Nova Scotia has enabled a financing approach that Premier Tim Houston previously doubted, allowing regulators to formally assess a Nova Scotia Power proposal the utility says would save customers about $265 million over time.
The plan could add a charge to electricity bills, even though Nova Scotia Power says it would cut borrowing costs for ratepayers over the long term, according to CBC News.
Here's what to know
By changing regulations under the Public Utilities Act, the province has given the Nova Scotia Energy Board the ability to consider — and potentially approve — Nova Scotia Power's securitization proposal.
Under securitization, a company can take certain assets or costs off its books and refinance them at lower interest rates, spreading the benefit over a longer period.
Nova Scotia Power submitted a 430-page application after cabinet approved the new rules. In that filing, the utility said the plan would apply to $1 billion in eligible costs and repay it over 30 years, saving customers about $265 million over the life of the debt.
The costs covered under the application are broader than the coal plants that featured prominently in earlier rate hearings.
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The list also includes fuel for power generation, deferred costs, and spending related to setting up the Nova Scotia Independent Energy System Operator.
For the government, Stephen MacDonald, the province's deputy energy minister, said the main goal is affordability.
"We're always looking for ways and tools to help lower power costs for Nova Scotians," MacDonald said, per CBC News.
More background
The move represents a clear change from January, when Houston — who is also the energy minister — openly questioned the idea.
"I would find it a little hard to believe that Nova Scotia Power has come up with some way to use accounting to save ratepayers money," he said at the time.
One central issue has been Nova Scotia Power's five coal plants, all of which are due to shut down in 2030.
Under the province's cost-of-service system, the utility can still recover those costs, and CBC reported that regulators had already allowed the plants to be placed in a temporary holding account instead of immediately pushing rates higher.
Under Nova Scotia Power's proposal, residential customers would see a 2.9% securitization rider in 2027. When added to a previously approved 3.9% rate increase for the same year, the total increase for residential customers would reach 6.8%.
Political criticism has grown as well.
NDP Leader Claudia Chender alleged that the government was offering the utility a bailout for costs it should absorb, while Interim Liberal Leader Iain Rankin argued the delay may have deprived ratepayers of earlier savings, per CBC News.
What's being done?
The matter will go before the Nova Scotia Energy Board, which can weigh the evidence and decide whether the refinancing proposal is in customers' best interests.
MacDonald said the province intends to participate in the hearing as an intervener, although officials have not settled on how extensive that involvement will be. He also said the government was seeking a fuller review than the temporary steps used in earlier rate hearings.
The proceeding is expected to look beyond the refinancing structure itself.
It could also bring renewed attention to the value Nova Scotia Power assigns to its coal plants, which Houston identified in January as a major concern when the company used a $700 million valuation.
At the core of the review will be whether the long-term benefit of cheaper financing offsets the short-term effect of adding a new rider to monthly power bills.
Houston said the new process aims to let regulators make the final decision.
"This should be a factual, objective decision so we are removing the politics from the decision," he remarked, per CBC News.
Where can I learn more?
Nova Scotia isn't alone in grappling with how energy policy affects monthly bills. These stories examine utility rule changes, power market reforms, and generation plans elsewhere.
• In California, an unorthodox power market has helped drive utility bills lower.
• In Oregon, lawmakers are weighing changes to utility regulation to protect customers.
• In Wisconsin, lawmakers say bipartisan nuclear expansion could help stabilize future power prices.
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