Topic:"Fuel Cost Adjustment" in M12780

1 4.2 DSM REMAINS AT A LOWER COST THAN THE FUEL OPTION 2 DSM, and particularly its energy efficiency programs, is demonstrably lower in price than the fuel option 3 it displaces, making it a logical and affordable first choice investment f...

AI summary Demand-Side Management (DSM), especially energy efficiency programs, is shown to be more cost-effective than fuel options, with DSM costing less than fuel by up to 4 cents per kWh. This makes DSM a preferable investment for ratepayers, as it reduces fuel costs and benefits all ratepayers through the fuel adjustment mechanism (FAM).

3.1 Revenue Requirement The annual revenue requirements under the "With DSM" scenario are kept consistent with the test year information from the preceding rate cases. The non-FAM costs in the years following the 2014 test year from the 20...

AI summary The document outlines revenue requirements under 'With DSM' and 'No DSM' scenarios, adjusting costs for inflation and DSM impacts. FAM and non-FAM costs are modified based on test year data and avoided fuel costs. Historic cost true-ups are excluded due to minimal impact, lack of rigor, and complexity. The analysis uses data from 2011-2035 and references prior rate proceedings.

3.2.1 Functionalization of System Costs As indicated in the Revenue Requirement section above, NS Power has used the test year revenue requirements, already functionalized by the four areas, from the historic rate cases. In the "With DSM"...

AI summary NS Power has functionalized system costs based on historic rate cases, adjusting revenue requirements for changes in load and inflation. The impact of DSM on load savings and avoided costs is considered, with examples provided on the true-up of depreciation costs from the Maritime Link project.

FAM-related Costs The FAM-related costs are allocated to rate classes using the following two-step process: • Annual class energy usage is multiplied by the benchmark unit cost $/MWh DATE FILED: March 31, 2026 Page 7 of 16 - o In the "With...

AI summary The Fuel Adjustment Mechanism (FAM) allocates costs via a two-step process using benchmark unit costs, with distinct methods for 'With DSM' and 'No DSM' cases. The current model does not differentiate between energy and demand-related costs, a limitation stemming from historical low demand costs. Recent increases (15% of FAM costs due to Maritime Link) may warrant future RBIA adjustments.

3.2.4 Generic COSS Results The actual results from the above cost allocation process under the "With DSM" and "No DSM" scenarios are presented in the "COSS Outputs" tab within NS Power's rate model, where the long-term trends in annual rel...

AI summary The COSS Results compare 'With DSM' and 'No DSM' scenarios, showing higher unit costs in historic periods due to DSM program costs and lower differentials in out-years as DSM measures expire. Fuel-cost-heavy classes (e.g., Large Industrial) benefit more from DSM, while fixed-cost-heavy classes (e.g., Domestic) see less impact. Trends are analyzed via NS Power's rate model.

3.3 Unit Revenue Determination For the directional purposes of the RBIA model, it is not considered necessary to develop annual rates with all charges under the "With DSM" and "No DSM" cases. Rather, it is sufficient for NS Power to provid...

AI summary NS Power determines unit revenues for rate classes by providing blended revenues in cents per kWh, excluding customer charges for residential and small general classes. Factors like fuel cost adjustments, deferrals, rate smoothing, and revenue-to-cost ratios are excluded, but this has no material effect on relative changes between 'With DSM' and 'No DSM' cases.

"COSS Data Inputs" tab This tab includes all annual test year class usage and embedded costs from the COSS and BCF COSS filed in GRA and BCF proceedings as well as a forecast of annual usage by class per the most recent ten-year Load Forec...

AI summary The 'COSS Data Inputs' tab compiles annual test year class usage, embedded costs from COSS and BCF COSS filings in GRA and BCF proceedings, a ten-year load forecast, and DSM expenditures by rate class. This data informs class unit cost and revenue calculations.

"Total-Savings" tab The "Total-Savings" tab provides a sum of annual class savings in energy and demand usage at the generator's gate and customer's meter. In addition, class demand savings at the high side of the bulk power substation are...

AI summary The 'Total-Savings' tab calculates annual energy and demand savings at the generator's gate and customer's meter, including avoided fuel, generation, transmission, and distribution costs. FAM-related avoided costs use unit fuel costs multiplied by energy savings, while non-FAM costs use avoided infrastructure costs per MW demand savings.

"With DSM" tab The "With DSM" tab provides annual cost allocation to rate classes based on long-term usage as included in NS Power's most recent Annual ten-year Load Forecast Report. This usage already reflects inclusion of DSM Program eff...

AI summary The 'With DSM' tab allocates annual FAM costs to rate classes using NS Power's load forecast, which includes DSM program effects. FAM costs for 2023-2035 are calculated via a two-step process: applying 2022 blended unit FAM costs to forecasted MWh usage, then scaling to match total annual FAM costs using a formula incorporating previous year costs and energy requirement deltas.

Comments The applied process is a simplification of a more elaborate cost allocation process from the COSS where some FAM costs, such as fuel costs, are allocated to rate classes based on their shares in monthly energy requirements; some o...

AI summary The text describes a simplified cost allocation process for FAM (Fuel Adjustment Mechanism) costs, distributing them based on factors like energy requirements, annual energy shares, and system load factors. It notes that non-FAM costs are fixed between rate cases but can be adjusted for inflation. Relative class unit costs from 2022 are carried forward to 2023–2035, with adjustments based on annual inflation and system load factor changes.

"No DSM" tab The "No DSM" tab provides annual cost allocation to rate classes absent DSM. The FAM-related costs in years 2011–2035 are calculated using the following process: - Annual FAM costs for each class are calculated by multiplying...

AI summary The 'No DSM' tab calculates annual Fuel Adjustment Mechanism (FAM) costs without Demand Side Management (DSM) savings. It uses blended unit FAM costs, scales class-specific costs to match total FAM estimates, and applies a formula incorporating energy requirement deltas and avoided FAM costs from the 'With DSM' case.

1 Table 6: 2029 Alternate Scenario Savings and Investment by Program Component 2029 Investment ($ million) Lifetime Benefits ($ million) First Year Energy Savings (GWh) Lifetime Energy Savings (GWh) Peak Demand Savings (MW) Available Deman...

AI summary The text presents a table titled '2029 Alternate Scenario Savings and Investment by Program Component' with columns related to investment, benefits, energy savings, and other metrics. However, no data is provided under the 'Residential EE Programs' row, leaving the content incomplete.

Round 2 Model Input Assumptions and Results Board Directives E1 Update primary screening cost-effectiveness test when inconsistent with the PAC test the Board has directed E1 to apply): a. If E1 uses a social discount rate, it must also pr...

AI summary The document outlines the Board's directives for the Round 2 model input assumptions and results, including the use of social discount rates and WACC, and the inclusion of emissions impacts in the analysis. E1 has calculated emissions impacts but is awaiting long-run marginal emissions rates from NS Power, which are not currently available.

Request IR-20: Page 40 of the Evidence states, "Based on the cost of fuel as reported in NS Power's 2025 Management's Discussion & Analysis (MD&A) of $0.09/kWh, the cost of DSM at $0.05/kWh is less than the average cost of fuel by $0.04/kW...

AI summary The text discusses the cost comparison between demand-side management (DSM) and fuel costs, referencing NS Power's 2025 MD&A and the availability of a 2026 version. It also notes that EfficiencyOne does not have projected fuel cost values for 2026–2031.

America's energy commodity market. NSPI holds a 50 per cent indirect voting interest in Wasoqonatl Transmission Incorporated ("WTI"), for further details refer to the "Outlook – Developments" section. NSPI is a public utility as defined in...

AI summary NSPI operates as a regulated public utility under the Public Utilities Act in Nova Scotia, with rates approved by the NSEB. NSPI uses a Fuel Adjustment Mechanism to recover fluctuating fuel costs, and its return on equity is set within a specific range. The energy industry is seasonal, and quarterly results may not reflect annual trends.

Consolidated Statements of Income For the Three months ended Year ended millions of dollars December 31 December 31 2025 2024 2025 2024 Operating revenues $ 504 $ 479 $ 1,944 $ 1,855 Fuel for generation and purchased power 269 (216) 1,065...

AI summary The consolidated statements of income show operating revenues increased in 2025 compared to 2024, driven by higher fuel costs and other deferrals. Operating expenses also increased, particularly due to higher OM&G costs related to storm recovery and cybersecurity incidents. Net income decreased significantly in 2025 compared to 2024.

NSPI's electric revenues are affected by rates approved by the NSEB and electric sales volumes. NSPI's electric revenues include revenues related to the recovery of fuel costs and non-fuel costs. The FAM allows NSPI to recover all prudentl...

AI summary NSPI's electric revenues depend on approved rates by the NSEB and sales volumes, influenced by factors like weather, customer numbers, and DSM activities. Fuel costs are recovered through the FAM, which does not significantly affect net income. Customer types include residential, commercial, industrial, and other categories.

NSPI's fuel costs are affected by commodity prices and generation mix, which is largely dependent on economic dispatch of the generating fleet. NSPI brings the lowest cost options on stream first after renewable energy from IPPs including...

AI summary NSPI's fuel costs are influenced by commodity prices and the generation mix, which depends on economic dispatch and includes renewable energy from IPPs and COMFIT participants. Thermal plant availability has slightly decreased but remains consistent with industry averages, supporting reliable energy supply during the transition to renewable generation.

Production volumes by fuel type and average fuel cost are summarized in the following table: Three months ended Year ended For the December 31 December 31 GWh (except as indicated) 2025 2024 2025 2024 Coal 1,329 976 4,370 3,347 Natural gas...

AI summary The text provides a summary of production volumes by fuel type and average fuel cost for a given period. It highlights a significant over-recovery of fuel costs due to a refund received by NSPI in Q4 2024, which is detailed in note 5 of NSPI's consolidated financial statements as of December 31, 2025.

Average fuel costs per MWh increased in Q4 2025 compared to Q4 2024 primarily due to a refund of previous NSPML assessment payments received in Q4 2024. For further details, refer to Note 5 in the NSPI Consolidated Financial Statements as...

AI summary Average fuel costs per MWh increased in Q4 2025 compared to Q4 2024 due to a refund of previous NSPML assessment payments and increased generation from solid fuel and oil. Year-to-date 2025 saw similar increases, partially offset by decreased natural gas generation and more favourable commodity prices.

Highlights of the changes in fuel for generation and purchased power are summarized in the following table: For the Three months ended Year ended millions of dollars December 31 December 31 Fuel for generation and purchased power – 2024 $...

AI summary The text outlines changes in fuel for generation and purchased power for 2024 and 2025, highlighting factors such as increased Maritime Link assessments, changes in generation mix, and variations in commodity prices. It also references the FAM and FAM Regulatory Deferral section.

Significant changes in the Consolidated Balance Sheets between December 31, 2025 and December 31, 2024 include: Increase millions of dollars (Decrease) Explanation Assets Receivables, net $ 140 Increased due to timing of billing and receip...

AI summary The Consolidated Balance Sheets show significant changes between 2024 and 2025, including increases in receivables, income taxes, and regulatory assets, as well as changes in debt and equity positions. The changes are attributed to factors such as timing of billing, investment returns, capital investments, and tax-related adjustments.

Transactions between the Company and its related parties reported in the Consolidated Statements of Income and Consolidated Balance Sheets are as follows: For the Year ended millions of dollars December 31 Nature of Service Presentation 20...

AI summary The document outlines transactions between the Company and related parties, including sales and purchases of services and energy, as well as a sale of development assets by NSPI to WTI for $15 million. These transactions are reported in the Consolidated Statements of Income and Balance Sheets.

Weather Risk A Material Adverse Effect may arise from weather seasonal variations impacting energy consumption, as well as severe weather events, changing air temperatures, wildfires and other severe weather conditions that are expected to...

AI summary The document discusses the risks posed by weather variations and severe weather events to Nova Scotia Power Inc. (NSPI), including impacts on energy consumption, infrastructure damage, revenue loss, and increased costs. These risks may lead to material adverse effects if not mitigated through insurance or regulatory processes.

Foreign Exchange Risk The Company is exposed to foreign currency exchange rate changes. NSPI may enter foreign exchange forward and swap contracts to limit exposure on certain foreign currency transactions such as fuel purchases and capita...

AI summary NSPI is exposed to foreign exchange risk, particularly from USD-denominated fuel purchases and capital investments. It uses forward contracts to hedge this risk, with 64% of 2026 USD requirements covered as of December 31, 2025. The company does not use derivatives for trading or speculation and is allowed to recover prudently incurred foreign exchange costs.

Commodity Price Risk The Company's fuel supply is subject to commodity price risk. The Company's fuel supply is exposed to broader global market conditions, which may include impacts on delivery reliability and price, despite contracted te...

AI summary The Company's fuel supply is exposed to commodity price risk due to global market conditions, including currency fluctuations, geopolitical risks, and supply disruptions. NSPI aims to hedge 50-100% of fuel costs for 2026 and 50-90% for 2027 to ensure fuel cost stability and manage affordability risks.

Coal: A substantial portion of NSPI's coal supply comes from international suppliers, which was contracted at or near the market prices prevailing at the time of contract. The Company has entered into fixed-price and index price contractua...

AI summary NSPI sources a significant portion of its coal from international suppliers under fixed-price and index-price contracts. As of December 31, 2025, approximately 81% of forecast coal requirements for 2026 and 8% for 2027 are hedged.

Natural Gas: NSPI periodically enters into physical and/or financial contracts based on forecast natural gas consumption to meet load and system security requirements. Volumes exposed to market prices are managed using financial instrument...

AI summary NSPI manages natural gas requirements through physical and financial contracts, with a high percentage of 2026 needs hedged but a lower percentage for 2027. Financial instruments are used in line with a hedging program to manage market price exposure.

Heavy Fuel Oil: NSPI periodically enters into physical and/or financial contracts based on forecast heavy fuel oil purchases to meet load and system security requirements. Volumes exposed to market prices are managed using financial instru...

AI summary NSPI manages heavy fuel oil purchases through physical and financial contracts to meet load and system security needs. As of December 31, 2025, forecasted heavy fuel oil requirements for 2026 are fully hedged using financial instruments under NSPI's hedging program.

RISK MANAGEMENT INCLUDING FINANCIAL INSTRUMENTS NSPI's risk management policies and procedures provide a framework through which management monitors various risk exposures. The risk management policies and practices are monitored by the Bo...

AI summary NSPI's risk management policies are overseen by the Board of Directors and include processes for identifying and mitigating material risks. The company uses financial instruments such as forwards and swaps to manage commodity and foreign exchange risks. Derivatives are accounted for under regulatory standards, with gains or losses potentially passed to customers via the Fuel Adjustment Mechanism.

The Company recognized the following net (losses) gains in income related to derivatives receiving regulatory deferral: For the Year ended December 31 millions of dollars 2025 2024 Fuel for generation and purchased power (1) $ (12) $ (36)...

AI summary The Company reported net losses related to derivatives in the 'Fuel for generation and purchased power' category for 2025 and 2024, with amounts of $12 million and $36 million, respectively. These losses are associated with settled and consumed derivative instruments, and will be recognized in the relevant category when the hedged item is consumed.

General Rate Application ("GRA"): On April 30, 2026, the NSEB approved the GRA with changes effective on May 1, 2026. This results in an average annual customer rate increase of 1.2 per cent, and a further average annual increase of 2.5 pe...

AI summary The NSEB approved the GRA on April 30, 2026, effective May 1, 2026, with a 1.2% annual rate increase and a further 2.5% increase in 2027. The approved rates will increase annual revenue by $31 million in 2026 and $97 million in 2027. Fuel cost adjustments will be managed via the FAM process, and NSPI's ROE range remains at 8.75% to 9.25%. The depreciation study and storm rider were also approved, and NSPI plans to recover deferred costs through securitization, pending provincial support.

Significant changes in the Condensed Consolidated Balance Sheets between March 31, 2026 and December 31, 2025 include: Increase millions of dollars (Decrease) Explanation Assets Receivables, net $ 84 Increased due to seasonality of sales v...

AI summary The condensed consolidated balance sheets show increases in assets such as receivables, inventory, and regulatory assets, primarily due to factors like seasonality, commodity prices, and the FAM. Liabilities and equity also show changes, including increased debt and retained earnings, while some accounts like accounts payable decreased.

SBA IR-8 Question: Refer to Exhibit E-17, the Peach Report, Key Findings, page 55, which states:

AI summary The Peach Report's Key Findings highlight that the Board's 2020 fuel-cost-adjustment mechanism created perverse incentives due to an 18-month lag between base rates and actual costs, prompting evaluation in the rate proceeding.

more effective candidate measures including integrated flexibility and load control features while continuing to refine its data gathering process for the purposes of cost-effectiveness calculations. Crucially, the Board must also require...

AI summary The text emphasizes the importance of incorporating managed EV charging programs into strategic electrification initiatives to improve cost-effectiveness and mitigate distribution system constraints. It references Newfoundland Power's plan, highlighting that managed EV charging passes cost-effectiveness tests, unlike unmanaged charging.

r accounting for avoided fuel oil, propane, gasoline, diesel, or other fossil-fuel expenditures. That would be an overall beneficial outcome for the customer, even if their electricity bill increases. Emission benefits are not explicitly b...

AI summary The text discusses the challenges of developing a cost-effective strategic electrification portfolio under the modified Program Administrator Cost (PAC) test, noting that emission benefits from reduced fossil fuel use are not being accounted for. The statutory definition of strategic electrification requires reductions in overall greenhouse gas emissions, not just those from the electric system.

A. E1 indicates that it chose this plan to improve affordability. In its Evidence, E1 states: "Consistent with the PUA and the NSEB's regulatory framework, 1 affordability is the primary consideration in the design of the 2027–2031 DSM 2 P...

AI summary E1's 2027–2031 DSM Plan prioritizes short-term affordability by maintaining a flat annual investment of $63.75 million, resulting in a total of $318.75 million over the plan period. This approach may increase electricity costs for ratepayers over time but aims to lower fuel costs and benefit ratepayers through the fuel adjustment mechanism (FAM).

Request IR-1: Synapse notes, at page 17 of its Report, that the primary focus of E1's DSM Plan is short-term affordability. However, on line 18 on page 17 and in footnote 13 on page 17, Synapse concludes that the level of spending on DSM i...

AI summary Synapse's report questions the effectiveness of E1's DSM Plan, suggesting that increased DSM spending may raise electricity costs for ratepayers and is not in their best interest. The request asks for an explanation of how DSM spending affects costs and benefits ratepayers through the Fuel Adjustment Mechanism.

Request IR-02: 1 Reference: Napoleon Evidence, page 27–29 (Low and Moderate Income [LMI] Oil-Heat 1 • Nova Scotia has one primary test, and New Brunswick has four primary tests. New 2 Brunswick's All Fuels tests include consideration of th...

AI summary The text discusses differences in fuel-cost-adjustment mechanisms between Nova Scotia and New Brunswick, highlighting NB Power's reporting on LMI oil-heat electrification and its status as a crown corporation. It also requests clarification on whether the NS Power 2022 Evergreen IRP available capacity includes Time-Varying Pricing (TVP) rates.

Request IR-46: - Regarding Appendix A, Attachment 1: worksheet PAC Assumptions: - a. Do the costs provided by NS Power for energy, capacity, transmission and distribution align with the recently approved Cost of Service Study approved by t...

AI summary Request IR-46 contains three questions regarding NS Power's alignment with a Board-approved cost study, inflation adjustments in Program Administration costs, and annual updates to the weighted average cost of capital. The questions seek clarification on cost assumptions, inflation adjustments, and capital update practices.

sts? Please describe a scenario in which changes in avoided costs would result in strategic electrification not increasing electricity costs. If not, please explain how this investment can result in the inclusion of strategic electrificati...

AI summary The text discusses the cost-effectiveness of Demand-Side Management (DSM) compared to fuel costs, highlighting that DSM has consistently been less expensive than fuel over the past years. It raises questions about the conditions under which strategic electrification could reduce electricity costs and how DSMAG members might identify measures that reduce both GHG emissions and electricity costs. It also asks about alternative funding sources for strategic electrification if ratepayer funds are not available.

10 Requests: - 11 a) Confirm whether the figures above are correct. If correct, confirm that they imply an 12 approximate 588% increase in unit cost between 2023 and 2031. If not, provide corrected 13 figures and calculations. - 14 b) For...

AI summary The document outlines five requests related to Nova Scotia's DSM Plan, including verifying cost figures, detailing program participation and savings, clarifying audit costs, analyzing funding changes, and evaluating alternative delivery models. Key themes involve cost methodology, program design, and federal/provincial funding impacts.

27 IR-5: HomeWarming and Low-Income Single-Family Support - 28 Reference: 2027-2031 DSM Plan; HomeWarming; Affordable Single-Family Homes. - 29 For each year from 2020 to 2031, please provide the following information for - 30 HomeWarming/...

AI summary The document requests data from 2020 to 2031 on HomeWarming and Affordable Single-Family Homes programs, including participant numbers, energy savings, funding sources, and cost-effectiveness analyses. EfficiencyOne is tasked with providing data where prior information is unavailable in comparable formats.

Definitions for Act and regulations - 2 (1) In the Act, "general rate increase" does not include increases arising from the fuel adjustment mechanism, demand side management cost recovery riders or the special annually adjusted rates. - (2...

AI summary The Act defines 'general rate increase' to exclude increases from the fuel adjustment mechanism, demand side management cost recovery riders, and special annually adjusted rates. It also defines 'pay plan' as the Senior Officials Pay Plan approved under the Civil Service Act and Public Service Act.

1 Request IR-1: 2 3 Synapse notes, at page 17 of its Report, that the primary focus of E1's DSM Plan is short-term 4 affordability. However, on line 18 on page 17 and in footnote 13 on page 17, Synapse concludes 5 that the level of spendin...

AI summary The text raises two questions regarding the impact of the Proposed DSM Plan on electricity costs and the Fuel Adjustment Mechanism. It highlights concerns that increased DSM spending may raise costs for ratepayers and asks for an explanation of how DSM affects the Fuel Adjustment Mechanism.

1 Request IR-3: 2 Reference: E-24, Pages 9, and Table 2. In the illustrative example above, full DSM funding could forfeit up to roughly $18,675 in federal support that could otherwise be brought into Nova Scotia. A cost-share model, suppo...

AI summary The text discusses the potential for leveraging federal incentives like the Clean Technology Investment Tax Credit (ITC) and accelerated Capital Cost Allowance (CCA) to reduce the DSM contribution for industrial customers in Nova Scotia. It raises questions about eligibility, budget implications, and legal considerations for implementing a cost-share model.