Topic:"Reasonableness Review" in M12663

Response - IR-2: - (a) The level of financial statement review did not ultimately impact our ability to execute our reasonableness review of forecast operations, maintenance and administration ("OM&A") costs. However, any subsequent change...

AI summary The document discusses the financial statement review and reasonableness review of OM&A costs by DGT, emphasizing that the level of review did not impact the ability to execute the reasonableness review. It also raises questions about the distinction between reasonableness and prudence in cost assessments and the need for additional evidence for a prudence review.

Response - IR-3: - (a) We did not test or examine whether IESO selected the least-cost means of achieving its objectives. - (b) Yes, being satisfied that a cost is "reasonable" should be distinguished from a finding that it is optimal or n...

AI summary The response discusses the distinction between reasonableness and prudence reviews, noting that the current procedures did not assess management decisions or least-cost options. It also highlights deficiencies in the IESO-NS forecasting processes and the impact on transparency and risk of future variances.

lly change.[72](#page-15-4) Those costs, by IESO-NS's own evidence, will likely flow into the Deferral Account (precisely the open-ended mechanism the Industrial Group submits should not be approved.) Overall, the Industrial Group submits...

AI summary The Industrial Group criticizes the lack of transparency and adequacy of evidence in the regulatory proceeding, highlighting unsupported cost assertions and the need for more complete disclosure before confirming recovery. They reference the Deferral Account and emphasize the need for the Board to require a compliance filing or cost-recovery application.

- 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.

22 23 IESO Nova Scotia submits that, based on the record provided to the Board under this matter to 69 consistent with those made in the prior 2025/26 proceeding (M12412), which were ultimately 70 reflected in the Board's Decision in that...

AI summary IESO Nova Scotia submits that the DGT Report confirmed the reasonableness of its cost forecasts, based on industry expertise and GUP principles. The report distinguishes between a reasonableness review and a prudence review, with the latter being a retrospective assessment of variances from approved revenue requirements.

38 M12633 Transcript, June 25, 2026, page 507-508. 799 800 Reasonableness Review Thresholds 801 The nature of a reasonableness (or prudency) review for costs proposed for recovery through the 802 DVM was raised during the hearing. Mr. John...

AI summary The transcript discusses the reasonableness review thresholds for the DVM, with Mr. Johnston clarifying that the Board established a +/−10% variance threshold for prudency review. He notes that if variances exceed this threshold, further prudency review is required, but the financial implications for ratepayers remain undetermined at this point.

41 NSEB Decision, M12412, February 25, 2026, p.20. 875 that circumstance, the variance is subject to a further reasonableness review by the NSEB. IESO 876 Nova Scotia submits that the threshold balances operational flexibility for IESO Nov...

AI summary The NSEB decision discusses the reasonableness of the DVM variance thresholds in managing routine variances, acknowledging that while exceptional circumstances may arise, the thresholds provide a practical framework for variance management. Nova Scotia emphasizes the need for fiscal responsibility, while IESO Nova Scotia notes that actual expenditures may vary from forecasts.

1 3 REASONABLENESS, PRUDENCY, AND DISALLOWANCE 2 Reasonableness and Prudency 3 The IG provided the following regarding DGT's evidence and the prudency of IESO Nova Scotia's 4 revenue requirement application: 5 The Industrial Group therefor...

AI summary The Industrial Group (IG) argues that DGT's evidence does not show unreasonableness in IESO Nova Scotia's revenue requirement application. IESO Nova Scotia explains that reasonableness applies to prospective forecasts, while prudence is a retrospective standard, and asserts there is no distinction between a prudent and a reasonable cost.

1 later in the calendar year. 2 Q. Okay. Thank you. Those are my 3 questions. 4 THE CHAIR: Thank you. 5 And there was no-one else, other than 6 the Applicant, I think. 7 So Mr. Furey? 8 MR. FUREY: Thank you, Mr. Chair. 9 10 11 12 13 14 15...

AI summary The text includes a portion of a regulatory proceeding where Mr. Furey is conducting cross-examination, asking Ms. Brown about the scope of her review of the proposed revenue requirement for reasonableness, which was a prospective review of forecast future costs.