Topic:"Prudency Reviews" in M12663

NON-CONFIDENTIAL 1 Request IR - 15 2 Reference: N-1(i), Exhibit B-2, pdf p.13-15 states that 23 administration employees are assumed 3 for the year, compensation targets the 50th percentile, and the fringe load factor is 15% (up from 4 14....

AI summary The text discusses a request for detailed compensation information for 23 administration employees, including position-by-position listings and market survey data. The IESO Nova Scotia responds by referencing previous responses and expresses concerns about revealing exact compensation details, offering anonymized data instead.

Nova Scotia Independent Energy System Operator (IESO Nova Scotia) Responses to Nova Scotia Energy Board (NSEB) Information Requests 1 Request IR - 28 59 focus on new or unexpected costs that are expected to be recovered in rates, and mater...

AI summary The IESO Nova Scotia will include new or unexpected costs in its quarterly reporting starting May 15, 2026, through the Net Revenue Requirement Deferral and Variance Mechanism. Interim adjustments are not currently planned, but may be considered with stakeholder and NSEB feedback. Variances will be reviewed annually as part of revenue requirement and fees applications, as noted in Board Decision M12412.

NON-CONFIDENTIAL 76 requirement and fees applications. Therefore, IESO Nova Scotia must, in its applications, provide an explanation for cost category variances exceeding +/-10%." 4 77 At this time there 78 is no established methodology on...

AI summary The document discusses the requirement for IESO Nova Scotia to explain cost variances exceeding +/-10% in its applications. It also mentions the lack of established methodology for handling NSEB disallowances and references a Board order establishing a +/-10% threshold for variances requiring prudency review.

- 3 given that actual balances are determined from both the actual ongoing OM&A expenditures, one-time costs and the - 4 available Provincial funding. The Net OM&A Deferral and Variance Account was intended to capture both the need to - 5...

AI summary The document discusses the establishment of the Net OM&A Deferral and Variance Account and the need for stronger cost management controls, formal accounting policies, and clear thresholds to ensure transparency and regulatory oversight. The Board emphasized that guidelines and policies must be developed before recovering Net Ongoing OM&A amounts from the account and that variances exceeding +/-10% must be reviewed.

- 2 requirement application on January 20, 2026 (the "Application"). - 3 Like the previous annual application, IESO-NS has requested a variance account to address any - 4 over or under collection and/or spending as compared to its Board ap...

AI summary The IESO-NS has requested a permanent variance account to address spending discrepancies, including capital and procurement costs. The SBA raises concerns about proper spending oversight, debt from ratepayers, potential duplication of effort with NS Power, and risk allocation for IESO-NS, especially with upcoming changes by 2030.

7 b) Does s. 29 of the Act permit the Board to "disallow" actual costs incurred by 8 the IESO where there is a finding of imprudence? 10 Section 29 of the Act does not explicitly address whether the Board has the authority to disallow 11 c...

AI summary Section 29 of the Act does not explicitly prohibit the Board from disallowing actual costs incurred by the IESO if there is a finding of imprudence. The Commissioner of the Environment and Sustainable Resource Development argues that the Board has the authority to review the IESO's conduct and potentially order disallowances, especially where mechanisms for such reviews were previously approved.

own 31 imprudence. Since IESO NS does not have an ultimate "shareholder" (unlike NS Power), all of 32 IESO NS's costs would ultimately be borne by its customers, even those that were not prudent. 33 34 At present, the CA would also respect...

AI summary The Commissioner of the Environment and Sustainable Resource Development (CA) argues that the Independent Energy System Operator - Nova Scotia (IESO NS) lacks a strong track record in budget adherence, having either underspent or overspent in all cost categories during its first year of operation. The CA is concerned that the IESO's approach to cost management may lead to imprudent spending, as its costs are ultimately borne by customers.

4. a meaningful audit process under the administration of the Board. - [46] This list is not meant to be exhaustive[.](#page-3-0) 8 It was not until the 2009 GRA, that the Board ultimately adopted the FAM. By that time an extensive collabo...

AI summary The document discusses the Nova Scotia Energy Board's approach to deferral mechanisms, highlighting its conditional approval of the Fuel Adjustment Mechanism (FAM) and the Decarbonization Deferral Account (DDA). The Board requires detailed governance structures and stakeholder input before granting final approval for such mechanisms.

2. BOARD AUTHORITY UNDER THE MAEA FOR DISALLOWANCES AND THE DEFERRAL ACCOUNT The Department of Energy ( DOE ), through counsel Mr. Kayter, raised a significant legal issue during the hearing that goes to the heart of the Industrial Group's...

AI summary The Department of Energy questions the Board's authority under the MAEA to disallow imprudent costs, while the Industrial Group argues that the Board has the authority to examine cost prudence in establishing just and reasonable rates. The issue remains unresolved as positions from the DOE and IESO-NS are not clearly articulated.

a. Limitations of the DGT Review DGT was retained by Board Counsel to conduct an independent review of the Application. However, DGT's scope of work and mandate in conducting its review was limited. In response to the Industrial Groups IRs...

AI summary The DGT Review was limited in scope, focusing on reviewing the Application, interrogatory responses, and mathematical accuracy, but not on verifying management representations, conducting detailed quantitative testing, or assessing prudence. The Industrial Group argues that the absence of unreasonableness does not imply prudence or necessity of costs.

c. Procurement and Energy Resource Costs Should Not Be in the s.29 Application The Industrial Group submits that the operating costs incurred by IESO-NS in running its energy resource procurement processes, including RFP management costs,...

AI summary The Industrial Group argues that procurement and energy resource costs incurred by IESO-NS should be recoverable under s.30 of the MAEA, not the general revenue requirement under s.29. They highlight inconsistencies in categorizing these costs and warn of potential double-recovery or regulatory gaps if not properly addressed.

- 3. require IESO-NS to apply to the Board for approval when significant unforeseen costs arise during a fiscal year, rather than permitting recovery through an open-ended deferral mechanism; - 4. confirm the Board's authority to direct di...

AI summary The proceeding outlines several regulatory recommendations for IESO-NS, including requiring approval for unforeseen costs, applying vacancy rate adjustments, aligning corporate incentives with ratepayer interests, and ensuring prudence in procurement costs. These measures aim to improve transparency, cost recovery, and compliance.

- 2 In this proceeding, the Independent Energy System Operator of Nova Scotia ("IESO Nova Scotia") - 3 seeks approval from the Nova Scotia Energy Board ("NSEB", "Board") of: 4 - 5 its fiscal 2026/27 revenue requirement of $14,850,121; and...

AI summary IESO Nova Scotia seeks approval for its 2026/27 revenue requirement and a proposed Net Revenue Requirement Deferral and Variance Mechanism. The evidentiary record shows no challenges to the prudence or reasonableness of the proposed expenditures, and the Board's consultant found no material concerns with the forecasts or the DVM.

3 M12633 Transcript, June 25, 2026, page 530. 89 IESO Nova Scotia submits that, in the context of a prospective review of forecast costs, there is 90 no distinction to be drawn between a cost that is reasonable, and a cost that is prudent....

AI summary IESO Nova Scotia argues that in the context of a prospective review of forecast costs, there is no distinction between reasonable and prudent costs. It references the Supreme Court of Canada's decision in ATCO 2015, stating that prudent costs are those that are reasonable and sound, and that the prudent investment standard from Enbridge applies to retrospective reviews, not prospective ones.

26 DGT response to IG IR-5, M12663, May 12, 2026. 572 presentation as provided in the Application. DGT found in its report in this proceeding that "The 573 modified calculation of the Deferral Mechanism fosters simplicity for tracking purp...

AI summary DGT discusses the modified calculation of the Deferral Mechanism and its alignment with the NSEB's Decision under M12412, including the +/- 10% variance threshold for OM&A Deferral and Variance Account. IESO Nova Scotia clarifies that the new DVM aligns with the Board's guidance and that prudency review thresholds would naturally extend to the DVM.

35 M12633 Transcript, June 17, 2026, pages 254-255. - 734 This, however, does not give IESO Nova Scotia license to automatically pass through costs for - 735 recovery via the DVM. Mr. Johnston provided clarity on this as well in the follow...

AI summary The testimony discusses the IESO Nova Scotia's position on cost recovery through the DVM, emphasizing the need for prudence in planning and the necessity of seeking Board approval before passing through unforeseen costs to customers.

37 M12633 Transcript, June 25, 2026, pages 503 - 505. 773 774 IESO Nova Scotia will produce a revenue requirement application each year developed based on 775 the best available evidence, demonstrating the prudency of the proposed expendit...

AI summary IESO Nova Scotia will annually submit a revenue requirement application to demonstrate the prudency and reasonableness of proposed expenditures. The NSEB and stakeholders can review these applications at the start of the fiscal year. Expenditures beyond the +/- 10% variance threshold require additional review by the NSEB before recovery through revenue and fees.

38 M12633 Transcript, June 25, 2026, page 507-508. 799 824 is limited to over- and 26 under-expenditures greater than +/- 10%." Are you suggesting 825 that if costs were incurred imprudently that the Board couldn't address those unless it...

AI summary The discussion revolves around the Nova Scotia Energy Board's ability to review and disallow imprudent decisions within a +/-10% budget range, even if they fall within approved estimates. The witness emphasizes that the Board retains its authority to assess such decisions.

1102 1103 Further, the potential for outright denial or disallowance of costs has the potential to interfere with 1104 the exercise of IESO Nova Scotia's public interest mandate, rather than simply being absorbed by 1105 a shareholder. As...

AI summary The text discusses the implications of cost disallowance on IESO Nova Scotia's ability to fulfill its public interest mandate, highlighting the challenges posed by its not-for-profit status and the potential for a permanent deficit. It references the Ontario IESO's approach to approving expenditure and revenue requirements under the Electricity Act.

Closing Submission 1328 participants and ratepayers ultimately pay only IESO Nova Scotia's actual costs, while also 1329 recognizing the unique not-for-profit status of the organization and the absence of any shareholder 1330 to absorb var...

AI summary IESO Nova Scotia emphasizes that participants and ratepayers pay only actual costs, while acknowledging its not-for-profit status. It commits to developing accounting policies and supporting prudency reviews. It also argues that Section 29 of the MAEA does not grant the Board authority to unilaterally disallow costs or substitute revenue requirements.

esses as part of the Deferral Account, Mr. Johnston noted that "we very much see that as an end-of-year, one-time drop activity, not something that's happening day to day or week to week." 5 Given the lack of clarity regarding (i) the pote...

AI summary PHP expresses concerns about the proposed Deferral Account, citing a lack of clarity on cost inclusion, recovery methods, and ongoing cost control. They argue it is premature to approve the account 'in perpetuity' due to the IESO's not-for-profit status and the risk of ratepayers bearing imprudent costs.

rgy Act. In light of the not-for-profit status of the IESO, it is all the more critical for the Board to proactively mitigate the risk that the IESO costs could subsequently be found to be imprudent. Accordingly, prior to approving any Def...

AI summary PHP suggests that the Board should require the IESO to provide detailed documentation before approving a Deferral Account 'in perpetuity', ensuring clarity on eligible costs and cost control measures. This is due to the IESO's not-for-profit status and the need to mitigate the risk of imprudent costs.

d="page-1-10"> & lt;sup>6 Transcript, page 515, lines 5-8. & lt;sup>7 Transcript, pages 459-466. MCINNES COOPER Page 3 July 24, 2026 by the IESO if it becomes aware of the potential for material cost increases. This should include the adop...

AI summary The IESO is recommended to adopt an approval to overspend (ATO) process and guidelines for reviewing significant projects to ensure proper cost monitoring and stakeholder input, preventing imprudent costs from being passed to ratepayers. The submission was made by James MacDuff.

22 Imprudence - 23 There remains serious concern about the potential lack.of accountability/recourse in the event that - 24 IESO-NS is deemed to have been imprudent. Questions were asked by the Consumer Advocate 38 M12663 - Exhibit N-6, NS...

AI summary The text discusses concerns about the potential lack of accountability and recourse if IESO-NS is deemed imprudent in its decisions. It highlights the risks associated with the New Brunswick Power's RIGS facility and the lack of an established methodology for handling disallowances. The SBA emphasizes the need for a plan or policy to address imprudence and protect ratepayers.

Re: M12663 – IESO Nova Scotia – 2026/2027 Revenue Requirement Application These Reply Submissions are filed on behalf of the Industrial Group (" IG ") to address the legal issue of the Board's jurisdiction under s. 29 of the More Access to...

AI summary The Industrial Group (IG) supports the Consumer Advocate's position that the Board has jurisdiction under s. 29(4) of the More Access to Energy Act to set IESO-NS's revenue requirements at a level it deems just, reasonable, and necessary, including below what IESO-NS proposed. The IG disagrees with IESO-NS's interpretation of the provision, arguing it is inconsistent with statutory interpretation and regulatory functions.

flips the ordinary ratemaking principles to justify an applicant's own revenue requirement. That reversal would matter for any applicant, but it matters more in the context of a not-for-profit entity. As pointed out by IESO-NS, it operates...

AI summary The text discusses the implications of retroactive imprudence reviews in the context of a not-for-profit entity, emphasizing the need for the Board to maintain the burden of proof on the applicant rather than shifting it to ratepayers. It highlights the importance of the Board confirming its authority to disallow costs and the need for guidelines to address imprudence reviews in not-for-profit organizations.

R ENEWABLES I NTEGRATION G RID S ECURITY (R IGS ) P ROJECT The CA raised the RIGS project in its closing submissions as a concrete example of the imprudence risk inherent in IESO-NS's procurement process and the proposed deferral account s...

AI summary The Consumer Advocate (CA) raised concerns about the imprudence risk in the RIGS project, citing issues with IESO-NS's procurement process and deferral account structure. The Industrial Group (IG) supports these concerns and notes that the NB EUB's approval of the project has been challenged through judicial review.

IESO NOVA SCOTIA PANEL 111 Cr-ex, (Murphy) 1 raised and the possibility of having that project 2 essentially transferred to IESO sort of midstream from 3 Nova Scotia Power, and that the Nova Scotia Power Panel 4 was asked about it. They sa...

AI summary The discussion centers on the potential transfer of a project from Nova Scotia Power to IESO Nova Scotia, with concerns about associated costs and their inclusion in the revenue requirement application. Mr. Murphy questions whether IESO has more information on the project and if future costs will be included in the fiscal year's forecast.

IESO NOVA SCOTIA PANEL 119 Cr-ex, (Murphy) the example earlier, there's areas where we've been under able to be underspent, for example in our employee cost, because we didn't have employees, but we were then over in sort of contractor/con...

AI summary The discussion revolves around budget management and the use of contractor/consulting costs versus employee administration costs. Concerns are raised about using funds approved for one purpose for another, and the response emphasizes prudent budgeting and alignment with legislative mandates.

IESO NOVA SCOTIA PANEL 199 Cr-ex, (MacAdam) 1 call it the deferral account, the prudency review for the 17 to the Board's requests. 18 Q. And the Board asked in 28(e): 19 20 Please explain how any variances would be reviewed and approved a...

AI summary The document discusses the IESO Nova Scotia's response to the NSEB regarding the management of disallowances, noting the lack of an established methodology and the unique challenges posed by its not-for-profit status. The discussion also touches on the need to consider how disallowances may impact operations.

IESO NOVA SCOTIA PANEL 283 Cr-ex, (Rudderham) 1 (Johnston) So our Application A. 14 (Johnston) At least my reading of A. 15 the Board's decision was that: 16 17 18 19 20 21 22 IESOmust, in its applications, provide an explanation for cost...

AI summary The document discusses the IESO's application and the requirement to explain cost variances of more than 10 percent, with the burden on IESO to demonstrate prudence in overruns. It also touches on the transition from NS Power to IESO, specifically Phase I involving energy procurement, system planning, and generation interconnection, which has been completed.

IESO NOVA SCOTIA PANEL 407 Cr-ex, (Rudderham) 1 Q. What I'm wondering, is that 6 that's for your lawyer to indicate whether there's an 7 objection or not. 8 THE CHAIR: Mr. Furey? 9 MR. FUREY: I object. 10 I'm assuming on relevance. THE CHA...

AI summary The discussion revolves around the relevance of historical data on bonuses and incentives in the context of the 2025/2026 revenue requirement and deferral account. Ms. Rudderham argues that this information is relevant for understanding how these expenses impact ratepayers, while Mr. Furey objects, suggesting it may only become relevant in future prudence reviews.

IESO NOVA SCOTIA PANEL 441 Cr-ex, (Rudderham) 1 Q. You've alluded to changes not of 4 were asked questions on you were asked questions last 5 week and again today, and is it fair to say those 6 questions are relatively fresh in your mind a...

AI summary The text refers to a proceeding involving the IESO Nova Scotia Panel 441 Cr-ex (Rudderham), where a discussion occurs about concerns related to risk assessment and liability for imprudence, particularly with respect to Nova Scotia Power and IESO NS. The Small Business Advocate's submission is mentioned, highlighting issues with procurement, contracts, and risk management in the context of upcoming changes by 2030.

IESO NOVA SCOTIA PANEL 453 Cr-ex, (Kayter) 1 talks about, you know, until the Board approves the 16 friend's very valid on-its-face objection about the 17 appropriateness of that question. 18 Over the two days of questions that we 19 have...

AI summary The text discusses the legislative authority of the Board to disallow parts or all of an application, referencing similar mechanisms in Ontario legislation. It highlights a theme from the hearing that the Board can approve or refer matters back to the IESO for further consideration with recommendations.

INTERNATIONAL REPORTING INC. CERTIFIED COURT REPORTERS 1 it approved." That hasn't even come up. 2 And I just want to know if the 3 individuals making these big decisions on behalf of 4 ratepayers now understand that that's an option becau...

AI summary The text discusses the importance of the Board's ability to disallow decisions made by utility companies, such as Nova Scotia Power, and how this impacts their decision-making process and the Board's review. It emphasizes the need for decision-makers to be informed about the potential for disallowance and the role of the Board in providing recommendations.

BROWN In-ch, (Mahody) 1 Q. So for costs, particularly of any 2 significance, realistically, no matter how imprudent you 3 were, while in theory the Board may have the ability to 4 disallow a cost for imprudence, it's not likely to be a 5 d...

AI summary The discussion focuses on the imprudence remedy in regulatory proceedings, highlighting the practical challenges of disallowing significant costs for an organization like IESO Nova Scotia, which has no alternative revenue sources. The conversation emphasizes the importance of transparent and robust cost mitigation processes to ensure regulatory compliance and avoid passing costs to ratepayers.