N-52024-2025 Bates White FAM Audit Report - Redacted
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es for the period. Residual BA at the end of a year is applied to the following year and is used in the determination of future BA rates. In this way, only actual costs are recovered from customers.16 Again, in a typical FAM rate cycle, th...
AI summary The Fuel Adjustment Mechanism (FAM) involves setting Base Cost of Fuel (BCF) rates for multi-year periods and using Annual Adjustment (AA) and Balancing Adjustment (BA) mechanisms to ensure recovery of actual fuel costs. The Electricity Plan Implementation (2015) Act required NSPI to file a Fuel Stability Plan for 2017-2019, with rates approved in 2016. In 2019, NSPI filed for new BCF rates for 2020-2022, based on forecasted fuel and purchased power costs.
XV – ELIADC Conclusion XV-2: ELIADC benefits as reported in the ELIADC annual reports are largely composed of the mandatory contribution to fixed costs. ( Recommendation XV-1 ) Recommendation XV-1: In the 2026 ELIADC annual report and all...
AI summary The document discusses issues with the ELIADC tariff, including the mischaracterization of mandatory fixed cost contributions as benefits, penalties for schedule deviations, and flaws in ADC benefit calculations. Recommendations include revising reporting practices, adjusting penalties, and modifying ADC benefit calculations to account for forecast and actual load and fuel price differences.
adequate and have a proper focus on both regular, annual training in crucial risk management and code of conduct issues, as well as employee-specific training to further develop NSPI's human capital. Conclusion II-6: NSPI's performance-bas...
AI summary The document discusses NSPI's training programs, performance-based incentives, succession planning, and the Fuel Manual. It highlights the importance of these initiatives in managing risk, improving employee performance, and ensuring accountability in fuel and power purchasing decisions.
DSM") and energy efficiency are set to further limit load growth. These load-reducing factors are forecasted to outweigh forecasted customer growth and continued electrification of the heating sector. NSPI's commercial SAE models express m...
AI summary Nova Scotia Power Inc. (NSPI) forecasts that energy efficiency and DSM programs will reduce load growth, which may offset customer growth and electrification trends. Commercial and General Service load forecasts show varying growth rates, influenced by factors such as electrification, DSM, and distributed solar.
101 NSPI, "Preliminary Outage Report for February 3-5, 2023 Cold Weather Event," M10987, February 21, 2023. 102 NSPI, "Preliminary Outage Report for February 3-5, 2023 Cold Weather Event," M10987, February 21, 2023, page 4. 103 2022-2023 B...
AI summary The document discusses NSPI's Smart Grid Nova Scotia Project, its testing of distributed energy resource management systems, and the impact of various programs on load management and peak demand reduction. It also highlights the cost challenges of residential batteries and the results of the Time Variable Pricing pilot, including load reduction percentages and factors influencing them.
IV.C. Conclusions Conclusion IV-1: Consumption of solid fuel was 26.9% higher than the base cost of fuel forecast, due largely to lower than forecasted Surplus Energy, changes in fuel blends, and the sulfur emissions CoV. NSPI's Audit Peri...
AI summary NSPI's solid fuel consumption was 26.9% higher than forecast, driven by lower surplus energy and changes in fuel blends. NSPI relies heavily on imported coal, with South American coal increasing to 52% of total consumption. NSPI has no domestic coal sources and adjusted fuel blends at its plants to meet SO2 emissions constraints. Coal prices moderated during the 2024-2025 audit period.
96,000 metric tonnes, consistent with a prior recommendation, but allowed capacity to reach as high as 120,000 metric tonnes if required and subject to the review and approval by the Director of ERM. Conclusion V-16: On October 6, 2025, th...
AI summary The text discusses a derailment on the Sydney Coal Railway, capital projects at the Transportation and Railway Maintenance Centre due to petroleum hydrocarbon releases, and inventory adjustments related to fuel inventory. These events are relevant to NSPI's coal supply chain and FAM processes.
supply, which had the highest forecasted biomass consumption of any forecast observed. Also, in the table below, we are including the November 2024 contract for GMT of 275 " Biomass Amendment." 276 " Biomass Purchase Sale Agreeme...
AI summary NSPI procured more primary biomass fuel than forecasted, leading to surplus purchases and increased costs for FAM customers. However, the PHB unit generated significant OBPS credits, reducing costs for FAM customers. The procurement decisions reflect the dynamics of the biomass fuel market in Nova Scotia.
SPI elected to perform a 100% eddy-current (electromagnetic) inspection to determine the extent of degradation and mitigate future risk. This led to the plugging of approximately 500 additional tubes. The investigation found that all conde...
AI summary SPI conducted a 100% eddy-current inspection of condenser tubes at Tufts Cove 3, identifying internal leaks caused by seawater-side erosion-corrosion. NSPI's maintenance program was found to be effective, but the Root Cause Analysis recommended significant refurbishment due to extensive degradation. NSPI plans to address this through its ACE plan with capital investments in 2026 and retubing in 2027.
X.B.7.b. NSPI's Greenhouse Gas Emissions Results As explained above, NSPI is subject to two separate, independent regulatory frameworks governing GHG emissions. NSPI's compliance period for the province's Greenhouse Gas Emissions Regulatio...
AI summary NSPI is subject to two regulatory frameworks for GHG emissions. For 2021-2024, NSPI emitted 16.8 mega tonnes of CO2 equivalent, but remained in compliance as actual 2024 emissions were 5.6 mega tonnes. For 2025, emissions were 5.8 mega tonnes, under the 6 mega tonne cap. The OBPS program allows emissions with payment, and emission intensity limits vary by fuel type, with gas-fired units having the lowest and solid fuel-fired units the highest. Emission costs are expected to rise from $80/tonne in 2024 to $115/tonne by 2030.
emissions at Point Aconi are managed using an adder for the cost of limestone in addition to a PAC adder. It is included in the dispatch equation for Point Aconi for all hours during the audit period. GHG compliance costs under the Output-...
AI summary Emissions at Point Aconi are managed using an adder for limestone costs and a PAC adder in the dispatch equation. The OBPS applies to fossil fuel generation with GHG intensity above a specified level, with adjustments to heat rate curves for some units. These changes affect the dispatch stack, influencing unit operation to manage emissions.
XI.B.4. Port Hawkesbury Paper Port Hawkesbury Paper ("PHP") takes service from NSPI under the Extra Large Industrial Active Demand Control ("ELIADC") tariff. The tariff allows NSPI to manage PHP load to reduce system costs to the benefit o...
AI summary Port Hawkesbury Paper operates under the ELIADC tariff, allowing NSPI to manage its load for system cost reduction. However, the methodology for measuring ADC benefits is inadequate, and real-time dispatch deviations impact FAM customers. PHP's load is not consistently used for reserve requirements due to operational interruptions.
audit period because limited SO2 allowances were managed with an additional fuel cost adder on solid fuel units that worked to raise the cost of solid fuel units relative to those run on natural gas. Under OBPS, the Port Hawkesbury Biomass...
AI summary The document discusses how Nova Scotia Power Inc. manages GHG emissions through the OBPS system, including the use of GHG OBPS Performance Credits and cost adders on fossil units to reflect emissions costs, impacting dispatch decisions and merit order reordering.
Figure XI-11: CO2eq emissions in tonnes572 Units 2021 2022 2023 2024 2025 Unit 1 Lingan Unit 2 2,637,870 2,110,642 1,541,267 1,643,685 2,100,732 Unit 3 Unit 4 Point Aconi Unit 1 589,431 978,708 876,703 876,083 756,838 Point Tupper Unit 2 7...
AI summary The table shows CO2eq emissions from various units between 2021 and 2025. Emissions from Lingan units increased by 36% from 2023 to 2025, while emissions from Tufts Cove units decreased by 18%. The increase in output and emissions at Lingan, Point Tupper, and Trenton is partially attributed to carbon pricing in the OBPS mechanism.
XI.C. Conclusions Conclusion XI-1: NSPI, to its credit, was able to keep its system running reliably through the period following the cyber event. However, the loss of automation and information required for scheduling and dispatch would h...
AI summary The document highlights NSPI's ability to maintain system reliability post-cyber event but notes inefficiencies and increased costs due to lost automation. It identifies issues with scheduling processes, RTED functionality, and dispatch of PH Biomass. There are concerns about understated system marginal costs and increased GHG emissions. A new Economic Dispatch Optimization Solution is expected to address some inefficiencies.
assessing the net impact on FAM customers.673 We included recommendations that NSPI maintain its pursuit of all undelivered volumes and attempts to accurately value the missing and makeup volumes.674 Our prior audit report was issued July...
AI summary The document discusses the valuation of undelivered and makeup NS Block volumes, highlighting the use of multiple methods by NSPI, including the 'Hourly Replacement Method,' which calculates replacement costs based on forward and spot prices for fuel and power. Bates White engaged with NSPI to understand these methods and their implications for FAM customers.
Figure XII-19: NSPI's Power Exports, by Listed Counterparty 708 2025 Counterparty Number of Transactions Transaction Volume Weighted Average Price (USD/MWh) As with imports, we sampled several of NSPI's export transactions during the Audit...
AI summary The audit examined NSPI's export transactions to determine if they were beneficial to customers, focusing on the prudence of marketers and the efficacy of NSPI's export process, including estimation and risk management of price movements.
XIII.B.1. Assessment of NSPI's Hedging Program Results We assessed the effectiveness of NSPI's hedging activities during the Audit Period by first considering whether NSPI's hedging is meeting the goal of greater stability in electricity r...
AI summary The assessment evaluates NSPI's hedging program effectiveness in achieving rate stability, as outlined in its Fuel Hedging Plan. It considers the alignment of hedging activities with governing documents, portfolio-level risk analysis, and individual fuel-level impacts, including transaction costs and procurement processes.
XIII.B.1.c.ii. 2024 (Second Quarter) In the second quarter of 2024, NSPI engaged in moderate rebalancing for purchased power, solid fuel, and natural gas. NSPI purchased an additional GWh of power hedges for 2026, initiating hedging for of...
AI summary In Q2 2024, NSPI engaged in moderate rebalancing for purchased power, solid fuel, and natural gas, including additional power hedges for 2026 and basis hedges to reduce winter 2024/2025 exposure. NSPI used all 2023 GHG OBPS performance credits to offset 2023 obligations, despite a lower net present value of spreading credits over seven years, to reduce the FAM balance and manage program risks.
XIII.B.1.c.iii. 2024 (Third Quarter) Entering the Audit Period, NSPI was in the midst of a two-year sulfur emissions compliance period, which limited NSPI's total SO2 emissions to 31.6 kt in 2024. In November 2023, NSPI implemented a compl...
AI summary NSPI faced challenges in complying with sulfur emissions limits in 2024 and implemented a compliance buffer. It also adjusted its load and surplus energy forecasts, leading to a portfolio rebalancing. NSPI increased its compliance buffer to 6 kt in 2025 and 2026 due to forecast changes and uncertainty around LIL maintenance.
XIII.B.1.d. Fuel-Level Hedge Assessment Our next assessment was to consider NSPI's hedge effectiveness across individual fuels. This would demonstrate if NSPI's overall hedge portfolio results were masking any concerns regarding a particul...
AI summary The assessment evaluated NSPI's hedge effectiveness across individual fuels, finding that hedging significantly reduced Value at Risk (VaR) for solid fuel, natural gas, and power. However, HFO showed positive VaR due to inconsistent delivery volumes. Analysis for Q1 2025 was not completed due to a cyber event affecting the Allegro system.
XV.B.1.a. ELIADC Price Components There are four main charge elements under the ELIADC: - 1. Customer Baseline Energy Charge ("CBL Energy Charge") - 2. Customer Baseline Adder ("CBLA") - 3. Variable Capital Charge ("VCC") - 4. Active Deman...
AI summary The ELIADC tariff includes four main charge elements: Customer Baseline Energy Charge, Customer Baseline Adder, Variable Capital Charge, and Active Demand Control Credit. PHP is subject to additional adjustments for deviations from dispatch instructions, meeting minimum payment requirements, and capturing ADC benefits.
CBL Energy Charge The CBL Energy Charge includes all incremental, non-capital costs to serve PHP load.816 Prior to each tariff year, PHP is required to provide NSPI a forecast of annual and monthly energy requirements, including anticipate...
AI summary The CBL Energy Charge is a flat rate based on forecasted incremental costs to serve PHP load, determined by NSPI using forecast information provided by PHP. This charge is applied monthly and can vary throughout the year.
CBLA The Customer Baseline Adder is a charge to PHP "to contribute to the reduction of the cost of service to other NS Power customers."821 It is determined relative to a reference rate specified in the tariff, which has been $61.75/MWh in...
AI summary The Customer Baseline Adder (CBLA) is a charge applied to PHP to offset the cost of service for other NS Power customers. It is calculated based on a reference rate of $61.75/MWh. When the CBL Energy Charge is below this rate, the CBLA is calculated as 75% of the difference plus $1/MWh. When it is above, the CBLA is set at $1/MWh. From March 2024 onward, the CBLA was $1/MWh, while it was higher in previous years.
ts but rather the weighted average costs of fuel inventories. See NSUARB, "Board Decision Letter", M11021, July 5 2023, p. 2. b. $4.00 multiplied by the total number of MWh supplied in the year.832 In 2024, actual costs to serve PHP load w...
AI summary The text discusses the financial implications of the ELIADC tariff on PHP, including ADC benefits, Off-Schedule Charges, and net costs. In 2024, PHP had to make an additional payment, while in 2025, it received a benefit that was partially allocated to FAM customers. The Off-Schedule Charge was reduced and netted against a CBL Credit, resulting in a net cost to PHP.
Figure XV-4: PHP Costs and Payments833 Year Total Delivered Energy (MWh) Total Billed Charge Total Cost to Serve PHP Load ADC Benefit Off Schedule Charge Additional PHP Payment 2020 $55,507,679 $45,864,745 $6,624,312 $276,000 N/A 2021 $60,...
AI summary Figure XV-4 presents the PHP Costs and Payments from 2020 to 2025, showing variations in total billed charges, total cost to serve PHP load, ADC benefits, off-schedule charges, and additional PHP payments over time. The data highlights fluctuations in costs and benefits associated with the PHP program.
XV.B.3. Scheduling and ADC Benefits Over the audit period, PHP's load (MWh) corresponded reasonably closely to the target energy (MWh) as adjusted for each month although there were several monthly outliers.839 Figure XV-9 compares PHP mon...
AI summary The document analyzes PHP's load performance in 2024 and 2025, comparing actual delivered energy to monthly and annual targets. It highlights significant deviations in August and October 2024 and notes the impact of paper product demand on 2025 performance. The ADC Benefit was positive in 2025, but factors like fuel costs and load variability can affect it.
XV.B.4.c. The Identification of PHP Deviations from Schedule Under the ELIADC tariff, NS Power/NSPSO is required to track the timing, magnitude, and reason for deviations,844 In the case of NS Power or PHP's inability to follow the dispatc...
AI summary The document discusses the responsibility for tracking deviations from the schedule under the ELIADC tariff. It highlights that PHP, rather than NS Power/NSPSO, tracked these deviations, creating a conflict of interest and violating the tariff, particularly with Cause Code 5 (PDN), which penalizes PHP for deviations. The recommendation is that PHP should not be allowed to determine and record off-schedule deviations.
XV.B.4.e. Cause Code 5: PDN Deviations – PHP Decision to Vary From Schedule NSPI identifies in its ELIADC annual reports the hours in which Cause Code 5: PDN deviations occur and the magnitude of those deviations. The cost or "penalty" for...
AI summary This section discusses the calculation and application of penalties for Cause Code 5: PDN deviations under the ELIADC Tariff. NSPI calculates penalties based on price differences and has reduced the penalty in 2025, but this reduction is criticized as not supported by the tariff and potentially weakening incentives for PHP to follow the schedule. The document also highlights a correction recommendation for the penalty calculation.
due to the inability of the PortOps model to converge, - iii. Calculation of costs/benefits would be highly dependent on assumptions, if load rebalancing post deviation is required for the analysis, - iv. Costs associated with the initial...
AI summary The document discusses challenges in calculating costs and benefits related to load rebalancing and dispatch decisions due to limitations in the PortOps model and lack of logged deviation data. It also highlights the inability to quantify load shifting benefits for real-time ADC and the potential for net costs from real-time load deviations.
(Recommendation XV-8) Recommendation XV-2: The calculation of the CBL Energy Charge, which includes fixed costs, appears to conflict with the language of the ELIADC tariff. NSPI should either revise the calculation of the CBL Energy charge...
AI summary The document discusses the revision of the ELIADC tariff to address conflicts in the CBL Energy Charge calculation and recommends improvements to NSPI's annual reporting on load shifting benefits and ELIADC performance. NSPI has complied with the first recommendation by revising the tariff, and the second recommendation emphasizes enhanced reporting practices.
Figure XV-19: Deficiencies in NSPI's Reported Information Requested Information Provided in 2024 ELIADC Annual Report Provided in 2025 ELIADC Annual Report 2022-2023 FAM Audit – Recommendation XV-3 More detailed quantification of actual lo...
AI summary The document highlights deficiencies in NSPI's reported information regarding the ELIADC tariff, including a lack of detailed quantification of load shifting benefits, incomplete narrative discussions on beneficial deviations, and insufficient information on tariff improvements. NSPI has partially complied with previous audit recommendations but continues to provide incomplete data, which limits the ability of FAM customers to assess the ELIADC tariff objectively.
XV.C. Conclusions Conclusion XV-1: The ELIADC tariff, as shown by benefits reported in the ELIADC annual reports, has minimally achieved the intent of the Board during the Audit Period. FAM customers did not bear the average costs to serve...
AI summary The conclusions highlight deficiencies in the ELIADC tariff's implementation, including flawed ADC benefit calculations, inadequate deviation tracking by NSPI, and lack of transparency in annual reports. The ELIADC tariff has not fully achieved its intended benefits, and there are inconsistencies in how PHP load is managed and reported.
XV.D. Recommendations Recommendation XV-1: In the 2026 ELIADC annual report and all future reports, NSPI should report the amounts collected under the $4/MWh (or any other) mandatory contribution to fixed costs, but should not characterize...
AI summary The recommendations focus on improving reporting and cost allocation practices related to the ELIADC and PHP. They include changes to how fixed costs are reported, modifications to ADC benefits, real-time deviation reporting, and adjustments to the calculation of Cause Code 5 penalties.