N-1Report
14 passages
NON-CONFIDENTIAL 1 TABLE OF CONTENTS 2 3 1.0 BACKGROUND 3 4 2.0 METHODOLOGY 6 5 3.0 RELATIONSHIP BETWEEN AVERAGE COST BASED RATES AND ACTUAL 6 SHORT RUN MARGINAL COSTS 8 7 3.1 Analysis of Variance between Average Unit Revenue and Average M...
AI summary The document outlines the history and requirements of the Short Run Marginal Cost (SRMC) test as directed by the Nova Scotia Energy Board (NSEB) to Nova Scotia Power Incorporated (NS Power). It includes past orders, supplementary reports, and updates to the SRMC test methodology, including environmental considerations and the inclusion of renewable energy sources.
M05002, NSUARB-NSPI P 878, NSUARB Order, August 1, 2003. DATE FILED: June 27, 2025 Page 3 of 20 (Multeese) in its SRMC memorandum dated August 27, 2010. The changes were to include the revenue adjustment mechanisms of the Demand Side Manag...
AI summary The document outlines a series of regulatory actions and decisions by the Nova Scotia Energy Board (NSEB) regarding the Short Run Marginal Cost (SRMC) test, including the inclusion of revenue adjustment mechanisms, the exclusion of specific rates, and the analysis of price elasticities. NS Power has been directed to continue monitoring and reporting on SRMC tests and to ensure that models reflect current consumer behavior.
2.0 METHODOLOGY The SRMC test involves the following steps: Determine the average marginal cost (over 8784 hours in 2024) at the transmission delivery level. In calculating this marginal cost, the effects of exports and load served under t...
AI summary The SRMC test calculates average marginal costs and compares them to unit revenues to assess efficiency. It accounts for distribution losses, uses price elasticity estimates, and applies different values for various rate classes. The test uses data from the 2024 Load Forecast Report and a California Energy Commission report.
1 (v) The following formula is used: 2 3 Δ q = q x price elasticity x Δ price / price 4 5 Where: 6 7 Δ q – Is the estimated inefficient usage of a rate class 8 9 q – Is the annual kWh sales to a rate class 10 11 Price Elasticity – Is the p...
AI summary The text discusses a formula used to estimate inefficient energy usage based on price elasticity. It references a -0.15 price elasticity value used by NS Power in the 2024 Load Forecast Report and notes that no inefficiency was observed in 2024 due to Marginal Cost being below unit Revenue. NS Power plans to monitor elasticity values and update them based on annual Load Forecast Reports.
3.0 RELATIONSHIP BETWEEN AVERAGE COST BASED RATES AND ACTUAL SHORT RUN MARGINAL COSTS 2 1 SRMC test results are determined by comparing appropriately modified average unit revenues for each rate class to actual marginal costs, adjusted for...
AI summary This section discusses the relationship between average cost-based rates and actual short-run marginal costs, highlighting differences caused by timing discrepancies in regulatory ratemaking and fluctuations in fuel costs. Rate changes are often based on forecasts rather than actual costs, and multi-year rate plans help smooth rate changes over time, leading to variations between customer payments and actual service costs.
1 Year Above-the-Lin e Rate Classes Below-the-Lin e Rate Classes No. of classes No. that failed No. of classes No. that failed 2014 10 0 4 1 2015 10 0 2 0 2016 10 0 2 0 2017 10 0 2 1 2018 10 0 2 0 2019 10 0 2 0 2020 10 0 1 0 2021 10 0 1 0...
AI summary The table presents the number of rate classes and the number of classes that failed the SRMC test from 2014 to 2024. In 2020 and 2021, the Shore Power rate class did not see any service uptake, preventing the SRMC test from being conducted on this class during those years.
DATE FILED: June 27, 2025 Page 13 of 20 1 3.3 Base Cost Rates 2 3 The 2024 base cost rates were increased in the 2023-2024 GRA proceeding subject to an overall 4 cap of 6.9 percent. The Residential rates increased by 6.8 percent, the Gener...
AI summary The document outlines the 2024 base cost rate increases, including residential, general, industrial, municipal, and unmetered rates. It also discusses the reinstatement of the DSM Cost Recovery Rider (DCRR) in 2023 and the SRMC test results, showing that all tested rate classes passed the tests. Adjustments related to FAM AA and FAM BA were made to class revenues for the SRMC test.
12 4.2 SRMC Test for the Above-the-Line Classes 14 The revenue for ATL rate classes reflects the Board-approved rate increase in 2024. Consistent 15 with the Board's 2008 directive, unit revenues for the Large Industrial Interruptible Ride...
AI summary The document discusses the SRMC test for above-the-line rate classes, the residential time-of-day rate structure, and the Time-Varying Pricing Pilot Program. It notes that all ATL rate classes passed the SRMC test in 2024 and explains how TOD rates are compared to average marginal costs for specific time periods. The TVP Pilot Program aims to shift energy consumption to off-peak hours.
1 5.0 SUMMARY 2 3 In 2024, all rate classes passed the SRMC test. DATE FILED: June 27, 2025 Page 20 of 20
AI summary In 2024, all rate classes passed the SRMC test, indicating that rates were aligned with the Short Run Marginal Cost. This is a key finding from the summary section of the document.
Figure 1.1 2024 Base Cost Rate Revenues with DSM _ . N4 o- · - S hort Run Marginal Cost Tes st Ine efficient Usage I Estimat е Distributi on Line Losses as a % of Total Ave. Line Unit Revenue net of Base Charge in cents per MC in cents per...
AI summary The table in Figure 1.1 outlines 2024 base cost rate revenues with Demand Side Management (DSM) across various residential classes, including line losses, unit revenue, marginal costs, and usage estimates. It highlights significant variances in cost and usage patterns for different time-of-day and seasonal rate structures.
CHANGES IN DEMAND ELASTICITIES DUE TO RESTRUCTURING As restructuring proceeds, more and more customers will purchase unbundled services. These will include differentiated products such as different levels of service quality and ancillary s...
AI summary As restructuring in the electricity industry progresses, more customers will have access to unbundled services and new market participants, which may affect the price elasticity of demand and supply. In the short run, consumer behavior may not change significantly, but long-term restructuring could lead to a more competitive market with greater consumer sensitivity to price changes.
Unbundling of Electricity Unbundling electricity into distinct commodities such as energy, reliability or spinning reserve, quality, such as voltage control delivery to customers, could have some interesting effects with respect to the pri...
AI summary Unbundling electricity into distinct commodities like energy, reliability, and quality may affect price elasticity of demand. Ancillary services may have smaller fees, leading to inelastic demand, but unbundling could increase elasticity by offering more substitutes. Industrial and commercial users may face different cost structures, while consumers gain more options, potentially increasing sensitivity to price.
Time of Use Rates Time-of-use (TOU) rates, where t e kilowatt hour ·charge depends on whether the customer's load is at 3 am or 3 pm, permit prices to be aligned more closely with the marginal cost of supplying electricity. Increased use o...
AI summary Time-of-use (TOU) rates align electricity prices with marginal costs, promoting efficiency and better cost alignment for customers. While TOU rates are widely used for large customers in California, residential adoption is limited due to high transaction costs and technological barriers. Increased use of TOU rates could improve demand elasticity and encourage technological innovations in energy management.
aller supply options. This should increase the price elasticity of electricity supplies. The extent of such options will depend on the future funding of financing electricity research and development. Future supply elasticity is dependent...
AI summary The text discusses how restructuring in electricity markets may affect supply elasticities. It highlights that future supply elasticity depends on market structure decisions, including the unbundling of ancillary services and the role of hydroelectric resources for spinning reserve. These factors could influence how responsive supply is to price changes.
N-2Report - Refiled
12 passages
NON-CONFIDENTIAL 1 TABLE OF CONTENTS 2 3 1.0 BACKGROUND 3 4 2.0 METHODOLOGY 6 5 3.0 RELATIONSHIP BETWEEN AVERAGE COST BASED RATES AND ACTUAL 6 SHORT RUN MARGINAL COSTS 8 7 3.1 Analysis of Variance between Average Unit Revenue and Average M...
AI summary The document outlines the background of a regulatory proceeding related to rate design, referencing a 2003 order by the Nova Scotia Energy Board directing Nova Scotia Power Incorporated to take specific actions.
(Multeese) in its SRMC memorandum dated August 27, 2010. The changes were to include the revenue adjustment mechanisms of the Demand Side Management (DSM) Cost Recovery Rider (DCRR) and the Fuel Adjustment Mechanism Actual Adjustment (FAM...
AI summary This text discusses the evolution and adjustments to the Short Run Marginal Cost (SRMC) test over time, including the inclusion of revenue adjustment mechanisms like the DSM Cost Recovery Rider (DCRR), Fuel Adjustment Mechanism Actual Adjustment (FAM AA), and Fuel Adjustment Mechanism Balance Adjustment (FAM BA). The Nova Scotia Energy Board (NSEB) has provided various directions and feedback to NS Power regarding the SRMC test, including the exclusion of certain rates and the need for updated price elasticities.
2.0 METHODOLOGY The SRMC test involves the following steps: Determine the average marginal cost (over 8784 hours in 2024) at the transmission delivery level. In calculating this marginal cost, the effects of exports and load served under t...
AI summary The SRMC test calculates the average marginal cost at the transmission delivery level, adjusting for exports and ELIADC Tariff load, and compares it to unit revenues. If unit revenues are lower than marginal costs, the class fails the test, and inefficient usage is estimated using price elasticities.
3.0 RELATIONSHIP BETWEEN AVERAGE COST BASED RATES AND ACTUAL SHORT RUN MARGINAL COSTS SRMC test results are determined by comparing appropriately modified average unit revenues for each rate class to actual marginal costs, adjusted for cla...
AI summary This section discusses the relationship between average cost-based rates and actual short-run marginal costs (SRMC). It explains that SRMC test results are determined by comparing average unit revenues to marginal costs, adjusted for line losses. Rate setting is influenced by forecasted rather than actual costs, leading to variations between revenues and actual costs.
Note 2. There were six new TVP Tariffs, which came into effect in June 22, 2021 (M09777) by way of a pilot program with limited enrolment targets. The SRMC test did not include these Tariffs in the 2021 results due to the incomplete annual...
AI summary Note 2 discusses six new TVP Tariffs implemented in June 2021 as part of a pilot program with limited enrolment targets. These Tariffs were not included in the 2021 SRMC test results due to incomplete annual consumption records. Note 3 states that SRMC test results are based on unit revenue with FAM adjustments as shown in Figure 1.2 of Appendix B. The SRMC results in Figure 1 should be reviewed in light of the SRMC test drivers, which show volatility in the differential between average unit revenues and marginal costs.
M10431, P 899- Nova Scotia Power inc. Exhibit N-160, Appendix B - 2023-2024 Proof of Revenue, 2022-2024 GRA Compliance Filing.
AI summary This document is related to Nova Scotia Power's 2023-2024 Proof of Revenue and 2022-2024 GRA Compliance Filing, submitted as part of a regulatory proceeding.
12 4.2 SRMC Test for the Above-the-Line Classes 14 The revenue for ATL rate classes reflects the Board-approved rate increase in 2024. Consistent 15 with the Board's 2008 directive, unit revenues for the Large Industrial Interruptible Ride...
AI summary The document discusses the SRMC test results for above-the-line rate classes in 2024, the modification of unit revenues for the Large Industrial Interruptible Rider and Unmetered Class, and the implementation of Time-Varying Pricing (TVP) tariffs to encourage energy consumption during off-peak hours. All ATL rate classes passed the SRMC test, and the TVP tariffs were approved in 2021.
Figure 1.2 2024 Base Cost Rate Revenues with DSM and 2024 FAM Amounts (Based o n 2024 ave rage annual ma arginal cost of 1 8.122 cents /KVVN) Short Ru n Marginal Co Ineff icient l Jsage E stimate l Sales rice Elasticity-of- Demand Range nt...
AI summary Figure 1.2 presents 2024 base cost rate revenues with DSM and FAM amounts, showing various residential rate classes, line losses, unit revenues, marginal costs, and usage estimates. It highlights significant variances in revenue and usage across different time-of-use and demand categories.
CHANGES IN DEMAND ELASTICITIES DUE TO RESTRUCTURING As restructuring proceeds, more and more customers will purchase unbundled services. These will include differentiated products such as different levels of service quality and ancillary s...
AI summary As restructuring progresses, more customers will have access to unbundled services and new market participants, potentially affecting price elasticity of demand and supply. In the short run, consumer behavior may not change much, but in the long run, a competitive market could make consumers more price-sensitive. Some elements of a competitive market already exist in the regulated market.
Unbundling of Electricity Unbundling electricity into distinct commodities such as energy, reliability or spinning reserve, quality, such as voltage control delivery to customers, could have some interesting effects with respect to the pri...
AI summary Unbundling electricity into distinct commodities like energy, reliability, and quality may affect price elasticity of demand. Ancillary services may have smaller fees, leading to inelastic demand, but increased substitutes could make demand more elastic. Industrial and commercial users may face higher costs for these services, while unbundling could introduce new products and options for consumers.
Time of Use Rates Time-of-use (TOU) rates, where t e kilowatt hour ·charge depends on whether the customer's load is at 3 am or 3 pm, permit prices to be aligned more closely with the marginal cost of supplying electricity. Increased use o...
AI summary Time-of-use (TOU) rates align electricity prices with marginal costs, potentially increasing efficiency and matching customer benefits with service costs. While TOU rates are used for large customers in California, they are not widely implemented for residential customers due to high transaction costs. Technological advancements may reduce these costs and increase demand elasticity.
Satisfaction Worl.G and Bright Line Energy Smvey Analysis A 1996 survey by Satisfaction Works and Bright Line Energy (SW-BLE), "The Market for Electric Energy in California," provides additional information on customer characteristics. The...
AI summary A 1996 survey by Satisfaction Works and Bright Line Energy on California's electric energy market shows that while price is not the top priority for customers, reliability and service are highly valued. Many customers would switch suppliers for small price reductions, but prefer enhanced services over lower prices.