Topic:"Return On Equity" in M12282

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AI summary The text discusses the Nova Scotia Power (NOP) and its role in regulatory proceedings, including the application of fuel-cost-adjustment mechanisms, the impact of cost-of-capital proceedings, and the evaluation of the efficiency of programs and services. It also touches on the regulatory oversight of energy and utility matters in Nova Scotia.

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AI summary The text discusses regulatory proceedings involving Nova Scotia Power and Hydro-Informatics and Jurisdiction, focusing on topics such as fuel-cost-adjustment mechanisms, cost-of-capital proceedings, and energy efficiency programs. The document appears to reference specific regulatory matters and technical aspects of energy management.

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AI summary The text appears to be a portion of a regulatory proceeding document related to energy and utility matters, discussing topics such as fuel-cost-adjustment mechanisms, cost-of-capital proceedings, and various regulatory processes. It includes references to entities and potential arguments related to these proceedings.

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AI summary The text discusses regulatory proceedings involving cost adjustments, fuel costs, and the impact of policies on energy pricing. It references a fuel-cost-adjustment mechanism and its implications, as well as cost-of-capital and related proceedings.

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AI summary The text discusses regulatory proceedings involving fuel-cost-adjustment mechanisms, cost-of-capital proceedings, and the impact of delayed base rates on incentives. It references matters related to the Nova Scotia Power and highlights the need for alignment between rates and actual costs.

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AI summary The text discusses the regulatory process and the role of the Board in managing fuel-cost-adjustment mechanisms. It mentions the filing of witness lists for various proceedings and the importance of addressing issues related to cost-of-capital and fuel-cost-adjustment.

Why is the E1 proposal on discount rates inconsistent with utility system resources? - In conducting Integrated Resource Planning ("IRP"), utilities typically compare alternative new energy - generation resources using their Weighted Avera...

AI summary The E1 proposal to use a 2% social discount rate for DSM evaluation conflicts with NSPM's requirement for consistent methods, as WACC is standard for utility IRP. Treasury Board guidance cited by E1 applies to regulatory proposals, not infrastructure investments. NSPM mandates equal footing for DSM with other resources using WACC, not lower social rates.

Utility Proceeding Work Performed Before Client Year Oral Testimony BC Hydro 2021 Intergrated Resource Plan Analysis, Preparation of Intervenor Evidence BCUC AMPCBC 2023 Yes Utility Proceeding Work Performed Before Client Year Oral Testimo...

AI summary The document lists various utility proceedings, including integrated resource plans, rate design applications, and transmission line valuations. It outlines the work performed, the regulatory bodies involved, and the clients for each proceeding, with some cases involving oral testimony and others settled through negotiation.

Why is the E1 proposal on discount rates inconsistent with utility system resources? - In conducting Integrated Resource Planning ("IRP"), utilities typically compare alternative new energy - generation resources using their Weighted Avera...

AI summary The E1 proposal to use a 2% social discount rate for DSM evaluation conflicts with NSPM principles requiring consistent methods with utility IRP (using WACC). Treasury Board guidance cited by E1 applies to regulatory proposals, not infrastructure investments, and emphasizes uniform discount rates for cost-benefit analysis.

and pride to zero for the purposes of the 2027–2031 DSM Plan. The Consensus Agreement also reduced the proposed proxy values for the "Building Shell", "BNI" and "Solar + Storage" measures categories. [23] The proposed BCA test will use a 2...

AI summary The proposed BCA test uses a 2% social discount rate, justified by E1 as aligning with GHG reduction objectives, legal standards, and guidance from NSPM, the U.S. Office of Management and Budget, and the Canadian Treasury Board. The Consensus Agreement adjusted proxy values for DSM measures like 'Building Shell' and 'Solar + Storage'.

ustification that would be required to possibly justify a measure that would have such a negative benefit and a benefit cost ratio substantially below 1.0. [Eastward Energy Closing Submissions, p. 9] [66] In terms of reliability impacts, E...

AI summary Eastward Energy argues that benefit-cost analyses for natural gas must account for reliability impacts and ancillary service costs, requesting explicit confirmation from Nova Scotia Power. It emphasizes balancing legislative requirements in determining cost tests and highlights the need for a 2% social discount rate consideration.

4.5.1 Findings [192] Discounting is a fundamental component of BCA. Applying a social discount rate places greater emphasis on future benefits than a standard discount rate typically would. Environment and Climate Change Canada's SC – GHGs...

AI summary The document discusses the importance of discounting in BCA, noting that Environment and Climate Change Canada's SC-GHG guidance uses a lower discount rate. It criticizes E1 for not following the Treasury Board's policy on when to apply a social discount rate, emphasizing compliance with the Treasury Board's Cost-Benefit Analysis Guide.

s. 7.1 about the discount rate to be used: The discount rate is the rate at which future costs and benefits are converted to their present equivalents. Discounting accounts for the fact that: - there is a time preference for current consum...

AI summary The NSUARB mandates using the opportunity cost of capital (WACC) as the discount rate for DSM programs, aligning with Treasury Board guidelines. This reflects the alternative investment returns of funds from NS Power ratepayers. The Board rejects social discount rates except for long-term regulatory proposals, emphasizing WACC's consistency with NS Power's IRP and PAC test requirements.

Request IR-20: - a) Please cite the source for the cost of carbon used in the BCA. - b) Please explain how the proxy for the host customer was selected and measured. - i. Please describe how the proxy is estimated and applied in the BCA. -...

AI summary Request IR-20 seeks clarification on the BCA's carbon cost source, proxy selection methodology, discount rate justification, and use of Canadian vs. American rates in NSPM. Questions focus on transparency, methodology, and regional applicability of economic assumptions.

Request IR-2: - Refer to Exhibit E-1, the Application, Notice of Application, page 5, paragraph 24. - a) Explain why E1 proposes a 2 percent real discount rate for societal impact. - b) Provide any internal or external studies, regulatory...

AI summary Request IR-2 asks for an explanation of E1's proposed 2% real discount rate for societal impact, including supporting studies, precedents, or stakeholder comments. The request references Exhibit E-1, the Application, and page 5, paragraph 24.

ile it is acknowledged that federal departments rely on the Federal Social Cost of GHG Guidance to assess the costs and benefits associated with greenhouse gas emissions in Regulatory Impact Analyses, this does not preclude the use of the...

AI summary The text discusses the use of Federal Social Cost of GHG Guidance beyond Regulatory Impact Analyses, referencing hearing transcript M12282 and past NSUARB decision M06733. It emphasizes that DSM cost-effectiveness tests should use discount rates aligned with public interest, not utility shareholder preferences, and highlights the relevance of GHG emission considerations in regulatory decisions.

Inconsistency across DERs The Industrial Group takes no issue with the use of the National Standard Practice Manual (" NSPM ") for Distributed Energy Resources (" DERs" ) as a guiding framework in formulating an appropriate cost-effectiven...

AI summary The Industrial Group supports using the NSPM for DERs but highlights inconsistent application of its principles. Concerns include E1's proposed 2% discount rate, which is deemed too low and not aligned with standard practices. The need for non-green energy investments to meet net-zero goals is acknowledged, but the BCA's consistency across NSPI and IESO remains unexplored. The Industrial Group disputes the discount rate's justification and cites legislative gaps.

CONCLUSION The Industrial Group respectfully requests that the Board: - 1. Direct E1 to use the PAC as its primary test for further DSM Plan applications, and a modified version of the PAC in relation to the strategic electrification progr...

AI summary The Industrial Group requests the Board to direct E1 to use the Program Administrator Cost (PAC) as the primary test for DSM Plan applications, apply primary testing at multiple levels, confirm secondary testing, modify the BCA test if accepted, and reject a 2% social discount rate for cost-effectiveness evaluations.

Discount Rate NS Power agrees with the submission by Mr. Bowman that it is inappropriate to use a low discount rate as proposed by E1 when assessing utility resources that are complementary to, or alternatives to, bulk power projects. The...

AI summary NS Power opposes E1's proposal to use a 2% discount rate for assessing utility resources, arguing it's inappropriate for utility spending decisions. They emphasize that the cited references apply to government policy, not utility projects, and warn that a lower rate inflates long-term savings while ignoring current affordability challenges. NS Power advocates using their cost of capital to prioritize immediate financial benefits for rate payers.

4.3 APPROPRIATE DISCOUNT RATE NS Power asserts that the WACC should be the discount rate for DSM cost-effectiveness screening. NS Power's reliance on WACC as the appropriate discount rate is both legally and conceptually flawed for several...

AI summary NS Power argues for using WACC as the discount rate for DSM cost-effectiveness screening, but opponents claim it is legally and conceptually flawed. They argue WACC misapplies NSPM principles, ignores sustainability and long-term GHG benefits, and undervalues DSM programs. A 2% social discount rate is recommended, aligning with federal guidance and legislative mandates.

and pride to zero for the purposes of the 2027–2031 DSM Plan. The Consensus Agreement also reduced the proposed proxy values for the "Building Shell", "BNI" and "Solar + Storage" measures categories. [23] The proposed BCA test will use a 2...

AI summary The proposed BCA test uses a 2% social discount rate for GHG emissions reductions, aligning with intergenerational equity and statutory objectives under the Energy Reform Act and Environmental Goals and Climate Change Reduction Act. E1 supports this rate as reasonable and legally sound, citing guidance from NSPM, U.S. OMB Circular A-4, and Canadian Treasury Board Secretariat.

ustification that would be required to possibly justify a measure that would have such a negative benefit and a benefit cost ratio substantially below 1.0. [Eastward Energy Closing Submissions, p. 9] [66] In terms of reliability impacts, E...

AI summary Eastward Energy argues that benefit-cost analyses for natural gas projects must account for reliability impacts and ancillary service costs, seeking clarification from NS Power. It emphasizes balancing legislative requirements for sustainable development and critiques the 2% social discount rate. The Board is urged to ensure reliability value is captured in avoided costs.

pdated SC-GHG guidance is to be used in accordance with the Treasury Board Secretariat's regulatory guidance on cost-benefit analysis, Canada's Cost-Benefit Analysis Guide for Regulatory Proposals ." [175] In response to Board IR-5(h) aski...

AI summary The document discusses the use of discount rates in regulatory analysis, with E1 proposing a 2% social discount rate and Mr. Bowman criticizing this approach. He argues that Integrated Resource Planning (IRP) should use WACC instead, aligning with NSPM Principles. The Treasury Board guidelines are noted as applicable to regulatory proposals, not infrastructure investments.

s. 7.1 about the discount rate to be used: The discount rate is the rate at which future costs and benefits are converted to their present equivalents. Discounting accounts for the fact that: - there is a time preference for current consum...

AI summary The document establishes that the discount rate for regulatory analyses should be based on the opportunity cost of capital (WACC), as per Treasury Board guidelines. It emphasizes alignment with NS Power's IRP and the Public Utilities Act, rejecting social discount rates except for specific long-term cases. The NSUARB mandates WACC for cost-effectiveness testing of DSM programs, citing NS Power's funding source and the need for comparable evaluations.

5.0 SUMMARY OF BOARD FINDINGS [217] The Board finds it does not have the authority to approve E1's proposed BCA because the Public Utilities Act restricts the Board's ability to consider non-energy and societal benefits in assessing the co...

AI summary The Board rejects E1's proposed BCA due to the Public Utilities Act's restrictions on non-energy benefits. E1 must use PAC test and NS Power's WACC for DSM plan assessments. Strategic electrification requires GHG reduction and cost savings. Eastward is added to DSMAG. Portfolio-level cost-effectiveness evaluations are mandated.