N-1Report
17 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.
wer than the prospective test year costs. For the above reasons, the annual unit revenues paid by customers can significantly vary from actual unit cost of service incurred by the utility. 24 25 26 Changes in actual unit short-run marginal...
AI summary The text discusses the differences between average cost-based rates and actual short-run marginal costs, noting that annual unit revenues can vary significantly from actual service costs. It also mentions exceptions such as FAM AA/BA riders and annually adjusted rates like GRLF and Shore Power Rates.
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.
Figure 4. Long-term trend in differential between Marginal Costs and Unit Revenues broken down by fuel and non-fuel components. 2014 2015 2015 2017 2010 2010 2020 2024 2022 2022 2024 11 Years 2014 2015 2016 2017 2018 2019 2020 2021 2022 20...
AI summary Figure 4 shows the long-term trend in the differential between marginal costs and unit revenues, broken down by fuel and non-fuel components. The data highlights fluctuations over time, with significant year-over-year changes in both average marginal costs adjusted for line losses and unit revenues, including FAM-related costs and fixed costs.
As shown in Figure 4 , the unit average marginal costs, aside from following a different annual trend pattern with a higher overall volatility, are also significantly lower than unit revenues in each calendar year. This is because the unit...
AI summary The text discusses the relationship between unit average marginal costs and unit revenues, noting that unit revenues are higher and reflect total service costs for the four entities involved. The document references Figure 4 and is part of a regulatory proceeding filed on June 27, 2025.
M12121, Exhibit N-1 M10431, P 899- Nova Scotia Power inc. Exhibit N-160, Appendix B - 2023-2024 Proof of Revenue, 2022-2024 GRA Compliance Filing.
AI summary The document references multiple regulatory filings and exhibits, including a proof of revenue and compliance filing related to the 2023-2024 period, as well as a reference to a prior matter (M10431). These filings are part of a larger regulatory proceeding involving Nova Scotia Power.
RMC test. The actual GRLF unit revenue for 2024 is 9.447c/kWh, 16 percent above the marginal cost of 8.122 c/kWh for that year. DATE FILED: June 27, 2025 Page 18 of 20 As reported in prior SRMC reports, a comparison of this rate to the mar...
AI summary The SRMC test results for the GRLF and Shore Power Tariff in 2024 show that both passed the test. The GRLF rate was set above marginal cost due to forecasting assumptions, while the Shore Power Tariff was compared to on-peak marginal costs during its service season, resulting in a significant revenue surplus over marginal costs.
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.
Q. How can one check if rates are set below short-run marginal cost? A. In checking that rates are set above short-run marginal costs, a useful rule of thumb is that the average revenue per kWh, exclusive of revenue from customer charges,...
AI summary To check if rates are set below short-run marginal cost, the average revenue per kWh (excluding customer charges) should not be less than the average marginal energy cost. This is part of the Short-Run Marginal Cost (SRMC) Test, which is a rule of thumb used in rate setting.
Q. Please explain the basis for the SRMC test? A. As I noted earlier, the marginal energy cost is simply the cost of supplying the "last kWh consumed," in a particular hour using available resources (i.e., existing generating equipment or...
AI summary The SRMC test ensures that rates, excluding fixed monthly charges, generate enough revenue to cover the cost of the last kWh consumed in a given hour. This is based on the marginal energy cost, which reflects the cost of supplying the last unit of energy using available resources.
Q. How should the SRMC test be used? - A. In using the test, it is important to note that there may be good reasons why a rate will fail the test: - If gas and oil prices are very high and coal prices very low, a cost-based rate (i.e., a r...
AI summary The SRMC test is used to evaluate rates, with potential failures due to factors like high gas and oil prices or non-cost-based rates. If a rate fails the test without justification, it should be adjusted to pass the test, ensuring fairness to ratepayers.
Figure 1.1 2024 Base Cost Rate Revenues with DSM _ . N4 o- · - General Demand CPP 0.700/ 5 700/ 450.00 CPP Hours 2.78% 5.78% 153.00 11.36 1247.1% 0.01 -0.15 -0.15 - - All Remaining Hours 2.78% 5.78% 11.48 8.74 31.4% 0.9 -0.15 -0.15 - - Ann...
AI summary The document presents a table showing 2024 base cost rate revenues with Demand Side Management (DSM) for various customer categories. The table includes data on percentages, hours, and financial figures, highlighting the impact of DSM on revenue distribution across different sectors.
In its February 15, 1996 Committee Order, the ER 96 Committee asked for information on how restructuring may affect price elasticities of supply and demand (Issue III.A.4). This Staff testimony begins with a definition of the concept of pr...
AI summary The Staff testimony discusses price elasticity of supply and demand in the context of restructuring, beginning with a definition of price elasticity, reviewing existing demand elasticity estimates, and analyzing how restructuring may affect demand and supply elasticities.
The Concept of Price Elasticity Estimates of the price elasticity of electricity demand can provide the answer to the following question: if the price of electricity falls, will consumers purchase a lot more or a little more electricity? T...
AI summary The text discusses the concept of price elasticity in the context of electricity demand and supply. It explains how elasticity measures the percentage change in quantity demanded or supplied in response to a 1% change in price, noting that factors influencing demand and supply responses differ.
Estimates of the Price Elasticity in the Regulated Electricity Market Existing estimates of demand and supply elasticities are derived from consumer and producer behavior in a regulated electricity market. The prospect of unbundled electri...
AI summary The document discusses the estimation of price elasticity in the regulated electricity market, noting that existing estimates may lose relevance with deregulation. It highlights the importance of statistical methods and variables in accurately estimating demand and supply elasticities, citing Bohi's 1981 survey and summarizing key findings in Table 1.
Current Supply Elasticity Estimates Supply elasticities, per se, do not exist in a regulated retail electricity market. Prices are set beforehand in a regulatory proceeding, and utilities must supply all retail power demanded at the price...
AI summary In a regulated retail electricity market, supply elasticities do not apply as prices are set in advance by regulatory proceedings. However, in wholesale markets, supply elasticities exist due to competition and the ability of utilities to adjust generation based on price. Hydropower significantly influences supply elasticity in the West due to its variability based on weather conditions.
CONCLUSION During the transition to the competitive market, changes in the price elasticity of demand and supply are likely to be small. In the longer term, competition may increase the price elasticity of both demand and supply. Existing...
AI summary The conclusion discusses the impact of market restructuring on price elasticity in the electricity sector, noting that competition may increase responsiveness of both demand and supply over time. It highlights that while existing estimates suggest greater long-term elasticity, new markets and technologies may emerge, similar to past industry transformations like telecommunications.
N-2Report - Refiled
16 passages
NON-CONFIDENTIAL 1 TABLE OF CONTENTS 5 6 …perform the SRMC test for all of its above and below-the-line rates. NSPI's 7 8 report in this regard should describe the methodology it has followed in calculating short run marginal costs as well...
AI summary The document discusses the Short Run Marginal Cost (SRMC) test, which evaluates whether average revenue per kWh meets or exceeds average marginal energy cost. The Nova Scotia Energy Board directed NS Power to file reports on SRMC calculations and revisions, including adjustments for transmission loss and inefficient usage from below SRMC rates.
being set lower than the prospective test year costs. For the above reasons, the annual unit revenues paid by customers can significantly vary from actual unit cost of service incurred by the utility. Changes in actual unit short-run margi...
AI summary The document discusses the relationship between average cost-based rates and actual short-run marginal costs (SRMC), noting that unit revenues can vary significantly from actual service costs. It also mentions exceptions to the GRA framework, such as annually adjusted rates and specific riders like FAM AA/BA.
Note 2: In the years 2014-2019 all reported figures are net of the LRT. In 2020-2023 the figures are net of ELIADC. Note 3: The unit revenue figure of $124.06/MWh in 2017 replaces the incorrectly stated figure of $112.04/MWh in this table...
AI summary This note provides corrections to figures in the SRMC Reports from 2017 to 2022, including adjustments related to LRT sales, line losses, and system fuel costs. These corrections address inaccuracies in previously published data.
Figure 4. Long-term trend in differential between Marginal Costs and Unit Revenues broken down by fuel and non-fuel components. 11 Years 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Average Average MC adj for Line losses ($/MWh)...
AI summary Figure 4 presents a long-term trend in the differential between marginal costs and unit revenues, broken down into fuel and non-fuel components. It shows average marginal costs adjusted for line losses, unit revenues, and their respective year-over-year percentage changes and variances from the average marginal cost.
DATE REFILED: August 15, 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 G...
AI summary The document discusses base cost rate increases from 2023-2024, including various rate class adjustments, and references the reinstatement of the DSM Cost Recovery Rider (DCRR) in 2023. It also outlines the results of the 2024 SRMC tests, which all rate classes passed, and discusses variable generation costs in 2024.
1 5.0 SUMMARY 2 3 In 2024, all rate classes passed the SRMC test. DATE REFILED: August 15, 2025 Page 20 of 20
AI summary In 2024, all rate classes passed the SRMC test. This indicates that the rates set for different classes of customers met the Short Run Marginal Cost benchmark, which is a key factor in regulatory proceedings related to electricity pricing.
Q. How can one check if rates are set below short-run marginal cost? A. In checking that rates are set above short-run marginal costs, a useful rule of thumb is that the average revenue per kWh, exclusive of revenue from customer charges,...
AI summary To check if rates are set below short-run marginal cost, the average revenue per kWh (excluding customer charges) should not be less than the average marginal energy cost. This is known as the Short-Run Marginal Cost (SRMC) Test, and the consideration of marginal costs may vary depending on the rate being evaluated.
Q. Please explain the basis for the SRMC test? A. As I noted earlier, the marginal energy cost is simply the cost of supplying the "last kWh consumed," in a particular hour using available resources (i.e., existing generating equipment or...
AI summary The SRMC test ensures that rates, excluding fixed monthly charges, generate enough revenue to cover the cost of the last kWh consumed in a given hour. This is based on the marginal energy cost, which reflects the cost of supplying the final unit of energy using available resources.
Q. How should the SRMC test be used? - A. In using the test, it is important to note that there may be good reasons why a rate will fail the test: - If gas and oil prices are very high and coal prices very low, a cost-based rate (i.e., a r...
AI summary The SRMC test is a method to evaluate rates, and a rate may fail the test due to factors like high gas and oil prices or due discrimination. If a rate fails without justification, it should be adjusted to pass the test. The text also references a figure related to 2024 Base Cost Rate Revenues with DSM.
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) Annual Average 2.78% 17.59 8.35 110.7% 3.4 -0.15 -0.15 - - General Demand CPP CPP Hours 2.78% 154...
AI summary The figure presents 2024 base cost rate revenues with DSM and FAM amounts, including various percentages and figures related to different customer categories and rates. It also references testimony on the effect of restructuring on price elasticities of demand and supply from 1996.
Testimony on The Effect of Restructuring on Price Elasticities of Demand and Supply Prepared for the August 14, 1996 ER 96 Committee Hearing
AI summary This testimony discusses the impact of restructuring on price elasticities of demand and supply in the energy sector, prepared for the August 14, 1996 ER 96 Committee Hearing.
The Concept of Price Elasticity Estimates of the price elasticity of electricity demand can provide the answer to the following question: if the price of electricity falls, will consumers purchase a lot more or a little more electricity? T...
AI summary The text discusses the concept of price elasticity in the context of electricity demand and supply. It explains that price elasticity measures the percentage change in quantity demanded or supplied in response to a 1 percent change in price, and notes that elasticity estimates are context-dependent and influenced by factors such as price range and shifts in demand or supply.
Estimates of the Price Elasticity in the Regulated Electricity Market Existing estimates of demand and supply elasticities are derived from consumer and producer behavior in a regulated electricity market. The prospect of unbundled electri...
AI summary The document discusses the limitations of existing price elasticity estimates in a regulated electricity market as deregulation progresses. It highlights the importance of statistical methods in estimating demand and supply functions, noting that omitted variables and data issues can affect accuracy. It references Bohi's 1981 survey of electricity demand studies and mentions Table 1 summarizing elasticity estimates.
Restructuring Experience in Other Countries Studies of other countries that have deregulated electricity provide information on demand elasticity after restructuring. In Wolfram's (1995) study of market power in the British electricity spo...
AI summary This section discusses demand elasticity in the British electricity market post-restructuring, citing studies by Wolfram (1995) and Lo, McDonald, and Le (1990). It notes that demand was inelastic in the short run but more elastic in the long run, with price elasticities ranging from -0.1 to -1.89.
Current Supply Elasticity Estimates Supply elasticities, per se, do not exist in a regulated retail electricity market. Prices are set beforehand in a regulatory proceeding, and utilities must supply all retail power demanded at the price...
AI summary This section discusses the concept of supply elasticity in regulated retail electricity markets, noting that it does not apply in such markets because prices are set in advance by regulatory proceedings. It contrasts this with wholesale markets, where supply elasticity exists due to competition and the influence of factors like transmission constraints and hydropower availability.
CONCLUSION During the transition to the competitive market, changes in the price elasticity of demand and supply are likely to be small. In the longer term, competition may increase the price elasticity of both demand and supply. Existing...
AI summary The conclusion discusses the impact of market restructuring on electricity demand and supply elasticity, noting that competition may increase responsiveness over time. It also highlights the role of deregulation in creating new goods and services, and how transmission access changes may affect supply elasticity.