Topic:"Rate Base" in M11927

CI 50518 CA IR-5 Attachment 19 Page 174 of 423 REDACTED (CONFIDENTIAL INFORMATION REMOVED) 3 # Indicators Condition Choices Data Definitions/Explanations Protection and off road vehicles appear to effectively exclude or divert visitors and...

AI summary The text outlines various indicators and condition choices related to environmental protection, consumptive uses, domestic wells, and calcareous fen within a specific area. It includes data on wildlife disturbance, sustainable consumptive uses, proximity of domestic wells, and calcareous fen identification.

INTRODUCTION - Midgard Consulting Inc. ( "Midgard" ) has been retained by Counsel for the Nova Scotia Utility and Review - Board ( "NSUARB" ) to carry out a review of Nova Scotia Power Inc.'s ( "NS Power" ) "CI 50518 - HYD Ruth Falls - Mai...

AI summary Midgard Consulting Inc. has been retained by the Nova Scotia Utility and Review Board (NSUARB) to review Nova Scotia Power Inc.'s application for an Authorization to Overspend (ATO) on its Ruth Falls Dam Refurbishment Project. The ATO request follows a previously approved 2019 Annual Capital Expenditure (ACE) application. Midgard will assess NS Power's actions since the close of the original proceeding and review past evidence relevant to the current application.

1.2 Application Context - NS Power's ACE Plan process, guided by adherence to the Capital Expenditure Justification Criteria (" CEJC "), - ensures that capital expenditures undergo scrutiny and justification within the regulatory framework...

AI summary NS Power submitted an Original Application (M08984) in 2018 for approval of capital expenditures, including the Ruth Falls Dam Refurbishment Project. The application was approved in 2019. Now, NS Power is seeking an ATO to increase the project budget by over $8 million.

6.4.1 Considered Alternatives - Despite Project costs increasing by 113% and $8.2M, NS Power has not re-evaluated its decision to not - consider a decommissioning option. Midgard understands the stated justifications for this (that the Pro...

AI summary Midgard argues that despite a 113% increase in project costs and an additional $8.2M, NS Power has not reconsidered its decision to exclude a decommissioning option. Midgard suggests that the NSUARB should have had the opportunity to evaluate whether a decommissioning option would be in the best interest of ratepayers.

6.2.5 Conclusion - Midgard is concerned that the Project remains exposed to several risk areas (environmental compensation - costs, archaeological costs, and geotechnical risks) that have the potential to cause additional overages to - Pro...

AI summary Midgard expresses concern that the Project is exposed to environmental, archaeological, and geotechnical risks that may lead to cost overruns beyond current estimates. It suggests that an analysis of a decommissioning option could provide more clarity on potential cost increases and the economic viability of reinvestment in the Project.

NON-CONFIDENTIAL that while it has suggested that such an option would "likely" not be considered economic, only a proper alternatives analysis could arrive at this conclusion with certainty. b) In Midgard's opinion the Board should always...

AI summary Midgard discusses its position on the evaluation of decommissioning and reinvestment options, emphasizing the need for the Board to assess whether decommissioning is in the best interest of ratepayers. It references NS Power's statement that re-evaluation of cost options was not necessary due to consistent cost increases across all options. Midgard does not independently verify these claims and acknowledges limitations in its expertise regarding sunk costs and regulatory mandates.

CI 50518 – HYD – Ruth Falls Main Dam Refurbishment ATO – Reply Evidence Redacted - 1 Ultimately, Midgard concludes that the changing context of the Fisheries Act and resulting - 2 consequences on NS Power's Project execution process have i...

AI summary Midgard argues that changes in the Fisheries Act have increased costs for NS Power's dam refurbishment project, impacting ratepayers. It concludes that NS Power acted prudently in responding to DFO's requests and that the project remains the lowest-cost alternative for customers.

t increase in archeological costs, the Industrial Group underscored the need for an economic assessment and perhaps even an alternative that is more cost-effective while offering longer-term benefits. [48] The Industrial Group also agreed...

AI summary The Industrial Group emphasized the need for an economic assessment of archaeological costs and questioned the cost-effectiveness of the proposed refurbishment project. They recommended delaying approval of the ATO until a more thorough analysis of alternatives is conducted, citing insufficient evidence of the project's benefit to ratepayers and the lack of a FAA permit.

of when specific capital expenditures over the eleven-year timeframe of the decommissioning option would be made. The lack of this information also limits the ability to test NS Power's cost estimate. [82] Considering this, the Board is co...

AI summary The Board is concerned that the current ATO proceeding does not include a comprehensive comparison of the Ruth Falls decommissioning option. The Board has placed the ATO application on hold until the FAA is received and will establish a new timeline for the proceeding once the amended application is filed.

am is not an appropriate comparison. The project justifications, project alternatives, project risks, regulatory environments, and impact to NS Power's operations and rate base are entirely different. NS Power noted that in the Lower Water...

AI summary NS Power argues that the Ruth Falls main dam project differs from the Lower Water Street project in terms of project justifications, risks, and NPV differences. It asserts that prudently incurred costs should be recoverable through the rate base, even if they exceed the ATO threshold and are approved by the Board.

$25/m2 cost NS Power had estimated in its original ATO application. In this case, the Board finds that it is not necessary to hold NS Power to the $25/m2 , as was recommended by the Industrial Group. As it relates to NS Power's EAM compari...

AI summary The Board finds that NS Power does not need to adhere to the $25/m² cost estimate from its original ATO application. While the EAM shows that refurbishment of the Ruth Falls main dam is preferred over decommissioning based on NPV analysis, the Board acknowledges limited supporting cost information for the decommissioning option. Sensitivity analysis supports the refurbishment decision despite increased project costs.

1 (f) Please elaborate on what Midgard means when it says "subsequent data 2 (a 2006 bathymetric map) suggested the estimate incorporated elements 3 beyond subjective evaluation", and how Midgard reached this conclusion? 4 Request IR-4: 5...

AI summary The text includes requests for clarification on Midgard's interpretation of data and its evaluation of an ATO application, focusing on economic justification, customer best interests, and lowest reasonable costs. It also references a site visit to the Ruth Falls Main Dam and seeks details on its purpose and outcomes.

respect to the requirements for FAAs were well within contemplation, or ought to have been contemplated, at the time of the original Ruth Falls refurbishment capital application on November 29, 2018. In response to Industrial Group IR 8 (f...

AI summary The text discusses the failure to consider potential changes to the Fisheries Act (FAA) during the original Ruth Falls refurbishment capital application in 2018. Midgard argues that NSPI should have been aware of these changes and their implications, and that the Board and stakeholders should have been informed of the potential cost increase. The text criticizes NSPI for not adequately accounting for the FAA requirement in its original application.

e Items.[65](#page-13-4) Some of these items were identified after the original filing, having been inadvertently omitted, and others arose from the delays and changes associated with the FAA process. The timing of NSPI learning these chan...

AI summary NSPI did not act diligently in advancing the Applications to the NSECC and DFO, leading to delays and increased costs in the Ruth Falls refurbishment project. The changes in scope since 2021 should have prompted a Scope Change application to the Board, but NSPI only applied in October 2024. The Industrial Group argues that NSPI's lack of diligence during the FAA process should not be passed on to ratepayers.

e amounts noted, however, do not account for the $1.4M increase in costs. Nor does this acknowledge the fact that the costs for "contracts" have also dramatically increased by $2.6M.[70](#page-14-8) In response to an Industrial Group IR re...

AI summary The document argues that the amounts applied for are not the lowest reasonable cost to ratepayers, citing a significant increase in material costs and the lack of evidence that competitive procurement was used for some items. The application record does not provide sufficient justification for the cost increases, which far exceed average inflationary increases.

Archaeology Costs The IG submits that the ATO costs associated with archaeology should be denied, as they were not accurately estimated in NS Power's original application. However, an accurate estimate of costs in the initial project estim...

AI summary The Industrial Group (IG) argues that archaeology costs in NS Power's ATO application should be denied due to inaccurate initial estimates. NS Power acknowledges the initial estimate was low but asserts that the costs were reasonable and prudent at the time, based on available information and studies from the Sheet Harbour system. Midgard's evidence suggests that the low initial estimate did not significantly affect the original decision.

t increase in archeological costs, the Industrial Group underscored the need for an economic assessment and perhaps even an alternative that is more cost-effective while offering longer-term benefits. [48] The Industrial Group also agreed...

AI summary The Industrial Group highlighted concerns regarding the economic assessment of archaeological costs and the lack of detailed decommissioning information provided by NS Power. They recommended delaying the ATO approval until a more thorough analysis of alternatives is conducted and additional requirements are addressed.

d decommissioning the dam was found to be more cost effective than refurbishing the dam and utilizing its 7.2 MW hydro generation, then that approach would have served the best interest of ratepayers. [77] The Board's approval of the Ruth...

AI summary The document discusses the decommissioning of the Ruth Falls dam, noting that decommissioning may now be a viable alternative to refurbishment due to increased costs. NS Power previously committed to providing decommissioning costs in future hydro applications following a recommendation by the Commissioner of the Environment and Sustainable Development.

5.1 Updated Information - In its June 18 decision, the NSEB requested that NS Power refile its application with a net present value - ( "NPV" ) analysis that compares the preferred refurbishment option to a decommissioning option. It its -...

AI summary The NSEB requested NS Power to refile its application with a net present value analysis comparing refurbishment and decommissioning options. NS Power provided the results of this analysis, which supported the refurbishment option.

Background In its Application for Authorization to Overspend (" ATO" ), NSPI sought approval for an additional $8.21 million on corrective actions regarding the main dam representing more than a doubling of the original approval of $7.24 m...

AI summary NSPI sought approval for an additional $8.21 million in corrective actions for the main dam, increasing the total project spend to $15.45 million. The Board held the ATO application in abeyance until the final FAA from DFO is received, and required an updated cost estimate and a decommissioning cost analysis in the amended application.

Project Budget Approval Amount NS Power respectfully disagrees with the Industrial Group's recommendation for the Company to be required to manage the project expenses within the envelope approved by the Board, before accounting for any al...

AI summary NS Power disagrees with the Industrial Group's recommendation to manage the Ruth Falls Main Dam project expenses within the approved budget before accounting for AFUDC. It argues that all prudently incurred costs should be recoverable through the rate base, unlike the Lower Water Street project, which had viable alternatives and higher risks.

am is not an appropriate comparison. The project justifications, project alternatives, project risks, regulatory environments, and impact to NS Power's operations and rate base are entirely different. NS Power noted that in the Lower Water...

AI summary NS Power argues that the Ruth Falls main dam project is different from the Lower Water Street project in terms of project justifications, alternatives, risks, regulatory environments, and impact on operations and rate base. NS Power highlights that the NPV difference between refurbishment and decommissioning is significant and that all prudently incurred costs should be recoverable through the rate base according to CEJC.

$25/m2 cost NS Power had estimated in its original ATO application. In this case, the Board finds that it is not necessary to hold NS Power to the $25/m2 , as was recommended by the Industrial Group. As it relates to NS Power's EAM compari...

AI summary The Board finds that NS Power does not need to adhere to the original $25/m2 cost estimate for the Ruth Falls main dam refurbishment. Despite Midgard's concerns about limited supporting cost information for the decommissioning option, the Board concludes that refurbishment remains the preferred option based on NPV analysis and sensitivity testing.

REDACTED Ruth Falls Main Dam Refurbishment Contingency Report 2 Appendix A Page 1 of 1 REDACTED (CONFIDENTIAL INFORMATION REMOVED) Account NSEB Approved Amount Spend-to-Date Contingency/ Unbudgeted Spend-to-Date Comments $8,074.00 $8,074.0...

AI summary The document outlines a contingency report for the Ruth Falls Main Dam Refurbishment, detailing approved amounts, actual spending, and unbudgeted expenditures. Key items include additional costs for water supply arrangements, meals, Mi'kmaq engagement, and administrative overheads. The report highlights discrepancies in cost allocations and the need for contingency funds.