 1, based on changes in the Consumer Price Index (CPI) and diesel fuel prices. The adjustment formula combines 75% of the CPI change and 25% of the diesel fuel price change over the previous 12 months.

FUEL COST REVIEW In addition to the fuel adjustment outlined above, the Utility and Review Board will review the fuel portion ofthis tariff every two years and may make additional changes to the fuel component ofthis tariff. The first revi...

AI summary The Utility and Review Board will review the fuel portion of the tariff every two years, starting in 2014, considering the adjusted market price of biomass fuel. Biomass CHP plants must file quarterly data with the Board and the Minister. Changes will be prospective and applied between reviews.

Scenarios in $2012 Va lue for S On ly tea m- Gr Va lue for C H P os s Ne Va lue for C H P t $ To l Pro j Co ( ) ta t ts ec s Fu l Us e e 3 4 6 2 3 9 1 0 1 8 3 5 $ To l Pro j Co ( / k W ) ta t ts ec s Ac $ $ $ l 1, 6, 4, Lo 8 1 8 Va 4 2 0,...

AI summary This section presents a table and calculations related to fuel costs and energy usage in 2012, including turbine sizes, boiler efficiency, fuel use in mmBtu, and heat input calculations. It provides data for different scenarios and energy sources.

4.0 Study Deliverables The cost of generating electricity can be categorized into 4 principal components; capital cost, non-fuel O&M, fuel cost and financing. The purpose of this study is to determine values for the capital cost, non-fuel...

AI summary This section outlines the study's deliverables, focusing on determining capital cost, non-fuel O&M, and operating parameters of the plant. Wood fuel cost and financing details will be sourced externally, including target return on equity, capital structure, amortization, and tax considerations.

6.5 Capacity Factor ANSS recommends a capacity factor of 90% for the CHP scenario. We have analyzed the impact of this change in the Excel file "Synapse U-6 Capacity Factor." Here we have changed the capacity factor of the turbine in conde...

AI summary ANSS recommends a 90% capacity factor for the CHP scenario, which increases fuel costs and affects the levelized rate calculation. The change is reflected in an Excel model, with a resulting fixed rate of $89 per MWh after adjusting for fuel costs and solving for an after-tax IRR of 13%.

6.7 Boiler Efficiency ANSS recommends using a boiler efficiency of 69% (Direct Testimony of Fenton Travis, p. 3). We have analyzed the impact of this change in the Excel file "Synapse U-6 Boiler Efficiency." In this file, we changed the bo...

AI summary The document discusses the impact of changing the boiler efficiency to 69%, as recommended by ANSS, on fuel use and costs. This change increases annual net fuel use and total fuel cost to $74 per MWh, but does not affect the fixed rate portion, resulting in a total 2012 rate of $169 per MWh.

6.8 All ANSS Assumptions In addition to the individual sensitivities discussed above, we also entered all the ANSS assumptions into the model at the same time. This model run is the Excel file "Synapse U-6 All." The various changes to assu...

AI summary This section discusses the assumptions used in the ANSS model, including fuel cost calculations and the impact of various adjustments on the 2012 rate. The fuel cost is calculated as $105 per MWh, and the fixed rate is determined as $269 per MWh, resulting in a total rate of $374 per MWh. The analysis also considers the correction of errors and the inclusion of net parasitic load costs.

Scenarios in $2012 Val for Ste -On ly ue am Gro ss V alu e fo r C HP Net Va lue for CH P $ Deb rvic ( ) t se e re ser ve $ 213 498 , $ 784 709 , $ 571 211 , Ste am t C Cos Deb los ing ts & Fe es $ 109 646 , $ 403 000 , $ 293 355 , Ca lcu l...

AI summary The document presents financial and operational data for various scenarios in 2012, including values for steam, gross value for CHP, net value for CHP, and other related metrics such as debt service reserves, equity closing costs, maintenance, and fuel usage. These figures provide a snapshot of financial and operational parameters for power generation and infrastructure planning.

Nova Scotia COMFIT Model Synapse U-6 Capital Structure Assumptions Notes: 1 Notes: General Inflation Factor (revenue and expenses) 1.92% From NSPI 2009 IRP Update Operating Inputs Capital Costs (Uses of Funds) Net Generator Capacity (MW) 2...

AI summary The document outlines the Nova Scotia COMFIT Model, detailing capital structure, assumptions, and financial inputs related to a project. It includes inflation factors, capital costs, energy production metrics, and operating expenses, with notes on net of steam-only scenarios and cost escalations.

Scenarios in $2012 fo r S On Va lue tea ly m- Gr e f CH s V alu P os or e f CH Ne t V alu P or $ Wo rki ita l re ( ) ng ca p se rve $ 22 3, 00 4 $ 28 6, 49 7 $ 63 49 3 , ( $ ) De bt rvi se ce re se rve $ 21 3, 49 8 $ 77 7, 90 5 $ 56 4, 40...

AI summary The text presents financial scenarios from 2012, including figures related to working capital reserves, debt service reserves, equity losses, and maintenance costs. It includes calculations for fuel costs and turbine efficiency, but lacks detailed discussion or arguments.

Beginning Balance 0 7,702,001 7,296,632 6,891,264 6,485,895 6,080,527 5,675,158 5,269,790 4,864,421 4,459,053 4,053,685 3,864,037 3,350,808 2,891,509 2,459,176 2,040,325 1,628,215 1,219,476 812,422 406,211 Original Book Value 8,107,369 000...

AI summary The text provides a financial overview of the Nova Scotia COMFIT Model for a biomass CHP (condensing turbine) project, including details on annual operating expenses, fuel costs, project hard costs, assessed value, and revenue assumptions.

Scenarios in $2012 Val for Ste -On ly ue am Gro ss V alu e fo r C HP Net Va lue for CH P $ Deb rvic ( ) t se e re ser ve $ 213 498 , $ 777 905 , $ 564 407 , Ste am 60% t C Cos Deb los ing ts & Fe es $ 109 646 , $ 399 506 , $ 289 860 , Ca l...

AI summary The document presents a table with various financial and operational metrics related to scenarios in 2012, including values for steam, gross value for CHP, net value for CHP, and other related costs and efficiencies. It includes data on debt service reserves, capital costs, equity closing costs, and fuel use.

Nova Scotia COMFIT Model Large Wind (Over 50 kW) Synapse U-7 Nova Scotia Comfit Model Large wind (Over 50 kw) 1 Synapse U-7 Equ ity In vest t men (1,8 90,5 59) Tota l Aft er-T ax E quity Ret urn (1,8 90,5 59) 390 ,290 457 ,301 355 ,931 308...

AI summary The document presents financial data related to the Nova Scotia COMFIT Model for Large Wind (Over 50 kW) using Synapse U-7. It includes equity investment and total after-tax equity return figures across various time periods.

Fue l Co st 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

AI summary The text presents a table row labeled 'Fuel Cost' with all values set to zero across multiple columns, suggesting no data or activity related to fuel costs in the context of the COMFIT Model for large wind projects.

Scenarios in $2012 r S On Va lue fo ly tea m- Sh e S d V alu tea are m Gr CH s V alu e f P os or CH Ne t V alu e f P or Ins ura nc e $ 23 65 0 , $ 11 82 5 , $ 80 75 2 , $ 68 92 7 , Pro rty ta pe xe s $ 0 $ 3, 56 7 $ Ye 10 Tu rbi erh l ( )...

AI summary The text presents a table with various financial and operational metrics for the year 2012, including insurance values, property taxes, fuel use and costs, and technical parameters for boilers and turbines. These metrics are likely used for forecasting and investment tracking purposes.

1 Undertaking U-11: Provide a suggested formula for a reopener of the biomass tariff. 2 Response U-11: 3 Calculation and Methodology of Biomass Fuel Cost Adjustment 4 For biomass combined heat and power (CHP) plants, the initial base bioma...

AI summary The response to Undertaking U-11 outlines a formula for adjusting the biomass fuel cost in a reopener of the biomass tariff. The formula involves calculating the Adjusted Biomass Market Price based on total cost and energy delivered to Approved CHP Plants, with adjustments made every two years using a weighted index of the Consumer Price Index and diesel fuel index.

- 3 Illustration of "Adjusted Biomass Market Price" Calculation - 4 CHP Plant A - 5 Total Market Biomass deliveries during the Evaluation Period = 10,000 BDT - 6 Total cost of all Market Biomass Deliveries during the evaluation period = $8...

AI summary The document presents calculations related to the adjusted biomass market price based on data from three CHP plants (A, B, and C) over an evaluation period. It includes total biomass deliveries, costs, and energy delivered, culminating in an adjusted biomass market price of $4.586 per MMbtu.

Darren Hartlen P.Eng Direct: 902 421 7241 E-Mail: [email protected] Nova Scotia Utility & Review Board FIT Model Biomass CHP condensing turbine; Biomass CHP condensing turbine Interest During Construction 557,683 Net of steam-only scenario I...

AI summary The document provides a detailed financial analysis of a biomass CHP condensing turbine project, including costs, funding sources, and return metrics. Key elements include total project costs, capital structure, and debt service coverage ratios. The project involves Nova Scotia Power and is analyzed under the FIT Model.

Page 5 of 6 NS_COMFIT_Biomass_45% Cost Allocation.xls Component Scenario Scenario Scenario Project development $0 $275,000 $275,000 Boiler installed cost ($) $20,298,000 $36,818,000 $16,520,000 Turbine installed cost ($) $0 $0 $0 Emission...

AI summary The document outlines the cost allocation for a biomass project under the Community Feed-in Tariff (COMFIT) program, detailing various financial components such as equipment costs, reserves, insurance, and fuel expenses across different scenarios.

Undertaking # Submitted by Toby D. Couture, E3 Analytics. April 12 2011 Q: Could you clarify Spain's fuel adjustment mechanism for biomass CHP?

AI summary Toby D. Couture from E3 Analytics submitted an undertaking on April 12, 2011, and was asked to clarify Spain's fuel adjustment mechanism for biomass combined heat and power (CHP).

Cross-cutting p In uts - •Target rate of return for projects - • Rate of inflation assumed for the period of the contracts (e.g., for use in inflating O&M costs) - • If some portion of the FIT rate escalates, is the escalation rate fixed o...

AI summary The text outlines key considerations for determining the target rate of return for projects, the assumed rate of inflation for contract periods, and whether escalation rates for FIT (Feed-in Tariff) rates are fixed or indexed.

Wind Pricing Model Assumptions: Notes: Income Tax Basis Adjustment Factor 50.0%

AI summary The document presents a Wind Pricing Model with an Income Tax Basis Adjustment Factor set at 50.0%. This factor is likely used to adjust financial calculations related to wind energy projects, potentially affecting cost recovery or revenue requirements.

File No: BRD-E-R-10 - Matter No. M03632 EXHIBIT LIST April 7, 2011 U-15 To confirm the data on Capacity Factor from Natural Resources Canada, if compiled for Nova Scotia. And, If it is, to supply a copy, include the presentation if availab...

AI summary The document outlines two exhibits related to a regulatory proceeding. Exhibit U-15 requests confirmation of capacity factor data from Natural Resources Canada for Nova Scotia, while Exhibit U-16 asks for a summary of a Spanish biomass fuel price adjustment clause. These exhibits were submitted by various entities for a board member's review.

llocating the boiler costs that way that's how we're trying to make sure that electricity sold on the COMFIT Tariff is truly combined heat and power electricity. (Transcript, April 4, 2011, pp.180-82) - 29. The final aspect of the proposed...

AI summary The NSDOE supports adjusting the biomass tariff rate to account for fluctuating fuel costs but opposes the specific fuel adjustment mechanism proposed by the Alliance, citing administrative difficulties and lack of jurisdiction over COMFIT generators.

2. Large Wind Generators As discussed in Mr. Chernick's evidence, wind projects in the size range covered by the large wind category of COMFIT have recently sought and obtained contracts with NSPI at prices considerably below those recomme...

AI summary The text discusses the pricing of large wind generators under the COMFIT program, noting that recent contracts with NSPI are significantly lower than Synapse's recommendations. It suggests that the Board should not set COMFIT prices higher than the average from Exhibit PLC-2, Table 2, and that adjusting Synapse's estimates could lower prices further, reducing the impact on retail rates.

3. Biomass Generation It is acknowledged that fuel risk is a major consideration in setting a biomass tariff but the proposed tariff by Synapse compensates for that fuel risk by providing an escalation mechanism. That by itself should acco...

AI summary The document discusses the proposed COMFIT biomass tariff by Synapse, which includes an escalation mechanism to address fuel risk. The Consumer Advocate argues the proposed $156/MWh price is overcompensation, while ANSS requests a much higher rate. The Board is advised to cap biomass capacity if approving a higher rate to mitigate retail rate impacts.

3) Biomass: Similar to small wind, there seems to be a significant risk to the ratepayers from biomass generated power. As well, environmental considerations are significant and serious in relationship to biomass wood supply, and are contr...

AI summary The document raises concerns about the risks of biomass-generated power to ratepayers, environmental issues, and policy changes that created an unfair playing field. It also highlights challenges in financing renewable energy projects, particularly large wind, and criticizes the government for not adequately addressing these issues in policy design.

Re: Renewable Energy Community Feed-In Tariffs - BRD-E-R-10/Matter No: M03632 - 1. This is the submission of the Alliance of Nova Scotia Sawmillers ("ANSS"). It focuses on the Tariff to be established by the Nova Scotia Utility and Review...

AI summary The Alliance of Nova Scotia Sawmillers submits that the Tariff for a biomass CHP Facility should be based on cost-based rates rather than least-cost principles, emphasizing the need to consider capital costs, operating costs, debt-equity ratio, internal rate of return, and fuel cost reset mechanisms.

iders appropriate. - 7. The Act provides that in order to qualify as a generator, it must be a Band Council, a Municipality, a not-for-profit entity, a community economic-development corporation, a cooperative or any other entity permitted...

AI summary The document outlines the requirements for qualifying as a generator under the Act and discusses the proposed COMFIT rates for Biomass CHP. The ANSS opposes the proposed rate of $156/MWh, arguing it is not cost-based and does not reflect the risk of Biomass CHP, and instead recommends adopting a rate of $320/MWh with biennial fuel cost readjustments.

Fuel Cost Reset Mechanism - 76. Synapse has recognized the risk associated with fuel costs in a biomass CHP project. Certainly, it is the single largest risk to such projects. Generators are unable to hedge against abrupt market changes in...

AI summary Synapse highlights the significant risk of fuel costs in biomass CHP projects, noting the inability of generators to hedge against market volatility due to short-term contracts and limited supplier assets. A CPI/diesel index is proposed as a mechanism to address this risk, allowing for renegotiation if costs escalate excessively after eight years.

CONCLUSION - 100. The reality is the government has made a policy decision to encourage small renewable generation. Electricity ratepayers will be paying for those costs. Other jurisdictions have offered tax breaks, grants, or incentives b...

AI summary The conclusion highlights the government's policy decision to support small renewable generation, with ratepayers covering associated costs. Tax incentives are unavailable in Nova Scotia, and the Board must follow existing regulations. Mr. Hayes asserts the accuracy of provided costs and recommends adopting the rate and fuel cost reset mechanism from Undertaking U-10 and U-11.

Biomass $0.156 per kWh in year 2012 for biomass CHP projects, composed of a fixed component of $0.094 per kWh and an escalating component of $0.062 per kWh representing the cost of fuel - 1. EAC is strongly opposed to the utilization of bi...

AI summary The Energy Advisory Committee (EAC) opposes the inclusion of biomass CHP in the COMFIT program due to unclear definitions, lack of efficiency standards, and concerns about carbon neutrality. It also highlights potential unfair advantages for biomass proponents and the risk of increased costs for rate-payers due to biomass fuel price escalations and reduced forest biomass availability.

Recommendations: - 1. The EAC strongly recommends that Board defer to the Minister of Energy and Natural Resources on the acceptability of approving the proposed COMFIT rate for biomass CHP, given the current policy landscape, lack of appr...

AI summary The EAC recommends that the Board defer approval of the COMFIT rate for biomass CHP due to policy uncertainty, lack of efficiency standards, and concerns about the impact on GHG reductions and rate-payer burdens. The approval could undermine provincial climate goals and natural resource management efforts.

ANSSSTEAM-ONLYARGUMENT In its submission at paragraphs 47 - 52, ANSS disputes Synapse's inclusion in the biomass rate of only the additional costs of a cogeneration system, above the cost of a steam-only system to meet the sawmill's heat r...

AI summary ANSS disputes Synapse's biomass rate model, arguing that it incorrectly allocates steam generation costs. ANSS claims that Synapse only allocates 55% of steam costs to the steam host, not 100% as misrepresented. ANSS also argues that the proposed biomass COMFIT rate is based on an inconsistent hypothetical scenario that violates COMFIT regulations.

ANSS Fuel Reset Mechanism Lessens Ratepayer Risk - 5. The EAC also expresses concern that ratepayers will be "burdened" by a COMFIT biomass fuel adjustment escalator. - 6. There is, indeed, a risk associated with biomass costs. With the Sy...

AI summary The EAC is concerned that ratepayers may be burdened by a COMFIT biomass fuel adjustment escalator. The ANSS biennial fuel cost reset mechanism is seen as less risky for ratepayers, as it allows for rate adjustments based on biomass price fluctuations. In contrast, the Synapse proposal places the initial risk of escalating fuel costs on the CHP Facility, potentially leading to project failure and loss of RES energy.

Misunderstanding of Steam-Only Allocation - 17. The ANSS had the benefit of the Consumer Advocate's Reply Submission and wishes to correct a misunderstanding with respect to allocation of steam generation costs. The Consumer Advocate's con...

AI summary The ANSS clarifies that the Consumer Advocate misunderstood the allocation of steam generation costs, noting that Synapse allocated 82.5% of the boiler cost to the sawmill, not 55%, and that other costs are fully allocated to the steam host. The ANSS also clarifies that its biomass COMFIT rate proposal is based on a combined heat and power plant consistent with regulations.

PPA Terms to Address Reporting and Audit of Fuel Costs - 25. We note that the Province supports the recommendation that the biomass tariff rate incorporate a mechanism to adjust changing biomass fuel costs and that it be subject to future...

AI summary The document discusses the Province's support for adjusting biomass fuel costs in the biomass tariff rate, but the NSDOE opposes the proposed fuel reset mechanism due to administrative and transparency concerns. ANSS suggests that compliance can be addressed through PPA terms requiring submission of biomass sales information for audit. Regular reporting of biomass prices is seen as a way to improve market transparency.

CONCLUSION - 29. The ANSS urges the Board to accept its recommended biomass CHP rate and fuel cost reset mechanism. The mechanism, as proposed, provides the best assurance that customers will not be overcharged should biomass prices drop a...

AI summary The ANSS recommends the Board accept its proposed biomass CHP rate and fuel cost reset mechanism, arguing it prevents overcharging customers if biomass prices drop. Intervenors suggest a 'conservative' approach but have not identified overstated assumptions. The ANSS also notes that limited CHP participation will mitigate risk to ratepayers.

RATE FOR "LARGE WIND" The rate developed by Synapse for Wind (greater than 50kW) was $139/MWh and this formed the basis of the COMFIT proceeding. Having regard for the intent of Government " to encourage a range of projects widely disperse...

AI summary The rate for 'Large Wind' proposed by Synapse at $139/MWh is based on a cost-recovery approach, aligning with the COMFIT proceeding. The Consumer Advocate's assertion that rates should not be cost-based is refuted, as Synapse's method balances cost and policy objectives to encourage renewable development.

Community feed-in tariff qualifications - 20(1) For the purposes of clause 4A(8)(f) of the Act, in addition to the entities listed in clauses 4A(8)(a) to (e) of the Act, each of the following entities qualifies as a generator that may part...

AI summary The document outlines the qualifications for entities to participate in the community feed-in tariff program, including ownership requirements and eligibility criteria. It also notes that the Board sets the COMFIT tariffs, while the Minister approves applications. NSPI and other utilities recover costs through the fuel adjustment mechanism.

5.5 Consideration of tariffs in other jurisdictions - [61] In assessing whether the proposed COMFIT tariffs are reasonable, Synapse, in addition to considering stakeholder feedback, compared the proposed tariffs "...to FIT prices adopted i...

AI summary The document discusses the evaluation of the proposed COMFIT tariffs in Nova Scotia by comparing them to FIT rates in other jurisdictions like Vermont and Ontario. Key differences include tax credits in the U.S., ownership requirements in Vermont, and project size eligibility. The Province supports Synapse's benchmarking approach, emphasizing the importance of considering these differences when assessing tariff reasonableness.

7.1 Submissions - [92] Synapse proposes a tariff of $139 per MWh for wind projects greater than 50 kW. - [93] This proposed tariff is based on a single turbine 1.5 MW in size. Synapse assumed total project costs of $3.8 Million or $2,520 p...

AI summary Synapse proposes a $139 per MWh tariff for wind projects over 50 kW, based on a 1.5 MW turbine with total costs of $3.8 million. The model assumes a 31% capacity factor, which is contested, and includes O&M costs, financing assumptions, and benchmarking against Vermont and Ontario.

8.1 Submissions [113] Synapse assumed a tariff of $452 per MWh for wind projects of 50 kW or less. This proposed tariff is based on a model project with a single 50 kW (0.05 MW) turbine. [114] Synapse assumed an installed cost of $268,000,...

AI summary Synapse's analysis of small wind projects in Nova Scotia includes assumptions about tariffs, installed costs, O&M expenses, financing structures, and capacity factors. These assumptions are based on data from developers, manufacturers, and industry associations, and are used to model the financial viability of such projects.

9.4 Financing [173] Synapse in its evidence stated: ... In addition, the lenders we talked to who were familiar with biomass felt that CHP projects could be financed with 60% debt if the question of fuel cost risk were addressed in a satis...

AI summary The financing of biomass CHP projects is discussed, with Synapse suggesting a higher debt cost due to fuel risk. Jeffrey Bodington argues that increasing the interest rate does not adequately compensate lenders for fuel risk and highlights the significant financial impact of fuel cost increases on lenders.

9.4.1 Findings on Financing [183] The Board accepts the wide experience of Mr. Bodington in financing various electric generation projects, of which some are biomass. However, the Board finds it difficult to conclude a Nova Scotia sawmille...

AI summary The Board accepts Mr. Bodington's expertise in financing electric generation projects, including biomass, but finds it unlikely that a Nova Scotia sawmiller would finance a Biomass CHP project solely with third-party equity. Instead, a mix of debt and equity is expected. The Board also accepts the use of a fuel escalator mechanism and a 13% ROE for the project, aligning with Synapse's calculations.

[187] Synapse also stated: When we try to put those pieces together for biomass we get a tremendous range and so in the face of that, we feel like you really need to look at the market data, and you really need to make sure that whatever r...

AI summary Synapse emphasized the importance of relying on market data when determining biomass rates, arguing that any rate should align with market trends and that a re-evaluation would likely result in a rate not significantly different from the current one.

9.5.3 Fuel Operating Costs [203] The total fuel consumption is driven by the size and availability of the plant, and the boiler efficiency. The Synapse FIT model is the one being used for turbine size, so any differences would be in availa...

AI summary The document discusses fuel operating costs related to biomass CHP facilities, focusing on differences in availability and boiler efficiency assumptions between Synapse FIT model and ANSS. ANSS argues that Synapse's 80% boiler efficiency is inaccurate for woody biomass and that proper accounting of steam and condensate can significantly impact overall efficiency calculations.

9.5.4 Findings on Fuel Operating Costs [209] The Board finds that in developing fuel requirements for the CHP, it should be on the basis which yields the lowest tariff. It may not make sense to increase availability for a less efficient (b...

AI summary The Board determines that fuel requirements for the CHP should be based on the lowest tariff, considering both 85% and 90% availability. It sets the boiler efficiency at 70% and acknowledges Synapse's calculation of overall efficiency at 51%, noting that parasitic power may have been included in the calculation.

9.7 Fuel Escalator [224] Synapse proposed an index for fuel in recognition that biomass fuel costs will fluctuate over time. They based their adjustment mechanism on one already approved by the Board: We are proposing to treat biomass fuel...

AI summary Synapse proposed a fuel cost index for biomass, based on a previously approved mechanism. ANSS argued that the 75/25 CPI/Diesel index is not an effective hedge for fuel costs, which would increase the risk profile of biomass projects and justify a higher cost of capital.

Calculation and Methodology of Biomass Fuel Cost Adjustment For biomass combined heat and power (CHP) plants, the initial base biomass fuel price for purpose of establishing the feed-in tariff rate during the first year shall be set by the...

AI summary This text outlines the methodology for adjusting the biomass fuel cost for combined heat and power plants, including the initial base price set by the NSUARB and subsequent adjustments based on the Consumer Price Index and diesel fuel index.

Adjusted Biomass Market Price = CD/ED Where: "CD" is the total cost of all Market Biomass delivered to Approved CHP Plants during the Evaluation Period ($). "ED" is the total Gross Energy of all Bone Dry Tons of Market Biomass delivered to...

AI summary The document discusses the calculation of the Adjusted Biomass Market Price using CD/ED, where CD is the total cost of biomass delivered to CHP plants and ED is the total energy content. The Province supports future price adjustments for biomass fuel but opposes Undertaking U-11 due to concerns about enforcement and transparency. The Consumer Advocate and ANSS suggest ways to address fuel risk and ensure proper disclosure.

9.7.1 Findings on Fuel Escalator [232] The Board accepts the evidence of ANSS and Mr. Couture that there needs to be a periodic review of the biomass fuel cost. It appears it would be difficult, if not impossible, to finance these projects...

AI summary The Board accepts the need for periodic review of biomass fuel costs and adopts Synapse's index as the escalator. Reviews will occur every second year, using the formula from Undertaking U-11, with adjustments not being automatic. Parties must agree to disclose biomass fuel costs, and no retroactive adjustments will be made.

10.1 Submissions [235] Synapse proposed a tariff of $652 per megawatt hour for in-stream tidal projects. They based this tariff on a 500 kilowatt installation employing one or more instream tidal generators. Synapse assumed total project c...

AI summary Synapse proposed a $652/MWh tariff for in-stream tidal projects, citing high costs and technology immaturity. The Consumer Advocate suggested a lower rate of $398/MWh. Mr. Couture supported the higher rate but raised concerns about uncertainties in tidal power. The Province suggested tariff degression and deferred detailed consideration to future reviews.

ffs. [283] While some of the intervenors challenged a number of the specific input assumptions made by Synapse, the FIT modeling adopted by Synapse was generally viewed favourably by all intervenors. [284] Taking into account the legislati...

AI summary The Nova Scotia Utility and Regulatory Board (NSUARB) adopts Synapse's FIT modeling approach, balancing low tariffs with encouraging COMFIT project development. The Board sets COMFIT tariffs based on comparisons with other jurisdictions, acknowledging the lack of precedent for assessing their reasonableness.

Large Wind 8-2-11 no tax Page 1 Nova Scotia COMFIT Model Large Wind (Over 50 kW) EBIT DA 478 ,304 476 ,825 475 ,317 473 ,780 472 ,213 470 ,616 468 ,987 467 ,327 465 ,635 463 ,909 462 ,150 460 ,357 458 ,530 456 ,666 454 ,767 450 ,711 448 ,7...

AI summary The document presents a financial table related to the Nova Scotia COMFIT Model for Large Wind (Over 50 kW), showing EBITDA and various reserve-related financial figures over time, including the release of debt service reserves and other maintenance reserves.

Page 2 Large Wind 8-2-11 no tax Nov a S ia C OM FIT Mo del cot Ca sh Flo w W ork she Bot et: tom Syn e C aps lian om p ce Lar Win ge d n o ta x a S ia C Nov cot OM FIT Mod el iatio Dep n W ork she et: Top rec Syn e C lian ind ce L e W no t...

AI summary This document appears to be a table related to a financial model and cash flow worksheet, likely associated with a regulatory proceeding involving Nova Scotia Power and the COMFIT model. The table includes terms like 'Large Wind' and 'no tax', suggesting it may involve tax considerations for a wind energy project.

Nova Scotia COMFIT Model Depreciation Worksheet: Bottom Synapse Compliance Large Wind, Taxable Owner Ope ratin Yea g r 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Net Output in MWhs 101 Annual Operating Expenses Annual Fuel Cost F...

AI summary The document presents a depreciation worksheet for a large wind project in Nova Scotia, focusing on operating expenses, fuel costs, and routine O&M costs. It includes details such as net output in MWhs and escalations based on inflation.

Page 2 Biomass 8-2-11 85% availability no fuel Nova Scotia COMFIT Model Cash Flo w worksh eet: Botto om Synapse Complian ice 85% A vailability No Fuel ( $ ) Inte ion ct rco nne $ 0 $ 1 9 9, 0 0 0 $ 1 9 9, 0 0 0 Co de ing n ns 25 % ( $ ) Ma...

AI summary This document presents a COMFIT model table with financial data related to a biomass project in Nova Scotia, including figures for integration costs, maintenance reserves, working capital reserves, debt service reserves, and closing costs. The table also includes fuel cost calculations and turbine capacity figures.

Page 2 Biomass 8-2-11 90% availability no fuel Nova Scotia COMFIT Model Cash Flov w workshe et: Botton n Synaps e Complia ance 90% / Availabilit / no Fuel Occ 1 urre nce Occ 431 ,441 431 ,020 0 0 0 0 0 0 0 0 0 0 215 ,721 107 ,860 53,9 30 2...

AI summary The text presents a table from the Nova Scotia COMFIT Model with data related to biomass availability and fuel costs, showing figures for different occurrences and financial metrics such as cash flow and compliance.

Scenarios in $2012 $ Sc ios in 2 0 1 2 en ar $ Inte ion ( ) t rco nne c $ 0 $ 1 9 9, 0 0 0 $ 1 9 9, 0 0 0 Co de ing n ns : 3 0 % $ Ma inte ( ) na nce re ser ve $ 6 5, 2 7 9 $ 8 6, 6 3 2 $ 2 1, 3 5 3 To l: ta 9 0 % $ Wo k ing ita l re ( ) r...

AI summary The document presents financial scenarios from 2012, including various reserves and costs related to maintenance, working capital, and debt service. It also includes calculations for fuel costs and equity closing costs, as well as capacity and generation figures.

VIA EMAIL Nancy McNeil Regulatory Affairs Officer/Clerk Nova Scotia Utility and Review Board 3rd Floor 1601 Lower Water Street PO Box 1692 Unit "M" Halifax NS B3J 383 Nancy G. Rubin Direct Dial: 902.420.3337 [email protected] Dear...

AI summary The Alliance of Nova Scotia Sawmillers (ANSS) submits comments regarding the Community Feed In Tariff (COMFIT) compliance filing. They request that the draft COMFIT terms include additional wording reflecting the Board's decision on the fuel escalator for biomass CHP projects and note an oversight in the Synapse compliance spreadsheet regarding parasitic power.

ENERGY PAYMENT The tariff for biomass combined heat and power plant projects consists of an energy payment only, undifferentiated by time of generation. The energy payment in will be $175 per MWh from January 1, 2012 through December 31, 2...

AI summary The energy payment for biomass combined heat and power plant projects is set at $175 per MWh for 2012, comprising a $75 fuel component and a $100 non-fuel component. The rate may be adjusted over time through specified mechanisms.

FUEL ADJUSTMENT The fuel portion ofthe rate will be adjusted automatically on January 1 of each year based QJ-La percentage ofthe change in the Consumer Price Index for Nova Scotia (all items excluding energy) and the full change in the pr...

AI summary The fuel portion of the rate is adjusted annually on January 1 based on a percentage of the change in the Consumer Price Index for Nova Scotia (excluding energy) and the full change in diesel fuel prices over the previous 12 months. The adjustment is calculated using a specific formula that combines these factors.

Where: FCo = the fuel component ofthe biomass rate on January 1st one year ago FC I = the adjusted fuel component ofthe biomass rate, applicable for the coming year A = the fuel adjustment factor P = a productivity factor of 750/0 CPlo = t...

AI summary The text defines and explains variables used in a fuel adjustment mechanism for biomass rates, including fuel components, productivity factors, and consumer price indices relevant to the adjustment year and the prior year.

FUEL COST REVIEW In addition to the fuel adjustment outlined above, the Utility and Review Board will review the fuel portion ofthis tariff every two years and may make additional changes to the fuel component ofthis tariff. :.tll.S;; "~!....

AI summary The Utility and Review Board will review the fuel portion of the tariff every two years and may make changes to the fuel component. Any changes will be prospective, and the fuel adjustment mechanism will continue to be applied between reviews.

ENERGY PAYMENT The tariff for biomass combined heat and power plant projects consists of an energy payment only, undifferentiated by time of generation. The energy payment in will be $175 per MWh from January 1, 2012 through December 31, 2...

AI summary The energy payment for biomass combined heat and power plant projects is set at $175 per MWh for 2012, divided into a $75 fuel component and a $100 non-fuel component. The rate may be adjusted over time through specified mechanisms.

FUEL ADJUSTMENT The fuel portion ofthe rate will be adjusted automatically on January 1 of each year based a percentage of the change in the Consumer Price Index for Nova Scotia (all items excluding energy) and the full change in the price...

AI summary The fuel adjustment mechanism automatically adjusts the fuel component of the biomass rate annually based on changes in the Consumer Price Index for Nova Scotia (excluding energy) and diesel fuel prices. The adjustment formula combines 75% of CPI changes and 25% of diesel fuel price changes.

FUEL COST REVIEW In addition to the fuel adjustment outlined above, the Utility and Review Board will review the fuel portion ofthis tariff every two years and may make additional changes to the fuel component ofthis tariff. Any changes th...

AI summary The Utility and Review Board will review the fuel portion of the tariff every two years and may make prospective changes to the fuel component, with the fuel adjustment mechanism applied between reviews.

ENERGY PAYMENT The tariff for biomass combined heat and power plant projects consists of an energy payment only, undifferentiated by time of generation. The energy payment in will be $175 per MWh from January 1, 2012 through December 31,20...

AI summary The energy payment for biomass combined heat and power plant projects is set at $175 per MWh from January 1, 2012, to December 31, 2012, with a fuel component of $75 per MWh and a non-fuel component of $100 per MWh. The rate is subject to adjustment and review mechanisms over time.

FUEL ADJUSTMENT The fuel portion ofthe rate will be adjusted automatically on January 1 of each year based a percentage of the change in the Consumer Price Index for Nova Scotia (all items excluding energy) and the full change in the price...

AI summary The fuel adjustment mechanism for the rate will be automatically updated annually on January 1, based on changes in the Consumer Price Index (excluding energy) and diesel fuel prices. The adjustment uses a formula that combines 75% of the CPI change and 25% of the diesel fuel price change.

FUEL COST REVIEW In addition to the fuel adjustment outlined above, the Utility and Review Board will review the fuel portion ofthis tariff every two years and may make additional changes to the fuel component ofthis tariff. Any changes th...

AI summary The Utility and Review Board will review the fuel portion of the tariff every two years and may make prospective changes to the fuel component, with the fuel adjustment mechanism being applied between reviews.

ENERGY PAYMENT The tariff for biomass combined heat and power plant projects consists of an energy payment only, undifferentiated by time of generation. The energy payment in will be $175 per MWh from January 1, 2012 through December 31, 2...

AI summary The energy payment for biomass combined heat and power plant projects is set at $175 per MWh from January 1, 2012, through December 31, 2012, with a fuel component of $75 per MWh and a non-fuel component of $100 per MWh. The rate may be adjusted over time according to specific mechanisms.

FUEL ADJUSTMENT The fuel portion ofthe rate will be adjusted automatically on January 1 of each year based on a percentage ofthe change in the Consumer Price Index for Nova Scotia (all items excluding energy) and the full change in the pri...

AI summary The fuel adjustment mechanism for biomass rates is automatically updated annually on January 1st using a formula that considers changes in the Consumer Price Index (excluding energy) and diesel fuel prices. The first adjustment is effective January 1, 2013, with a productivity factor of 75% applied to the CPI component.

FUEL COST REVIEW In addition to the fuel adjustment outlined above, the Utility and Review Board will review the fuel portion ofthis tariff every two years and may make additional changes to the fuel component ofthis tariff. The first revi...

AI summary The Utility and Review Board will review the fuel portion of the tariff every two years, considering the adjusted market price of biomass fuel. Changes will be prospective, and the fuel adjustment mechanism will apply between reviews. Data on biomass fuel prices must be filed quarterly by eligible plants.

- settled upon, and considered the structures and cost 1 Page 24 NSUARB-BRD-E-R.10 approved by the Board for the major utilities in Nova 2 Scotia. Our assumptions reflect our assessment that hydro 3 projects will be perceived as least risk...

AI summary The document discusses the development of COMFITs (Cost of Money, Fuel, Interest, and Taxes) for major utilities in Nova Scotia, focusing on capacity factors and the treatment of year-to-year changes. It outlines assumptions about risk levels for different energy projects and explains how capacity factors influence required rates. The approach to fuel cost adjustments for CHP projects is also detailed, balancing risk and incentive structures.

- all you can think of? Page 64 NSUARB-BRD-E-R.10 11 there will be economies of scale from the 10 megawatt or 12 higher wind farms they were anticipating. 13 MR. MERRICK: Let me take you to your 14 biomass rate for a moment. Mr. Biewald, I...

AI summary The discussion revolves around the biomass rate and the escalator mechanism used to account for fuel price increases. A transcription error is identified in the starting year biomass rate calculation, which was based on a levelized fuel cost instead of a Year 1 fuel cost. The correct starting year biomass rate was determined to be $156.

- MR. KEITH: That's right. Page 90 NSUARB-BRD-E-R.10 1 MR. MERRICK: And that's identified as 2 a risk factor that has to be accommodated, and that's why 3 you build in the escalator clause, to minimize the risk to 4 the operator, correct?...

AI summary The discussion revolves around risk management in a biomass project, focusing on the use of an escalator clause to share risk between customers and the project. The escalator clause is based on the Port Hawkesbury biomass project's indexing methodology, which partially indexes fuel costs to inflation and diesel fuel. However, some risk remains, as biomass fuel prices can fluctuate. The approach is considered reasonable by the speaker, as it allows the project to be financially viable.

MR. KEITH: Can I speak to this? The testimony filed by the Alliance of Sawmillers suggests that only way their project is going to be financeable is with no debt, all equity, and a return of 17.5 percent. different ways, that fuel pricing...

AI summary Mr. Keith discusses concerns raised by the Alliance of Sawmillers regarding the financing of a project, which requires a 17.5% return with no debt. Fuel pricing risk is identified as a significant factor affecting lenders' perceptions of project risk and influencing cost of capital assumptions.

- DICTUM DIGITAL INC. CERTIFIED COURT REPORTERS reasons for doing so; what are the other policy factors to Page 188 NSUARB-BRD-E-R.10 22 of the comparison of other jurisdictions; we did talk to DICTUM DIGITAL INC. CERTIFIED COURT REPORTERS...

AI summary The text discusses a past project at a sawmill in Nova Scotia involving a 2-megawatt condensing turbine, noting that the project was completed in the early '90s without a fuel adjustment mechanism. The discussion also touches on the allocation of sunk capital costs between steam and electricity, with an expert offering their perspective on a 50/50 split.

- DICTUM DIGITAL INC. CERTIFIED COURT REPORTERS fact to inquire about? When size of the project is a risk 1 NSUARB-BRD-E-R.10 Page 201 factor, would you not inquire about the size of the 20 that in various options, and I pressed him to giv...

AI summary The discussion revolves around the financing expectations for a project, with a focus on debt and return on equity. The speaker mentions that an 8% debt expectation is reasonable if fuel cost risks are mitigated, but higher rates may be necessary depending on the project's specifics and fuel indexing mechanisms.

- DICTUM DIGITAL INC. CERTIFIED COURT REPORTERS MS. SHAW: I would say that that was 1 NSUARB-BRD-E-R.10 Page 273 outside of what we were asked to do, which was to come up 18 procurement in your evidence and in your responses to Ms. 19 Rubi...

AI summary The discussion centers on the risk associated with biomass facility development, particularly fuel cost and pricing risks. Mr. Keith explains that these risks were accounted for in the tariff recommendation by adjusting the cost of debt and equity and including a fuel indexing mechanism.

- some cases for periods of years and then back up and back - down. - So assuming that there's going to be a - risk with this commodity of it increasing beyond the rate - of inflation, I don't think it really bears out in the - historical...

AI summary The discussion revolves around the risk of biomass costs increasing beyond inflation and the inclusion of risk assumptions in the tariff that raise it above wind energy prices. The participants question the validity of these assumptions based on historical trends.

- risk associated with fuel. Page 282 NSUARB-BRD-E-R.10 1 MR. KEITH: Yeah. So I guess the 2 answer to your question is we didn't have the resources to 3 do a real study of biomass fuel supply, but the anecdotal 4 evidence that we did look...

AI summary The discussion addresses the risk of rising biomass prices due to a cap on new electricity generation from forest biomass, which limits the amount of biomass that can be used for renewable energy purposes. The cap is interpreted as a limit on demand rather than supply, which may affect biomass pricing.

- DICTUM DIGITAL INC. CERTIFIED COURT REPORTERS individual shareholder is there some projection of how 1 NSUARB-BRD-E-R.10 Page 353 much that might result in for that individual? 6 the rate in Vermont was lower than otherwise would have 7...

AI summary The text discusses a discussion between individuals regarding tax credits affecting generator rates in Vermont and the impact of a 30 percent subsidy on capital costs in the U.S. It also references the Ontario Energy Board and the Ontario Power Authority's FIT rates.

- DICTUM DIGITAL INC. CERTIFIED COURT REPORTERS factor of one of their turbines whether they're talking Page 380 NSUARB-BRD-E-R.10 18 process, did you get a general feeling for what's an 19 appropriate percentage of total capital costs tha...

AI summary The discussion revolves around the appropriate percentage of total capital costs allocated to annual O&M, referencing testimony from Ontario and Vermont, and CanWEA's input on O&M costs for small wind, suggesting a lower rate of 1.6 cents per kilowatt hour for FIT prices.

soften, there we did see some community groups have 1 Page 424 NSUARB-BRD-E-R.10 development, again, so that's a very broad definition. 20 association. 21 The fuel escalator, which is an 22 important matter and has been covered off compete...

AI summary The text discusses the need for a fuel adjustment mechanism as a risk remediation measure for a project, referencing the importance of producing electricity during periods of low steam load. It also mentions the economic infeasibility of back pressure turbines in certain contexts.

- MR. COADY : Oh, Mr. Rickerson. - MR. KEITH : And you can direct these - questions to me. - MR. RICKERSON : Mr. Keith. - MR. COADY : Mr. Keith, if you would. - Why are lenders so concerned about the fuel cost? - MR. KEITH : It's highly un...

AI summary Mr. Coady questions Mr. Keith about lenders' concerns regarding fuel costs, the impact of a 1.5 percent interest rate adder on debt extension, and how recourse guarantees affect Synapse's debt assumptions.

- question if you wish. Page 436 NSUARB-BRD-E-R.10 1 MR. KEITH: Yes. 2 MR. COADY: There are comments about 3 recourse guarantees for debt in Synapse's discussions, 4 particularly I think with Mr. Christmas. How does such 5 support affect S...

AI summary The discussion revolves around debt assumptions and financial guarantees in Synapse's analysis, including the impact of recourse guarantees on debt assumptions and the realistic debt service coverage ratio for biomass projects with a proposed CPI/diesel indexing mechanism. Lenders expressed reluctance to speculate without more detailed project information.

- conditions under which payment is to be made by public - utility to generator. - So (a) is obviously clear. We dealt - with that. Jumping to (c), the effective date, I assume - we'd do that in short order after our decision. - The durati...

AI summary The discussion revolves around the duration of a tariff, with participants debating whether the fixed rate component should be set for 20 years and whether the fuel adjustment should be updated annually. There is agreement that annual adjustments for the variable component would be appropriate.

- concerning power and pipeline projects. Page 524 NSUARB-BRD-E-R.10 10 with biomass facilities that have a diesel fuel cost 11 adjustment? 12 MR. BODINGTON: Yes, I do. In the 13 power purchase agreement, yes. 14 MS. RUBIN: Mr. Chair, I'd...

AI summary The document discusses a proceeding concerning power and pipeline projects, including a power purchase agreement with biomass facilities, the need for securities registration, and the qualifications of Mr. Bodington to provide opinion evidence in financing and transactions related to electrical power projects.

Page 534 NSUARB-BRD-E-R.10 1 project financing assumptions. 2 Synapse has assumed that the project 3 can be financed based on 60 percent debt and 40 percent 4 equity at a cost of debt of 9.5 percent and equity at 13 5 percent. Mr. Bodingto...

AI summary The document discusses financing assumptions for a project, with Synapse assuming 60% debt and 40% equity, while Mr. Bodington argues for 100% equity due to the project's size and risk. He also highlights the risk of a fixed-price contract with a CPI diesel index and suggests a reopener mechanism to mitigate fuel price escalation risks.

the price gets adjusted accordingly. 1 Page 564 NSUARB-BRD-E-R.10 MR. SIMPSON: But in addition to that, 2 you've managed to convince the consultant, Synapse, to 3 increase the cost of borrowing from eight percent to 9.5 4 percent and you'r...

AI summary The discussion revolves around the perceived risk of fuel supply and its impact on the cost of borrowing, with arguments made about historical fuel prices and the adequacy of the fuel adjustment mechanism.

- years or four years to 1996. - Effectively, the price has escalated - incredibly over that period of time and it is unlikely - that a CPID escalator would have covered that risk off in - that period of time and you'd be sustaining severe...

AI summary The text discusses concerns about price escalation over time and the need for adjustment mechanisms to manage financial risks and profitability in projects, particularly in the context of setting tariff rates and managing market fluctuations.

- DICTUM DIGITAL INC. CERTIFIED COURT REPORTERS don't really do deal with too much hardwood pulp. NSUARB-BRD-E-R.10 Page 567 1 I was trying to focus on that and get 2 some historical information. So that's precisely why we 3 want to make s...

AI summary The discussion focuses on the challenges of using historical fuel cost data for future investment decisions, emphasizing the importance of forward-looking analysis and the local nature of biomass fuel supply. Concerns are raised about the economic feasibility of shipping biomass over long distances and the impact of local mill activity on fuel availability.

- sales, construction projects, forest management practices, - cleaning up from beetle kills and all these kinds of - things are what affect the supply and demand for biomass - fuel. And all of those things are happen on a very - tight reg...

AI summary The discussion highlights the complexity of biomass fuel supply and demand influenced by regional factors such as sales, construction projects, and forest management. It also mentions the limitations of using historical data for business planning due to significant fluctuations in fuel costs, such as a 77% change between 1990 and the pricing bottom.

- percent. 1 Page 570 NSUARB-BRD-E-R.10 If you'd set it back in January of 2 1990 and this thing had escalated every year for 17 years, 3 the ratepayer would have overpaid by tens of millions of 4 dollars for this electricity because the p...

AI summary The discussion revolves around the variability of fuel costs and the inadequacy of a fuel adjustment mechanism in covering risk. The speaker argues that a fixed percentage (77%) does not account for changes over time, such as the price of pulp wood chips, and that a mechanism indexed to inflation would be more effective.

- they had a reopener to look at, you know, what's the - market price of fuel and biomass for the CHP plants and - had that be the benchmark, so after a couple of years of - operation we report the fuel price and the Board can see, - okay,...

AI summary The discussion revolves around the need to adjust fuel cost benchmarks for CHP plants based on market prices, with a focus on managing fuel cost risk for biomass CHP projects. The speaker suggests that reporting actual fuel prices allows the Board to assess whether adjustments are necessary.

- explain exactly what you mean. I'm assuming that you're 1 Page 574 NSUARB-BRD-E-R.10 saying that that price of a non-renewable, a fossil fuel, 2 is going to go up over time. And are you basically 3 you're saying that that same sort of tr...

AI summary The discussion focuses on the price trends of fossil fuels and biomass, highlighting the volatility of biomass prices due to market forces and harvesting limits, contrasting it with the finite nature of fossil fuels. The conversation explores whether biomass can be considered a renewable resource and the potential for supply-demand imbalances.

MR. OUTHOUSE : Plus, I realize, a fuel protection mechanism, which we'll get to later. MR. TRAVIS : That's correct. That is including that's the purview that a fuel adjustment mechanism is in place to keep the cost of equity at 13 percent....

AI summary The discussion centers on the fuel adjustment mechanism and the assumption of a 13 percent return on equity in a model. The participants confirm that the model assumes a 13 percent return on equity and that an effective fuel protection mechanism is in place.

recourse financing. Page 638 NSUARB-BRD-E-R.10 22 to do that? DICTUM DIGITAL INC. CERTIFIED COURT REPORTERS 1 NSUARB-BRD-E-R.10 Page 641 MR. BODINGTON: Correct. 2 MR. OUTHOUSE: Now, you've recommended 3 that the return on equity for these...

AI summary The discussion revolves around the recommended return on equity for biomass projects, with a focus on the effectiveness of fuel cost hedges. The witness indicates that a 17.5% return on equity is appropriate if there is no effective hedge, while a lower rate may be acceptable if an effective hedge is in place.

- that not in addition to the rate - THE CHAIR : But that's a grant from - the city, it's not a ratepayer - MR. HAYES : That's correct. They're - getting the grant from the federal government, an $8 - million grant. And by the way, their c...

AI summary The discussion involves a project with a capital cost of $23 million, receiving a $8 million federal grant and being subject to a PPA rate and fuel adjustment. The project is part of a final list for EPC services in Ontario.

- basically set a rate which would be tracked and would be - paid for the benefit of having renewable energy. - And that project was moving forward. - I think everyone was excited about that one until the - sawmills closed down because the...

AI summary The discussion references a past renewable energy project impacted by the 2008 economic downturn and current biomass plants with power purchase agreements tied to adjustable fuel mechanisms. The speaker notes that smaller facilities face higher rates due to scale, as regulated by existing policies.

- DICTUM DIGITAL INC. CERTIFIED COURT REPORTERS include the purchase of that parasitic power load. And so 1 I just put that caveat to that. 16 obviously the nature of these you know, the number in 17 the queue right now if something econom...

AI summary The discussion revolves around fuel risk and the fuel adjustment mechanism, with a focus on how NSPI absorbs a portion of fuel variance risk. The conversation includes a reference to a reopener and options for managing fuel costs, as outlined in the evidence on page 9.

- DICTUM DIGITAL INC. CERTIFIED COURT REPORTERS the ratepayers' interest, if today we're at a high market 1 NSUARB-BRD-E-R.10 Page 727 and we fix it in today's prices, it's going to be a 2 significant overpayment to the biomass CHP propone...

AI summary The discussion focuses on the importance of periodic fuel cost adjustments in biomass CHP projects to ensure fair pricing and prevent overpayment. The speaker emphasizes that these adjustments benefit both proponents and ratepayers, and that the mechanism is not retroactive, unlike some other programs.

1 Page 730 NSUARB-BRD-E-R.10 If the reopener includes material 2 discretion on the part of some party such as the Board, 3 that will not be an effective transfer of risk. It will 4 not be effective, therefore, in reducing the cost of 5 cap...

AI summary The text discusses the ineffectiveness of a reopener mechanism in transferring risk effectively, as it allows discretion by the decision maker, potentially leading to higher costs for investors. It also references incentives to control fuel costs and mentions a 13% cost of equity calculation that includes risk transfer.

- think about that in the abstract. - I don't know how different the average - would be from any particular project, but I can imagine a - situation where in the case of a particular project you - would say, "Well, because of my location,...

AI summary The discussion highlights concerns about the effectiveness of a fuel-cost-adjustment mechanism in transferring risk, noting that local variations in fuel costs may make the mechanism ineffective. The speaker acknowledges that a 13 percent figure is based on a complete transfer of fuel risk, subject to a small incentive.

- DICTUM DIGITAL INC. CERTIFIED COURT REPORTERS MR. OUTHOUSE : Sure. So basically, NSUARB-BRD-E-R.10 Page 733 1 what you're looking at is the risk the project would 2 have a feed-in tariff at a set rate, would sell all the 3 power it could...

AI summary The text discusses a feed-in tariff (FIT) mechanism for a project, where the rate is set and the project sells all the power it can produce at that rate, with a 13% return. It also touches on fuel-related issues and boiler operations at 15 psi.

- DICTUM DIGITAL INC. CERTIFIED COURT REPORTERS the wood fibre. NewPage, as an example, is going to 1 NSUARB-BRD-E-R.10 Page 735 construct a 60-megawatt power plant, and they're going to 11 MR. DEVEAU: Okay. Thank you. 12 QUESTIONS FROM TH...

AI summary The discussion revolves around the challenges of implementing a fuel adjustment mechanism for smaller power plants, comparing it to the existing mechanism for Nova Scotia Power, which covers a much larger capacity.

- DICTUM DIGITAL INC. CERTIFIED COURT REPORTERS lay of the land was that Antigonish District Heating 1 Limited owned and operated that facility and St. F.X. 7 a COMFIT rate that would properly finance the project, 8 they would proceed with...

AI summary The discussion revolves around the Antigonish District Heating project, with considerations of whether the university would proceed with the project if it were to be owned and operated by them, and the motivations behind such a decision. The project is seen as a priority to address an aging facility on campus.

using fish oil from Ocean Nutrition which has been a good - experience for them. That experience has been cut short - because the cost of fuels, bio-fuels has gone through the - roof. What they used to get for 25 cents, they now would - be...

AI summary The discussion highlights the increased cost of bio-fuels, leading to a return to Bunker C fuel due to economic reasons. The steam load replaced by co-generation is estimated to cost around the current rate. The conversation also touches on the COMFIT policy and its development process involving government meetings.

- DICTUM DIGITAL INC. CERTIFIED COURT REPORTERS that got that changed into a feed-in tariff which removed 1 NSUARB-BRD-E-R.10 Page 779 the CEDIF restrictions. I just wondered if you or the 21 on the evidence and the needs in this circumsta...

AI summary The discussion revolves around a CHP project and its comparison to a steam-only project, with a focus on incremental costs and FIT tariff benefits. The fuel cost is discussed, and the project is noted as conceptually designed as a private sector development before the existence of COMFIT.

- posture would be that let's see what the COMFIT comes in - at and then we can quantify what's missing. And hopefully - nothing's missing. - But the priority is such that they - would have to find a way to fill the hole. And that's not -...

AI summary The discussion centers on the financial aspects of a project, referencing a fuel cost of $16 per million BTU and the need to await a Board decision before quantifying potential gaps. There is mention of capital and operating costs, but no clear resolution or detailed analysis is provided.

- DICTUM DIGITAL INC. CERTIFIED COURT REPORTERS million BTU, if I understand it Page 792 NSUARB-BRD-E-R.10 1 MR. COADY: Right. 2 MR. DOEHLER: is only to replace 3 the cost of fuel the plant now runs. It does not include 4 the operating cos...

AI summary The discussion revolves around the cost structure for a fuel plant, specifically the cost per million BTU, and the financial relationship between the university and the developer. There is a mention of return on equity and potential rate reductions if the return on equity is removed from calculations.

April 7, 2011 U-14 To provide the success rate of the RFP Projects (NSPI); also to indicate which Mr. Chernick understands failed and to identify which projects were completed by NSPI 975 U-15 To confirm from data on Capacity Factor from N...

AI summary The document outlines various matters under consideration by the NSUARB, including the success rate of RFP Projects, the availability of capacity factor data for Nova Scotia, and the Spanish Biomass fuel price adjustment clause. It also includes procedural details and participant interactions during a hearing.

- glad somebody read my testimony. 1 Page 1016 NSUARB-BRD-E-R.10 MR. DOEHLER: At least more than just 2 me. Okay. So those should be reversed. 3 MR. CHERNICK: Yes. Thank you very 4 much. 5 MR. DOEHLER: On page 13 no, sorry. 6 That's alread...

AI summary The text contains a conversation between participants in a regulatory proceeding, discussing the Synapse proposal's fuel escalation rate and the risk reduction associated with a known feed-in tariff. The discussion highlights concerns about double-counting fuel escalation and the impact of known versus uncertain pricing mechanisms.

- prepared to allow states to set cost-based rates. And - they've recently made a ruling on that. - But as I mentioned, it's a fairly new - development and by and large, states have not been doing - that. - MS. RUBIN : Would you agree that...

AI summary The discussion focuses on the importance of setting rates based on costs to encourage successful project development, particularly in the context of feed-in tariffs and biomass CHP projects. Accurate input costs, especially capital costs, are highlighted as essential for deriving cost-based rates.

- DICTUM DIGITAL INC. CERTIFIED COURT REPORTERS MR. COUTURE : Yes. 1 NSUARB-BRD-E-R.10 Page 1119 (SHORT PAUSE) 17 months for resources dependent on 18 a fuel." 19 MR. COUTURE: Yes. 20 MS. RUBIN: What do you mean by 21 "flexible" formula? I...

AI summary The discussion revolves around the concept of a 'flexible' or 'responsive' formula used in adjusting fuel costs, specifically in the context of biomass energy production. The formula is described as being responsive to changes in fuel prices and is adjusted quarterly to reflect market conditions, including natural gas and fossil energy prices.

- DICTUM DIGITAL INC. CERTIFIED COURT REPORTERS Allen study, given the assumption I think you raise a 1 NSUARB-BRD-E-R.10 Page 1181 good point, that based on the assumption that they were 8 happens, and provided it's capped as the Regulati...

AI summary The discussion revolves around biomass feed-in tariffs and their fuel escalator mechanisms. The speaker notes that biomass feed-in tariffs typically do not include long-term contracts and instead use shorter terms with periodic tariff revisions. The Vermont tariff is referenced as a potential example.

- ask you the same question. - MR. COUTURE: So perhaps just so that - it's fresh in my memory, if you could describe it to me - again. They've indexed partially to diesel and partially - to? - MR. OUTHOUSE: CPI. - MR. COUTURE: To CPI. - MR...

AI summary The discussion revolves around the indexing of fuel costs to CPI and diesel prices, with a focus on volatility and hedging strategies. The participants confirm that 75% of the fuel component is indexed to CPI, while 25% is indexed to diesel prices, providing a hedge against unpredictable diesel price fluctuations.

- DICTUM DIGITAL INC. CERTIFIED COURT REPORTERS MR. OUTHOUSE: Fair enough. Those are 1 NSUARB-BRD-E-R.10 Page 1191 all my questions. 2 Thank you, Mr. Chair. 3 MR. COUTURE: Thank you. 4 THE CHAIR: Just before we leave 5 it's not my turn, bu...

AI summary The discussion focuses on designing a fuel adjustment mechanism for biomass, emphasizing the use of waste products like biogas from landfills and dairy farms, rather than relying on wood fibre for electricity generation. Germany's approach to utilizing agricultural waste is highlighted as a guiding principle.

- add a boiler and start generating electricity is actually - not a very big leap, so your capital cost assumptions are - going to have to change. - In terms of the escalator, I actually - I think the formula, as designed, is a fairly - re...

AI summary The speaker discusses the need to adjust capital cost assumptions when transitioning to electricity generation and the importance of revising the escalator formula in light of changing factors such as CPI and diesel prices. They also suggest that adjustments should be made based on prevailing market prices, similar to coal contracts, and that this applies to renewable energy resources dependent on fuel.

- DICTUM DIGITAL INC. CERTIFIED COURT REPORTERS THE CHAIR: I guess given the cap and 1 NSUARB-BRD-E-R.10 Page 1207 the fact that this is going to be reviewed at some point 2 in the future, we could give this a try and see how it 3 works. 4...

AI summary The discussion revolves around the frequency of adjustment mechanisms, with reference to Spain's quarterly adjustments and considerations related to inflation rates. The conversation includes a mention of Nova Scotia's current structure and the potential impact of inflation on adjustment frequency.

- a bit in Spain. We're talking more than a percent on a - quarter by quarter basis. - So that can introduce significant - changes to the tariff that biomass projects receive. - In Nova Scotia I don't anticipate nor - do I think there are...

AI summary The discussion focuses on the volatility of inflation rates and their impact on biomass projects in Nova Scotia, with a suggestion that a 75/25 breakdown in fuel adjustment clauses is reasonable and has precedent elsewhere. The speaker also mentions the need for periodic review based on evidence.

- DICTUM DIGITAL INC. CERTIFIED COURT REPORTERS MR. COUTURE: No, I have seen other 1 I followed it fairly closely when these negotiations were 2 happening in the U.S. There was a big discussion around 3 biomass in Florida because they don'...

AI summary The discussion revolves around biomass energy initiatives in the U.S., particularly in Florida, and the inclusion of inflation and diesel components in contracts. It also mentions periodic reviews of adjustments, with a suggested interval of 18 months to allow for market stabilization and data collection.