N-1Fee Recovery Mechanism Application
25 passages
The Independent Energy System Operator of Nova Scotia ("IESO Nova Scotia") applies to the Nova Scotia Energy Board ("NSEB", "Board") pursuant to subsection 29(1) of the More Access to Energy Act , SNS 2024, c 2, Sch B, ("MAEA") for approva...
AI summary IESO Nova Scotia seeks approval from the NSEB to implement a new fee recovery mechanism to recover its revenue requirement from applicable LSEs. The mechanism includes a fixed monthly charge and options for annual true-up adjustments. The proposal is based on expert advice and stakeholder engagement, with a four-step cost recovery framework identified by FTI.
ystem operator ("ISO") cost recovery: determining the revenue requirement, allocating that revenue requirement to market participants, setting ISO fees, and applying collection and true-up mechanisms. - 1 IESO Nova Scotia's proposal applie...
AI summary The document discusses the revenue requirement and cost recovery for the system operator in Nova Scotia, focusing on the framework applied by IESO Nova Scotia and the fee calculation model proposed by Power Advisory. It outlines the timeline for recovery and assumptions made for the 2025/26 and 2026/27 periods.
- 14 IESO Nova Scotia identified an additional true-up option which incorporates prior year revenue - 15 requirement variances sooner via a compliance filing. In this application, that option allows for - 16 IESO to apply the under-spend f...
AI summary The IESO Nova Scotia identified an additional true-up option that allows for earlier incorporation of prior year revenue requirement variances through a compliance filing. This option enables the IESO to apply the under-spend from fiscal year 2025/26 via compliance filing, resulting in revised charges to market participants.
2. INTRODUCTION 2 IESO Nova Scotia is the recently established independent system operator for Nova Scotia, taking 3 over the system planning, energy resource procurement, and interconnection functions of NSPI. 4 Currently, IESO Nova Scoti...
AI summary IESO Nova Scotia, the independent system operator for Nova Scotia, is seeking temporary financial relief while developing a permanent fee and cost recovery mechanism. It plans to submit this mechanism for NSEB approval by Q2 2026 and recover its remaining revenue requirement from March 2027, the end of its 2026/2027 fiscal year.
IESO Nova Scotia 2026/27 Revenue Requirement Application (M12663), January 20, 2026, p.41, lines 19-27. IESO Nova Scotia provided a progress update to the NSEB on July 6, 2026, noting that its application for a fee recovery mechanism would...
AI summary IESO Nova Scotia provided an update to the NSEB regarding its application for a fee recovery mechanism, which was planned for submission in July 2026. The update was part of the IESO Nova Scotia 2026/27 Revenue Requirement Application (M12663).
10 3.2. Determination of Revenue Requirement - 11 ISOs must first determine their revenue requirement applicable for recovery from market - 12 participants. In most jurisdictions, this is accomplished through applications made to the ISO's...
AI summary The determination of revenue requirement involves ISOs identifying their core costs through applications to their respective regulatory authorities for recovery from market participants.
6 Amended from FTI report to suit the purpose of this application, but otherwise based on the FTI report information and graphics. 1 In IESO Nova Scotia's case, the process through which it determines its revenue requirement to 2 recover c...
AI summary The document outlines the process by which IESO Nova Scotia determines its revenue requirement through an application to the Board under the Maritime Electric Act. The proposed fees are based on the Board-approved revenue requirement and will be adjusted according to the Board's final decision on the 2026/27 revenue requirement application.
by energy consumption (MWh) provided to IESO Nova Scotia by the LSEs. The Proposed Mechanism uses a combination of a fixed charge and energy consumption as billing determinants. It applies a fixed charge to LSEs, but the fixed charge is al...
AI summary The Proposed Mechanism introduces a fixed charge for energy consumption based on proportional energy served by utilities, aiming to ensure revenue predictability and stability for the ISO, as costs incurred are generally fixed and evenly distributed throughout the year.
- versus actual revenues collected. 1 2 IESO Nova Scotia's Proposed Mechanism incorporates two mechanisms to account for over or 3 under forecasting: 4 • First, it proposes a revenue true-up mechanism to allow recovery of the difference be...
AI summary IESO Nova Scotia proposes two mechanisms to address revenue forecasting discrepancies: a revenue true-up mechanism to reconcile forecasted revenue requirements with actual costs, and a load actual allocation adjustment to ensure LSEs pay charges reflecting their proportional share of actual load. These mechanisms are part of the Revenue Requirement Application (M12633).
1 Figure 5: Flow of ISO Costs and Recovery Options 3 Source: FTI Analysis. 4 Notes: DSM = Demand Side Management. 5 2 6 FTI ultimately recommended Option 2a: a direct custom charge to market participants. 7
AI summary Figure 5 illustrates the flow of ISO costs and recovery options, with FTI recommending Option 2a, which involves a direct custom charge to market participants. The figure is sourced from FTI Analysis and includes a note that DSM stands for Demand Side Management.
Revenue stability - Ability to adjust charges to ease volatility in cash flows - Allows for quicker reaction to changes in billing determinants (demand/usage), in internal costs, or exogenous factors (inflation, interest rates, regulations...
AI summary The text discusses revenue stability strategies, including the ability to adjust charges to manage cash flow volatility and the application of cost causation principles. It emphasizes minimizing distortion and administrative complexity, with a focus on selecting a fee recovery mechanism that is flexible and suitable for IESO Nova Scotia's early-stage operations.
The Proposed Mechanism allows for minimal set-up costs because it allows for an initial filing for a relatively straightforward application using straightforward allocation methods (annual load) and 1 clearly defined market participants (L...
AI summary The Proposed Mechanism offers minimal setup costs and revenue stability for IESO Nova Scotia through a fixed monthly charge and load allocation adjustment mechanisms. It contrasts with Options 1a and 1b, which rely on OATT and introduce dependencies and risks related to revenue recovery.
1 2 4.2. The Proposed Fee Recovery Mechanism 3 The resulting Proposed Mechanism is based broadly on the following: 4 • A monthly charge based on IESO Nova Scotia's NSEB-approved revenue requirement 5 • Calculated by allocating IESO Nova Sc...
AI summary The Proposed Fee Recovery Mechanism involves a monthly charge based on IESO Nova Scotia's revenue requirement, allocated proportionally to each LSE based on forecast load, with an annual true-up adjustment for actual costs and load served.
13 11 In discussions with LSEs it is recognized that not all LSEs would have a detailed forward looking FY load forecast, and so based on the relatively stable load growth seen in the province that historic actuals from the most recent cal...
AI summary The document discusses the need for a Revenue Requirement Deferral and Variance Mechanism (DVM) to ensure IESO Nova Scotia can recover actual costs incurred, given its not-for-profit status. This mechanism would allow for truing up revenue requirements based on actual loads and account for fiscal year variances, as outlined in the 2026/27 Revenue Requirement application and referenced in FTI's Jurisdictional Report.
1 Figure 9 – Revenue Requirement True-Up Example Source: FTI Analysis.[13](#page-29-0) 3 2 5 11 4 Notes: (1) Year 2 is not shown as it is not relevant to the Year 1 true-up. 6 The example above contemplates under-recovery of revenue requir...
AI summary The document presents two options for revenue requirement true-up, with a focus on Option 2, which allows for earlier refunds or recovery of over- or under-recovered amounts by using a compliance filing process. This approach reduces carrying costs and benefits market participants and ratepayers sooner.
1 For this fee recovery mechanism application, an illustrative example of both true-up methodology 2 options is provided in Appendix 3 - Fee Calculation Model. The compliance filing option 3 under-spend of $313,84114 incorporates IESO Nova...
AI summary The document outlines a fee recovery mechanism application that includes a true-up methodology and load allocation adjustment. It describes how revenue requirement true-ups and load allocation adjustments would be calculated and applied annually based on forecast and actual load served data. The process involves adjustments by the DVM and requires LSEs to submit actual load data to IESO Nova Scotia.
3 Figure 11: Option 1 – Detailed Timeline of Filings and Inputs 5 4 2 - 6 For the compliance filing True-Up Option 2, the true-up and load allocation deltas are attributed - 7 to each LSE by adding to or subtracting from the LSE's allocati...
AI summary The text outlines the process for the compliance filing True-Up Option 2, where true-up and load allocation deltas are attributed to each Load Serving Entity (LSE) by adjusting their allocation of the FY2 forecasted revenue requirement to determine FY2 fees. The timeline and cadence of inputs and filings under Option 2 are detailed in Figures 12 and 13.
3 Figure 13: Option 2 – Detailed Timeline of Filings and Inputs 4 5 - 6 For this application, IESO Nova Scotia has used actual load in 2025 to allocate the 2025/26 - 7 revenue requirement and forecast 2026 loads to allocate the 2026/27 rev...
AI summary The IESO Nova Scotia uses actual load data from 2025 to allocate the 2025/26 revenue requirement and forecasts 2026 loads for the 2026/27 revenue requirement. It is open to using recent actual loads for MEUs to reduce administrative burden and may update forecasts with more recent data in compliance filings.
1 5. FEE CALCULATION AND MODEL - 2 Power Advisory was engaged by IESO Nova Scotia to create a model for the calculation of its fees - 3 to the LSEs, and the corresponding annual revenue true-up mechanism and load allocation - 4 adjustment,...
AI summary The document outlines the fee calculation model developed by Power Advisory for IESO Nova Scotia, based on annual revenue requirements and load allocation adjustments. The model uses forecasted consumption volumes to determine each LSE's share of the revenue requirement and includes a true-up mechanism to adjust for variances between forecast and actual figures.
3 Annual Fee 2025/26 2026/27 Total Total Revenue Requirement $5,306,824 $14,850,121 $ 20,156,945 Market Participant MWh % Annual Fee MWh % Annual Fee Annual Fee NSPI 10,634,708 98.57% $ 5,230,798 10,525,592 98.55% $ 14,635,202 $ 19,866,000...
AI summary The table outlines the revenue requirement and annual fees for various market participants in Nova Scotia for the fiscal years 2025/26 and 2026/27. Nova Scotia Power Incorporated (NSPI) is the largest contributor, followed by smaller entities like Berwick Electric Commission and Riverport Electric Light Commission.
3 Figure 15 - Monthly Fees with 2025/26 True-Up by Compliance Filing Total 2025/26 and 2026/27 Revenue Calculation 2025/26 True-Up Total Monthly Fee Market Participant Total Fees (2025/26 + 2026/27) Interim Fee Recovered before Implementat...
AI summary Figure 15 outlines monthly fees with a 2025/26 true-up by compliance filing, detailing revenue calculations and allocations for various market participants. NSPI and other entities are listed with their respective fees, unrecovered amounts, and monthly charges.
6 adjustment applicable to fees in future fiscal year. The model is capable of adjustments to any 7 aspect of the fee calculation inputs and assumptions, including the timeframe over which fees may 8 be spread, and the potential impact, if...
AI summary The document discusses the method for calculating IESO Nova Scotia fees to be charged to LSEs, based on annual revenue requirement and fees applications. It references Section 29(3) of the MAEA and outlines the process if the NSEB does not approve new fees for the 2027/28 fiscal year.
9 Figure 17 - Continuation of Fees to LSEs Post March 31, 2027 with 2025/26 True-Up Total Monthly Fee Calculation Market Participant Proposed Annual Fee 2026/27 Before True-Up 2025/26 True-Up Proposed Annual Fee 2026/27 with True-Up # Mont...
AI summary Figure 17 presents the continuation of fees to Load Serving Entities (LSEs) post March 31, 2027, with a 2025/26 true-up adjustment. The table shows the proposed annual fees for various entities, including NSPI and others, before and after the true-up, along with monthly fees and the number of months of revenue collection.
IESO Nova Scotia respectfully requests that the Board approve: - 1. The Proposed Mechanism, including the applicable market participants and the billing - determinants, as the fee recovery mechanism to be used by IESO Nova Scotia in collec...
AI summary IESO Nova Scotia is requesting the Board's approval for a new fee recovery mechanism, including a fixed monthly charge to Load Serving Entities (LSEs) based on their proportion of actual load served, with an annual revenue true up and load allocation adjustment. Specific monthly fee amounts are proposed for various entities, including NSPI and several smaller electric commissions.
DATE FILED: July 31, 2026 Page 46 of 48 1 7. CONCLUSION IESO Nova Scotia respectfully submits that the Proposed Mechanism is fair, reasonable, and appropriate for approval. It provides a practical and necessary means of recovering IESO Nov...
AI summary IESO Nova Scotia submits that the Proposed Mechanism is fair, reasonable, and appropriate for approval. It provides a means of recovering revenue from market participants, consistent with its statutory mandate and not-for-profit status. The mechanism includes a fixed monthly direct charge to LSEs, with adjustments based on annual load served and true-up processes.
N-1-(i)Appendix 1 - ISO Enduring Fee Cost Recovery Jurisdictional Scan
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Process Figure 2: Summary of typical process for setting tariffs and recovering costs The process for setting ISO tariffs to recover Core Costs typically involves four steps: - 1) Determining the revenue requirement : Typically, the revenu...
AI summary The process for setting ISO tariffs to recover Core Costs involves four steps: determining revenue requirements, allocating costs to market participants, setting tariff rates, and collecting tariffs with periodic true-ups. The methodology varies by jurisdiction and includes energy-based, demand-based, and hybrid approaches.
Step 1: Determination of revenue requirement The process begins with the ISO forecasting its revenue requirement for its Core Costs over the period of assessment, which is the revenue that it must recover through its tariffs and charges to...
AI summary The determination of revenue requirement begins with the ISO forecasting its Core Costs over the assessment period, which must be recovered through tariffs and charges. In Ontario, the IESO prepares a 3-year business plan approved by the Ontario Energy Board, while in Alberta, the AESO Board of Directors approves it internally.
Step 2: Allocation of revenue requirement The revenue requirement is then allocated across the relevant services to determine the MPs that bear these costs. As we discuss in more detail below, these are typically LSEs and large loads conne...
AI summary The revenue requirement is allocated across services, typically borne by LSEs and large loads connected to the transmission network, generation, and intertie traders, which are passed on to end-users. In GB, NESO levies BSUoS on LSEs, who recover these costs from ratepayers. ISOs, except NESO, are non-profit, and specific costs can be charged directly to relevant users.
For LSEs there is a final step consisting of how they recover the ISO costs that they are charged. Each LSE will have its own unique ratemaking process, to determine how its share of the ISO's revenue requirement is recovered from end user...
AI summary The text discusses how Load Serving Entities (LSEs) recover ISO costs from end users through their ratemaking processes, highlighting that some ISO charges, like capacity-based ones, cannot be directly passed through due to non-simultaneity of peak usage. Examples from New England and California are referenced to illustrate this.
N-1-(ii)Appendix 2 - ISO Enduring Fee Cost Recovery Recommendation
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("MPs") (similar to the ISOs in Australia and Ontario). Fourth and last, a direct fee to NSP who passes through a proportion of the fee to the other relevant MPs (similar to the EfficiencyOne model). In the immediate future, we propose to...
AI summary The document proposes introducing a Direct Charge as a fee recovery mechanism for the IESO NS, where the IESO charges relevant MPs a fixed monthly fee proportional to their annual electricity consumption. This approach aims to reduce setup and administrative costs, provide flexibility for future changes, ensure revenue stability, and align with economic principles.
Billing determinants Billing determinants are the specific units of service consumption, such as megawatt-hours ("MWh"), megawatts ("MW"), or number of customers, used to calculate charges and determine how a revenue requirement is collect...
AI summary Billing determinants are units of service consumption used to calculate charges and revenue requirements. They can be based on usage (MW or MWh) or fixed charges. Cost reflectivity is a key principle for regulated activities, as export charges can distort efficient trading patterns and shift revenue recovery.
3.Revenue requirement process and options for Nova Scotia Nearly all ISOs operate on a cost recovery basis rather than for profit, that is, they aim to recover their approved costs through regulated [t](#page-7-1)ariffs and fees with no ab...
AI summary This section discusses how ISOs typically operate on a cost recovery basis, aiming to recover approved costs through regulated tariffs and fees without earning a profit. It outlines the typical process for setting tariffs and recovering costs, with a focus on implementing this process in Nova Scotia for the IESO.
Step 1: Determination of revenue requirement The process begins with the ISO forecasting its revenue requirement for its Core Costs over the period of assessment, which is the revenue that it must recover through its fees to fund its opera...
AI summary The determination of revenue requirement begins with the ISO forecasting its revenue for Core Costs over the assessment period, which is the amount it must recover through fees to fund operations. This is typically approved by a third-party authority.
Step 1 Considerations for Nova Scotia The determination process of the IESO revenue requirement, and relevant regulatory approval is already prescribed in the More Access to Energy Ac t, SNS 2024, c 2, Sch B, (the "Act") . This determines...
AI summary The document outlines the process for determining the IESO's revenue requirement under the More Access to Energy Act, requiring submission 90 days before each fiscal year and approval by the Nova Scotia Energy Board. Until approval, previous year fees remain in effect.
Step 2: Allocation of revenue requirement The revenue requirement is then allocated across the relevant services to determine the MPs that bear these costs. The revenue requirement can be split to cover (i) 'inseparable costs' incurred for...
AI summary The revenue requirement is allocated between inseparable and direct costs. Inseparable costs are spread across multiple market participants, while direct costs are attributed to specific beneficiaries. This approach is compared to the polluter pays principle, where costs are allocated based on the actions of specific market participants, particularly relevant for interconnection requests.
Step 2 Considerations for Nova Scotia Inseparable costs (which include integrated resource planning, employees, and administrative costs for example) are inherent to the running of the IESO, from which the broader customer base (rather tha...
AI summary Inseparable costs, such as those related to integrated resource planning and administrative expenses, are recovered across the Nova Scotia transmission system customer base. Only third-party recoveries for interconnection study procedures are considered direct costs with identifiable beneficiaries.
Steps 3 and 4: Set ISO fees and collection and true-up Once step 1, determining the revenue requirement (and associated ISO Core Costs), as well as step 2 to allocate between direct costs and inseparable costs are complete, step 3 will set...
AI summary Steps 3 and 4 involve setting ISO fees for recovering inseparable Core Costs and defining collection and true-up mechanisms. ISOs charge MPs directly for specific services, and true-up mechanisms are necessary due to variations between forecasted and actual Core Costs and billing determinants.
cost driver, such as inseparable ISO Core Costs. However, given the degrees of freedom in choosing the billing determinants and process under this option, we propose a hybrid billing determinant that 28 Load diversity refers to the extent...
AI summary The text discusses a hybrid billing determinant model that combines a fixed charge with energy consumption-based allocation. A monthly fixed charge is proposed, proportional to each Market Participant's annual forecast share of consumption. This approach aims to ensure revenue predictability and stability for the IESO, regardless of seasonal or usage fluctuations.
Ranking Ranking of each of the four options based on the five criteria indicates that a custom Direct Charge to MPs would most effectively recover IESO fees from users of the system, as shown in [Figure 11.](#page-21-0) Figure 11: Ranking...
AI summary The text evaluates four options for recovering IESO fees, concluding that a custom Direct Charge to MPs is most effective. It considers criteria like set-up costs, administrative simplicity, flexibility, revenue stability, and economic principles. A fixed charge offers revenue stability and minimizes behavioral distortions.
Appendix 1: Detailed example of Direct Charge to each MP (Option 2.a.) To provide more detail and explanation on how the monthly charges for a Direct Charge to MPs would work, the figures below provide additional illustration of the recomm...
AI summary This appendix details the structure of monthly charges for Market Participants (MPs) under a Direct Charge mechanism. The charge consists of a base allocation, an allocation adjustment based on forecast vs. actual load share, and a true-up based on forecast vs. actual IESO revenue requirement. The total revenue collected by the IESO is derived from base allocations and true-up amounts, while allocation adjustments net to zero.
Base allocation design The base allocation to recover the IESO's revenue requirement for the current year will be derived from two key inputs: the IESO's forecast budget for the year, and the forecast load of each MP. This is further illus...
AI summary The base allocation design involves calculating the IESO's revenue requirement based on its forecast budget and each MP's forecast load. Each MP is charged the same amount monthly, ensuring the IESO collects consistent revenue.
True-up design The true-up will resolve any over/under-forecast of IESO revenue requirement. As shown in [Figure 15](#page-26-0) [below,](#page-26-0) if the IESO's revenue needs are higher than forecast when setting the charge, it will inc...
AI summary The true-up mechanism adjusts the IESO's revenue requirement based on actual performance compared to forecasts. If revenue needs are higher than forecast, additional charges are collected in future years. If lower, charges are reduced. The adjustment is allocated based on each MP's actual load share for the year being trued up.
Allocation adjustment and true-up working in tandem – IESO perspective Both allocation adjustment and true-up will be recovered in future years, however, they will be collected during different periods. The reason for this difference in co...
AI summary The IESO explains that allocation adjustments and true-ups are recovered in different periods due to differences in data collection timing. Allocation adjustments are reconciled in Year 2, while true-ups are applied in Year 3. This timing difference affects how revenue requirements are calculated and applied over time.
Allocation adjustment and true-up working in tandem – MP perspective From an individual MP perspective, its bill in a given year is made up of three components: its share of that year's IESO revenue requirement, its adjustment for the prio...
AI summary From an MP perspective, their bill in a given year consists of three components: their share of the current year's IESO revenue requirement, an adjustment based on the prior year's load forecast, and their share of the revenue requirement from two years prior. Examples illustrate how these components affect the MP's bill in Year 3, considering under-forecasting in Year 1 and updated revenue requirements for Years 2 and 3.
Flexibility for future changes The flexibility for future changes criterion illustrates how the recovery mechanism is adaptable to changes such as i) an increase in transmission service competition; ii) an increasing IESO role (future ener...
AI summary The flexibility for future changes criterion highlights the adaptability of the recovery mechanism to potential changes, such as increased transmission service competition, evolving IESO roles, and shifts in the market participant landscape, including greater Renewable-to-Retail participation and special power purchase agreements.
Revenue stability The revenue stability criterion shows i) how the recovery mechanism can adjust charges to reduce cash flow variability, and ii) whether it enables a quicker response to changes in billing determinants (demand/usage), inte...
AI summary The revenue stability criterion evaluates how a recovery mechanism can adjust charges to reduce cash flow variability and enable a quicker response to changes in billing determinants, internal costs, and external factors such as inflation and regulatory changes. This is important for the IESO to ensure it can meet cash flow needs for large investments.
N-4IESO (IG) RIR 1 to 11
6 passages
1 Total 11,273,881 100.00% 19,875,875 10,526,824 0.18881 3CP 3CP % Allocated Revenue Requirement 2027 Forecast Billed MWh ¢/kWh Residential 4,351,189 65.06% 12,931,101 5,174,286 0.24991 Pros Small General 230,332 3.44% 684,513 356,341 0.19...
AI summary The document presents revenue requirement allocations and billing data across various customer classes for 2027, including comparisons between different allocation methods and criticisms of inconsistencies in cost allocation practices by NSP and IESO.
NON-CONFIDENTIAL fees. Otherwise, IESO Nova Scotia will obtain load served forecast and actuals from LSEs for all LSE served load irrespective of the source from which the load is being served. c) Please refer to NSEB IR-21. Entities wheel...
AI summary IESO Nova Scotia outlines its fee recovery mechanism, clarifying that it does not apply to intertie traders and that interconnection study costs are billed to customers. The proposed mechanism differs from the OATT, and the term 'netted out' refers to direct costs not being included in the Revenue Requirement.
Response IR - 5 a) Existing LSEs will be credited or adjusted once the RtR supplier becomes operational and is added as a fee-paying LSE. This will likely be done by way of the next revenue requirement, proposed expenditures, and fees appl...
AI summary This response outlines how existing LSEs will be adjusted once the RtR supplier becomes operational, including redistribution of IESO Nova Scotia fees based on load served. NS Power's share of total Nova Scotia load is expected to decline from 98.6% to 95.1% as the RtR supplier becomes fully operational.
22 b) Confirmed. IESO Nova Scotia will disclose proportional load data, forecast and 23 actual, via fee calculation models in its annual Revenue Requirement, Proposed 24 Expenditures, and Fees applications.
AI summary IESO Nova Scotia will disclose proportional load data, forecast and actual, via fee calculation models in its annual Revenue Requirement, Proposed Expenditures, and Fees applications.
Response IR - 11 Date Filed: September 22, 2026 IESO Nova Scotia (IG) IR - 11 a) Under True-up Option 2, a compliance filing would be made shortly after NSEB decision issuance on FY2 Revenue Requirement, Proposed Expenditures, and Fees app...
AI summary IESO Nova Scotia proposes that under True-up Option 2, a compliance filing would be made shortly after the NSEB decision on FY2 Revenue Requirement, including adjustments based on FY1 actuals. It argues that no separate NSEB process for reviewing the variance would be needed, as prudency review would occur in FY3.
NON-CONFIDENTIAL Revenue Requirement, Proposed Expenditures, and Fees application submitted to the NSEB by December 31 in FY2. Recourse for LSEs would be considered as part of the FY3 application – any potential adjustments to the fees cou...
AI summary The document discusses revenue requirements, proposed expenditures, and fees submitted to the NSEB, with recourse for LSEs considered in the FY3 application. It also outlines the carrying cost of IESO Nova Scotia and how over- or under-recovery impacts subsequent revenue requirements.
N-10Evidence - LEI
14 passages
Review of IESO Nova Scotia's fee recovery mechanism application prepared for the Nova Scotia Energy Board by London Economics International LLC October 13th, 2026 London Economics International LLC ("LEI") was engaged by the Nova Scotia En...
AI summary The document reviews IESO Nova Scotia's fee recovery mechanism and finds it reasonable as an interim measure. However, it recommends a more detailed cost allocation and a shift to a usage-based fee post-Phase 2 transition, considering the operator's evolving role.
ase 1 mandate. Once Phase 2 is implemented, the NSEB may wish to direct IESO Nova Scotia to undertake a more granular, function-level cost allocation exercise, including explicit treatment of exports. - iii. Flat monthly fee (as opposed to...
AI summary The text discusses interim measures for fee recovery during Phase 2 implementation, suggesting a flat monthly fee based on load served as a temporary solution. It also recommends re-evaluating the fee recovery mechanism, including potential changes to the Open Access Transmission Tariff (OATT), after Phase 2 steady-state operation.
I recommends that this re-evaluation, including recovery through OATT schedules, form part of its first revenue requirement application after the Phase 2 transition, rather than a separate proceeding. - v. True-up application options, i.e....
AI summary LEI recommends integrating re-evaluation and recovery through OATT schedules into the first revenue requirement application post-Phase 2 transition. It also prefers a two-year lag via annual revenue requirement application for regulatory efficiency and finds the fee calculation methodology reasonable, aligning with cost allocation and rate design principles.
LEI assessment Principles applied Key observations Interim mechanism (Sections 5.2-5.4) Accept the flat monthly fee, allocated Administrative simplicity and transparency Fixed monthly charges recover IESO Nova Scotia's largely fixed costs...
AI summary The document discusses the interim mechanism for cost recovery, including a flat monthly fee allocated to LSEs, granular cost allocation for Phase 2, billing determinants based on MW/MWh, and the recovery mechanism through OATT schedules. It also addresses true-up and fee calculation methodology.
IESO Nova Scotia is the recently established independent system operator for Nova Scotia.[1](#page-5-1) Under Phase 1 of the transition contemplated by the More Access to Energy Act ("MAEA"), IESO Nova Scotia has assumed the system plannin...
AI summary IESO Nova Scotia, the new independent system operator, has assumed system planning and procurement functions from NS Power but does not yet control the transmission grid. It currently recovers revenue through temporary fees charged to NS Power, approved by the NSEB in Matter M12663, and plans to submit a permanent fee recovery mechanism in 2026.
ESO Nova Scotia committed to develop a permanent fee recovery mechanism, informed by jurisdictional research and stakeholder engagement, and to submit it for the NSEB's approval in 2026.[3](#page-5-3) On July 31st, 2026, IESO Nova Scotia f...
AI summary IESO Nova Scotia has proposed a fee recovery mechanism to recover its revenue requirement through fixed monthly charges to LSEs, with approval sought from the NSEB. The mechanism includes interim payments, a true-up process, and future fee approvals as part of annual revenue applications.
5 Reasonableness review for proposed recovery of IESO Nova Scotia's revenue requirement This section assesses the reasonableness of IESO Nova Scotia's fee recovery proposal. Specifically, it presents the results of LEI's review of the foll...
AI summary This section evaluates the reasonableness of IESO Nova Scotia's proposed fee recovery, focusing on components of the revenue requirement, allocation methods, fee structures, recovery mechanisms, true-up application options, and calculation methodologies.
5.1 Revenue requirement components Per the fee recovery application, IESO Nova Scotia is currently responsible for system planning, energy resource procurement, and interconnection functions, but does not yet have operational control of th...
AI summary The document discusses the revenue requirement components for IESO Nova Scotia, highlighting that most costs are fixed and primarily include employee, transition, and IT hardware costs. These costs do not vary significantly with energy throughput, and IESO Nova Scotia's costs are expected to remain fixed even as it assumes additional responsibilities under the MAEA.
As summarized in [Figure 4,](#page-13-1) the ISOs reviewed recover their revenue requirements through several service-specific charges rather than a single undifferentiated fee: (i) PJM and ISO-NE apply separate tariff schedules for each a...
AI summary The document discusses how different ISOs recover their revenue requirements through service-specific charges rather than a single fee, highlighting examples from PJM, ISO-NE, AESO, IESO, and NYISO.
ponses to Industrial Group (IG) Information Requests. IR-1, Attachment 1. September 22nd, 2026; Nova Scotia Energy Board. Matter M13007. Appendix 3 – Fee calculation model . July 31st, 2026. As such, a MW or MWh based fee is a more economi...
AI summary The text discusses the recommendation of a MW or MWh based fee for recovering revenue requirements, emphasizing economic efficiency and alignment with cost causation principles. It also suggests that the OATT may be a suitable avenue for revenue recovery as IESO Nova Scotia takes on Phase 2 responsibilities.
allocates a portion of these costs to the municipal utilities. Source: Nova Scotia Power. [Efficiency One.](https://www.nspower.ca/about-us/who-we-are/nova-scotia-efficiency) Accessed September 2026. 42 NSEB. Matter M13007. Appendix 2 - IE...
AI summary The document discusses the appropriateness of the proposed recovery mechanism, specifically direct invoicing, in the context of transmission charges. It references the Open Access Transmission Tariff (OATT) and the IESO Nova Scotia Fee Recovery Mechanism Application. NS Power invoices municipal utilities for transmission-related charges, and the billing infrastructure is already largely in place.
5.5 Appropriateness of the proposed true-up options IESO Nova Scotia's proposed revenue requirement true-up builds on the revenue requirement Deferral and Variance Mechanism ("DVM") proposed in its 2026/27 revenue requirement application,...
AI summary IESO Nova Scotia proposes two true-up options for revenue requirement variances. Option 1 defers adjustments to the revenue requirement application two years later, while Option 2 allows for earlier refunds or collections. LEI recommends Option 1 due to its lower compliance costs and minimal financial benefits of Option 2, despite potential future benefits as revenue requirements grow.
red balance, net of $9.5 million), 0.8% to the Town of Antigonish, 0.4% to Berwick Electric Commission, 0.1% to the Town of Mahone Bay, and 0.1% to Riverport Electric Light Commission.[54](#page-22-1) The recovery timeline at the bottom of...
AI summary The document discusses the fee calculation methodology for recovering revenue requirements, detailing the distribution of fees among various entities and the timeline for interim and final fee recovery. LEI deems the methodology reasonable, citing traceable inputs and proportional allocation of monthly fees among LSEs. NS Power's volumes are aligned with IESO Nova Scotia's fiscal year.
6 Concluding remarks LEI has assessed IESO Nova Scotia's fee recovery mechanism application against the rate design principles set out in Section [3,](#page-7-0) and in light of IESO Nova Scotia's current Phase 1 mandate described in Secti...
AI summary LEI evaluates IESO Nova Scotia's fee recovery mechanism and finds it reasonable as an interim measure. It recommends a granular cost allocation and a billing determinant based on MW or MWh once IESO Nova Scotia's Phase 2 mandate is implemented. LEI also suggests incorporating variances into the revenue requirement application and recommends Option 1 for true-up due to regulatory efficiency.
N-11Evidence - John Wilson on behalf of CA
8 passages
Q: Will a fixed monthly direct charge lead to revenue stability? A: Yes. As discussed by FTI, a fixed monthly direct charge based on the annual revenue requirement would fully recover IESO NS's forecast revenue requirement, regardless of v...
AI summary A fixed monthly direct charge based on the annual revenue requirement would ensure revenue stability for IESO NS, regardless of system usage fluctuations. Monthly adjustments could lead to frequent over- or under-recovery, increasing administrative complexity. Seasonal variations in usage-based fees would require an operating reserve, potentially increasing costs for customers.
Q: What is your recommendation to the Board on the use of a fixed monthly direct charge? - A: I support the IESO NS proposal to use a fixed monthly direct charge to LSEs as the structure for the fee recovery mechanism. - I agree that reven...
AI summary The respondent supports the IESO NS proposal to use a fixed monthly direct charge to LSEs for fee recovery, citing revenue stability and administrative simplicity as key reasons. The recommendation is based on the assumption that IESO NS costs will not vary significantly with load or energy use.
Q: What is the IESO NS proposal for allocation of its revenue requirement to LSEs? - A: IESO NS proposes that the fixed monthly direct charge be allocated to LSEs, who are the only market participants,[8](#page-6-2) based on annual load se...
AI summary The IESO NS proposes allocating a fixed monthly direct charge to LSEs based on annual load served, with a true-up mechanism. This proposal is not based on cost-causation, as economic principles offer limited guidance on selecting a billing determinant.
A. Per-MW Allocation Should Not Be Used - Q: Do you agree with IESO NS and FTI that a demand-based, or per-MW allocation, should not be used? - A: Yes. FTI provides sound reasons against (a) allocating the charge on a per-MW basis and (b)...
AI summary The response agrees with IESO NS and FTI that a per-MW allocation should not be used due to revenue variability and equity concerns. The OATT mechanism is criticized for potential over- or under-recovery of costs, especially in Nova Scotia’s smaller system with less load diversity. Alternative recovery methods, such as direct LSE invoicing, are suggested.
Q: Is there an alternative to a true-up mechanism? A: There is not a good alternative in the case of a non-profit entity such as IESO NS. FTI correctly lays out the case for a true-up mechanism, as follows: True-up mechanisms are required...
AI summary The response discusses the necessity of a true-up mechanism for non-profit entities like IESO NS, explaining that alternatives such as a future test year do not eliminate the need for true-up due to cost uncertainty and rate variability.
Q: Do you agree that Option 2 will achieve a full true-up? A: No. While I agree that IESO NS's recommended Option 2 is preferable to Option 1, it will not fully true-up cost recovery because it relies on unvetted data. In Option 2, after t...
AI summary The respondent disagrees with Option 2 achieving a full true-up due to reliance on unvetted data. While Option 2 is preferable to Option 1, it would defer prudence review of FY1 actual costs to FY3, potentially leading to cost recovery adjustments in future rates.
Q: Is this schedule feasible? A: I believe so. As a model, I considered the June 30, 2026 hearing order for the 2027/2028 NSPML revenue requirement and cost assessment application (M12914). That application has information requests due on...
AI summary The schedule is deemed feasible based on the June 30, 2026 hearing order for the 2027/2028 NSPML revenue requirement and cost assessment application (M12914). The timeline assumes no oral hearing and includes deadlines for information requests and reply submissions, allowing for an order prior to January 1. Adjustments may be necessary if prudency issues are complex.
C. Treatment of Carrying Costs - Q: How would carrying costs be considered in your recommendation? - A: As confirmed by IESO NS, there is no need for the complexity of the NS Power FAM AA/BA process. The FAM true-up is complicated due to m...
AI summary The discussion focuses on how carrying costs would be treated in the recommendation, with IESO NS stating that carrying costs would be fully recovered through approved fees via the Revenue Requirement, Proposed Expenditures, and Fees applications. It also notes that carrying costs are not anticipated to be applied to the true-up balance.
103392IG (IESO Nova Scotia) IR 1 to 11
5 passages
1 Request IR-2: 2 Reference: Application, Section 3.2, p. 12, lines 13-15. In future years, IESO Nova Scotia proposes to apply for approval of its fees as part of its revenue requirement applications using the Proposed Mechanism – in that...
AI summary IESO Nova Scotia proposes to combine Step 1 of the fee-setting process with revenue requirement applications. The Board is asked to explain how the fee recovery mechanism would operate if the revenue requirement application is not fully approved and returned with recommendations, including the anticipated timeline for any iterative review and approval process.
10 Request IR-4: - 11 Reference: Application, s. 3.3, p.13 Identification of Market Participants, and - 12 Reference: Appendix 2, p. 7, footnote 5. - 13 (a) Please confirm whether any large industrial customer in Nova Scotia is, or 14 in t...
AI summary The request asks whether large industrial customers in Nova Scotia may be directly connected to the transmission system instead of being served through NSPI or an MEU, and if so, how their share of IESO-NS's revenue requirement would be recovered under the Proposed Mechanism.
1 Request IR-9: - 2 Reference: Application, Section 5, Figure 14, p.41; Figure 15, p.42-43. - 3 Preamble: The Fee Calculation Model determines the remaining 2025/26 and 2026/27 - 4 revenue requirement fees to be collected from LSEs over th...
AI summary The text requests confirmation of the total 'Total Unrecovered Fees' to be collected from NSPI over a four-month period in 2026–2027, under two True-Up Options, and whether alternatives to full recovery of the shortfall were considered, including the impact on rate smoothing for NSPI.
20 Request IR-10: - 21 Reference: Application, Section 4.4 (Load Allocation Adjustment), p.33, lines 4-6; - 22 Appendix 2, p.19-20. - 23 Preamble: The load allocation adjustment reconciles each LSE's forecast versus actual - 24 annual load...
AI summary The request asks for a numerical example of how the load allocation adjustment would be calculated and applied in a scenario where NSPI's actual load share differs from its forecast by 1 percentage point. It also asks whether IESO-NS plans to disclose this information annually and make it available to intervenors.
6 Request IR-11: - 7 Reference: Application, Section 4.3 (Revenue Requirement True-up Option 2), p.31-32; - 8 Section 5, p.39, footnote 17. - 9 Preamble: IESO-NS's preferred true-up methodology (Option 2) would see revenue - 10 requirement...
AI summary The text outlines a request for detailed information on IESO-NS's preferred true-up methodology (Option 2), including the process for compliance filings, stakeholder scrutiny, prudency review timelines, and the impact of carrying costs on fee amounts for different true-up options.
103397SBA (IESO Nova Scotia) IR 1 to 12
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Refer to M13007, Exhibit N-1, Application, Section 1. Executive Summary, page 4 of 48, at lines 1-11 and Figure 1 at lines 12-13 on the same page: a) If IESO-NS takes over control of the grid in the future, as contemplated in Phase 2, and...
AI summary The text raises two questions regarding the potential transfer of grid control to IESO-NS in Phase 2 and the financial implications. It asks whether incremental costs from Phase 2 operations would be added to revenue requirements and if a true-up mechanism would be used, and when such a mechanism would be evaluated and approved.
Request IR-2: Up (Compliance). Refer to M13007, Exhibit N-1, Application, Section 1, Executive Summary, page 3 of 48, lines 10-16, which states: IESO Nova Scotia proposes a fixed monthly direct charge to load serving entities ("LSEs") in N...
AI summary The document outlines a request (IR-2) concerning the allocation of a fixed monthly direct charge to load serving entities (LSEs) by IESO Nova Scotia, with questions about the methodology for allocating charges based on annual load served and discrepancies in credit calculations for Berwick Electric Commission.
Request IR-3: Refer to M13007, Exhibit N-1, Application, Section 3.3 Allocation of Revenue Requirement to Market Participants, page 16 of 48, at lines 7-22. a) What changes does the transition to Phase 2 entail in terms of employee assignm...
AI summary Request IR-3 and IR-4 seek clarification on changes in employee assignments during Phase 2, the functions performed by IESO-NS under the Open Access Transmission Tariff, and the relevance of jurisdictional scan findings to Nova Scotia. They also ask about the entities served by IESO-NS, the applicability of the More Access to Energy Act, and financial assurance requirements for market participants.
Request IR-5: Refer to M13007, Exhibit N-1, Application, Section 4.2 The Proposed Fee Recovery Mechanism, which includes descriptions of Revenue Requirement True-Up Option 1 on pages 29-30 of 48 and Option 2, on pages 30-33 of 48. And refe...
AI summary The text requests information regarding IESO-NS's financial statements, under-spending in specific categories, carrying costs, and the application of the true-up mechanism under the More Access to Energy Act. It also seeks an illustrative example of true-up calculations including carrying costs.
Request IR-6: - Refer to M13007, Exhibit N-1, Application, Section 4.2 The Proposed Fee Recovery Mechanism, - which includes Figures 10 and Figure 12, illustrating the timeline for Revenue Requirement True- - Up Option 1 and Option 2, on p...
AI summary The text outlines several regulatory inquiries regarding the proposed fee recovery mechanism, load allocation adjustments, and ISO core costs. It asks about the impact of missed deadlines, verification methods, penalties for non-compliance, and the classification of interconnection study costs under core costs.