Cut profits, cut spending, and an independent review — premier’s ideas for Nova Scotia Power
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A cut to profits, cuts to spending and an independent review of Nova Scotia Power — those are among the asks Premier Tim Houston is making to the Nova Scotia Energy Board as it considers the company’s much-maligned general rate application.
In a lengthy submission to the Nova Scotia Energy Board on Friday, Houston picked apart Nova Scotia Power’s application and called for the board to reject it.
Houston has been blunt in his criticism of the utility’s rate application since it was first made public last September, but his 20-page submission goes into greater detail than the premier — who also serves as energy minister — has previously done.
“Our submission is clear: Nova Scotia Power should demonstrate stronger performance and transparency before Nova Scotians are asked to pay more,” Houston said in a news release.
Nova Scotia Power is asking the board to approve new rates for the next two years, including an 8.1 per cent increase for residential customers within 12 months. Some other customer groups would see rates go up by smaller degrees or, in some cases, go down.
Houston urged the board to consider that individuals, businesses and local governments are facing “significant financial pressure,” and noted the province’s growing deficit.
Cut profits
He told the board he thinks the company’s return on equity should be cut from nine per cent down to 7.6 per cent. One of the board’s expert witnesses, Queen’s University finance professor Sean Cleary, suggested this change in the course of the rate hearing, and Nova Scotia Power countered that his calculations were flawed.
The change would shave about $30 million this year and about $50 million next year off the company’s revenues.
Houston also called for the board to reject $20 million in upgrades on one of the coal units at the Lingan Generating Station in Cape Breton.
The premier left the door open for securitization — an arrangement wherein the company would issue bonds for the book value of its coal plants — but not without a reassessment of the plants’ value.
Nova Scotia Power’s application includes wages for about 500 additional full-time equivalent employees, and Houston calls for the board to consider cutting that number by an unspecified amount.
If any increase is approved, Houston asks that it not be applied retroactively given that customers have been experiencing billing errors for about 10 months as a result of last year’s massive cybersecurity breach.
Independent review
The rate proposal has become a rare instance where the governing PCs and both opposition parties have found alignment. All parties oppose the rate hikes in the name of affordability and have been critical of the utility’s profits.
Now, all three parties appear to be on the same page about the need for a review.
In his submission, Houston calls for a “savings review” of the utility, which the board has the power to order under a provision of the Public Utilities Act.
The act says a savings review would look at the utility’s finances, operations and management and any other matters the board considers relevant.
The Liberals have called for the same thing. The NDP have also called for a review of the company, although with a slightly different scope. NDP Leader Claudia Chender has said the province needs to conduct a review of Nova Scotia Power’s ownership to determine if it should be bought and turned into a public entity, as it once was.
Nova Scotia Power has an opportunity to make a final response to the energy board next week before the board makes its decision on the rate application.
