N-52024-2025 Bates White FAM Audit Report - Redacted
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tracts and management performance that affect the audit period from January 1 to December 31 of the years within the audit period."44 The POA explains the objectives and scope of the audit as follows: The overall objective of the FAM audit...
AI summary The FAM audit will examine NS Power's fuel and energy procurement, management, and production functions to ensure compliance with good utility practices and the NS Power Fuel Manual. Key areas include fuel costs, operational availability, contract prudency, and hedging practices.
IV – Solid Fuel Procurement Conclusion IV-20: NSPI uses current index futures prices to evaluate index-priced solid fuel supply offers and does not add a risk premium associated with those bids when evaluating them against fixedpriced offe...
AI summary NSPI evaluates index-priced solid fuel offers without adding a risk premium and uses derivative contracts to hedge index price risk. The recommendations suggest accounting for index price risk, ensuring delivery periods in contracts, inviting all suitable vendors to RFPs, and improving Purchase Order details to align with Standard Terms and Conditions.
VI – Biomass Procurement and Supply Planning Conclusion VI-8: Given the low turnout to the June 2024 biomass supply RFP, NSPI could improve its RFP process by removing the stated preference for biomass supply contracts with terms that are...
AI summary The document discusses issues with NSPI's biomass procurement and supply planning, including low participation in RFPs due to contract term preferences, missing execution dates on contracts, and concerns with the energy balance process. It recommends revising RFP terms, clarifying moisture targets, and addressing inventory adjustments post-cyber event.
IV.B.5. NSPI's Solid Fuel Procurement Process Assessment NSPI's solid fuel procurement processes are clearly laid out in NSPI's Fuel Manual158 are designed to use competition to benefit FAM customers. The process allows NSPI to leverage it...
AI summary NSPI's solid fuel procurement processes are designed to use competition to benefit customers, with clear guidelines on supplier diversification and risk exposure. The RFP process encourages supplier participation and ensures fair evaluation based on price, transportation costs, and environmental factors. Procurement approvals are well documented and justified through management review.
IV.B.7. New Supply Agreements during the Audit Period, by Quarter During the Audit Period, NSPI entered into new contracts for solid fuel supply. We reviewed each of these contracts and the process by which those contracts were executed—th...
AI summary During the Audit Period, NSPI entered into new solid fuel supply contracts. The review included how suppliers were selected and the rationale for seeking additional supply. A summary of all contracts signed over the two-year period, by quarter, is provided along with tables for each quarter.
elative to is . We confirmed seeking up to 150,000 tonnes in 2025 and up to 350,000 tonnes in 2026. These volumes match forecasted open positions of 137,500 tonnes in 2025 and 287,000 tonnes in 2026. Seven suppliers made offers, totaling n...
AI summary NSPI is procuring coal for 2025 and 2026, selecting suppliers based on bids. In 2025, the lowest bid was invalid, so the next lowest was selected, covering 84% of the open position. In 2026, the lowest bid only covered 19%, so an additional cargo was selected, totaling 39% of the open position.
Fourth Quarter 2025 NSPI entered into two new contracts for solid fuel supply in the fourth quarter of 2025. This is shown in Figure IV-23. Petcoke RFP: On October 9, 2025, NSPI issued an RFP for petcoke, seeking up to 250,000 tonnes for d...
AI summary In the fourth quarter of 2025, NSPI issued an RFP for petcoke, seeking up to 250,000 tonnes for delivery between December 2025 and 2026. NSPI did not purchase any petcoke for 2025 delivery due to higher prices offered in 2025 compared to 2026. Twelve suppliers submitted offers, with the most economic offers selected for 2026 delivery.
y notifying that same day due to its "unsatisfactory safety performance."186 As noted above, just under 9,000 tonnes of coal had been transported of the up to 80,000 tonnes called for in the contract. Following contract termination, and fo...
AI summary Following the termination of a coal contract due to safety concerns, a new agreement was executed with modified terms, including reduced daily delivery limits and the inclusion of a safety mitigation plan. The vendor transported additional coal under the new agreement at a specified cost per tonne.
d of approximately $ NSPI did not provide the contract for this work but provided an invoice from showing the total cost of $ NSPI also provided the Purchase Order for the work, which matched bid of $ NSPI's reliance on Purchase Orders (as...
AI summary The text discusses NSPI's use of Purchase Orders (POs) instead of contracts for FAM-related transactions, highlighting that this practice is not typical for NSPI's suppliers. POs include standard terms and conditions, but the scope of work and timing details are often limited, raising concerns about the need for improvement in these practices.
AN0059)." 207 " - PO 2148554 (TRAN0059)," PDF page 5. 208 " - PO 2148554 (TRAN0064)," PDF page 1; see also " - PO 2140911 (TRAN0051)," PDF page 1. 209 " - PO 2140911 (TRAN0051)," PDF page 1. Orders. We include a recommendation that NSPI in...
AI summary NSPI conducted an RFP for limestone supply services and evaluated bids using a 'best and final offer' process. After evaluating offers across multiple scenarios, NSPI selected one offer due to its superior pricing in most scenarios and the incumbent's strong track record of performance.
d reduced volatility during the 2024-2025 period. The , which is the index against which many of NSPI's coal contracts settle, ranged between just under $ and just under (USD) during the Audit Period. Conclusion IV-6: Solid fuel prices use...
AI summary The audit period saw reduced volatility in solid fuel prices, though there were two outlier periods involving increased costs at Trenton 5 and 6. NSPI adjusted marginal costs to HFO during these periods due to inventory challenges. NSPI's procurement processes, RFP execution, and supplier negotiations were generally sound and effective.
IV.D. Recommendations Recommendation IV-1: NSPI should consider a method to account for index price risk when evaluating index priced offers against fixed price alternatives in its solid fuel procurement process, without sacrificing the be...
AI summary The recommendations focus on improving NSPI's procurement practices by addressing index price risk, ensuring clarity in fuel supply contracts, inviting all suitable vendors to RFPs, and ensuring Purchase Orders include necessary standard terms and conditions.
VI.A. Background In this chapter, we review and assess NSPI's procurement and supply management of biomass fuel. We begin by explaining NSPI's biomass fuel-fired generator, the Port Hawkesbury Biomass Unit ("PHB"). Next, we look at NSPI's...
AI summary This section provides an overview of NSPI's biomass fuel procurement and supply management during the Audit Period. It covers topics such as the PHB generator, fuel consumption, supply contracts, procurement process, and inventory adjustments, as well as actions taken in response to prior audit recommendations.
VI.B.5. NSPI's Biomass Fuel Procurement Process Assessment NSPI's biomass fuel procurement processes are contained in NSPI's Fuel Manual. The Fuel Manual calls for use of multiple procurement strategies, including 262 and since " '"263 The...
AI summary NSPI's biomass fuel procurement processes are outlined in the Fuel Manual, which details competitive evaluation criteria such as commodity cost, transportation, and fuel quality. The manual also allows for the procurement of alternative biomass sources.
Another important process is NSPI's recordation of procurement approval by the FST, which is typically well documented and contained in the Fuels Data Cart. These "Record of Procurement 262 Fuel Manual Revision 14, Link 8, page 2. 263 Fuel...
AI summary NSPI's procurement processes, particularly for biomass fuel, are documented in the Fuel Manual and involve approval by the FST. These processes ensure purchases are justified and vetted by management, with evaluations conducted by ERM. The procedures were enhanced following an audit recommendation.
VI.B.7. New Biomass Supply Agreements during the Audit Period During the Audit Period, NSPI entered into several new contracts for solid fuel supply. We reviewed each of these contracts and the process by which those contracts were execute...
AI summary During the Audit Period, NSPI signed new solid fuel supply contracts. The audit highlights increased forecasted output from PHB in 2025 and 2026, which influenced higher procurement targets. The review includes how suppliers were selected and the rationale for seeking additional supply.
VI.B.1.e. Fourth Quarter 2024 The fourth quarter of 2024 was particularly active for NSPI regarding biomass supply procurement. NSPI extended supply agreements with suppliers ( ) and entered into one new contract ( ). NSPI also materially...
AI summary In the fourth quarter of 2024, NSPI engaged in significant biomass supply procurement, including extending agreements, entering new contracts, and amending existing ones. The RFP process faced challenges, including unreasonable minimum contract terms and a lack of specificity about supply needs. NSPI also sought FST approval for a new agreement involving biomass fuel delivery in 2025.
Figure VI-11: NSPI new biomass supply contracts (Q4 2025) Supplier Product Quantity (GMT) Term Sawmill Bark Biomass Roundwood/ Chips and Grindings Sawmill Chips Sawmill Bark Sawmill Chips Sawmill Bark NSPI issued an RFP for biomass supply...
AI summary NSPI issued an RFP for biomass supply in July 2025 to secure fuel for 2026. Suppliers submitted offers for primary biomass fuel and bark, with bark offers bundled with primary fuel. NSPI evaluated offers using a bundled pricing methodology. In December 2025, NSPI recommended contracting for GMT of primary biomass fuel and GMT of bark.
VI.B.14. Bates White's 2022-2023 Audit Recommendations In our report for the prior audit period, we offered five recommendations related to biomass fuel. This section assesses NSPI's actions related to those recommendations. 309 2022-2023...
AI summary This section of the audit report discusses NSPI's implementation of five recommendations from the 2022-2023 Bates White audit, focusing on biomass fuel procurement, inventory processes, and agreement amendments. NSPI has taken several actions to address the recommendations, including revising RFP processes, updating the Fuel Manual, and executing agreement amendments.
VI.D. Recommendations Recommendation VI-1: NSPI should consider revising future biomass supply RFPs to reduce or remove preference for supply contracts of 2-years or greater, given the inability or unwillingness of suppliers to offer such...
AI summary The recommendations focus on revising biomass supply RFPs, clarifying contract terms, and improving the energy balance process to better reflect supply realities and economic dynamics, aiming to enhance participation and fairness in biomass procurement and energy management.
The MN365 FT Contract With the advent of the MMBtu per day firm gas supply from Alberta, NSPI sought to match it with an MN365 FT contract on M&NE-CA because there was little doubt that this gas would be used by NSPI every day. This contra...
AI summary NSPI entered into an MN365 FT contract on M&NE-CA to match a daily MMBtu gas supply from Alberta, with flexibility to sell unused gas in NB/NS markets. The contract was renewed for 2024-2025 and extended to 2026, with a decision on 2027 deferred. Analysis showed declining utilization of FT capacity, leading to cumulative losses, prompting NSPI to conclude the capacity would be uneconomic.
The TCPL and PNGTS Open Seasons In July and August of 2025, TCPL and PNGTS issued coordinating Open Seasons for new FT capacity on their respective systems.320 The TCPL open season invited prospective shippers to bid on up to MMBtu/day of...
AI summary In 2025, TCPL and PNGTS launched coordinated open seasons for new FT capacity. NSPI modeled the economic implications of this opportunity, considering factors like generation capacity, gas prices, and pipeline costs. The analysis concluded that the increased costs of additional pipeline capacity make bidding unwise, with future open seasons to be evaluated using updated assumptions.
VII.B.3. Bates White's 2022-2023 Recommendations In our report for the prior Audit Period, we included three recommendations regarding natural gas supply planning. The first recommendation read: Recommendation VII-1: On an annual basis, NS...
AI summary Bates White's 2022-2023 recommendations include a call for NSPI to annually quantify the optimal mix of short-term and long-term FT pipeline contracts and delivered gas supplies for FAM customers, including risk mitigation strategies. NSPI accepted the recommendation but did not clarify the term of the analysis, leading to the recommendation being considered unaddressed.
VIII.A. Background In this chapter, we assess NSPI's natural gas procurement processes and results during the Audit Period. The natural gas market in Nova Scotia remains supply constrained, which limited the number of natural gas suppliers...
AI summary This section examines NSPI's natural gas procurement processes during the Audit Period, noting supply constraints in Nova Scotia's market, NSPI's role as a price taker, and the increase in natural gas prices from 2024 to 2025. The focus includes procurement decisions, contract management, and transactions with counterparties and Emera Energy.
h, for a total forecasted cost of $ over that 33-month term. The original PPA, which had a 30-year term, was set to expire on August 31, 2024. The extension continues the terms of the original PPA.609 - • PPA Extension: On September 17, 20...
AI summary NSPI extended its PPA with a biomass CHP plant for 10 years at a fixed price, comparing it to alternatives like COMFIT and replacement capacity. The extension was justified through alternatives analysis, though it was noted that competitive procurement should be handled by the IESO to benefit FAM customers.