The Nova Scotia Utility and Review Board exercises general supervision over all municipal electric utilities operating as public utilities within the Province. This authority includes setting rates, tolls, charges, and regulations for the provision of service and approval of capital expenditures in excess of $250,000. In addition, the Board is also authorized to deal with any other matters it considers necessary to properly exercise its mandate, including complaints. ThePublic Utilities Act allows the recovery of all reasonable and prudent operating expenses, annual depreciation expense, and a reasonable return on rate base.
There are five regulated municipal electric utilities, all of which are owned and operated by a municipality or a separate commission. Each Utility has schedules of rates and regulations approved by the Board. The Board must approve all amendments to these schedules which generally requires a public hearing.
The municipal utilities generally purchase most of their power from Nova Scotia Power Inc., but may generate power for their own use, or enter into contracts to acquire supply from independent power producers. The Board has approved a separate process for the municipal electric utilities in order to pass through rate increases once an increase in rates for NS Power has been approved.
When approving capital expenditures, the Board assesses, among other things, the need for the proposed project, the reasonableness of the expenditure, and the financial impact on the Utility and its customers. When a customer complaint is investigated, the focus is on whether the regulations, as approved by the Board, have been followed on a fair and equitable basis.
Setting Rates and Regulations
a) Rate Applications/Changes to Regulations
The Utility decides when a rate application is necessary or the Board may determine that a rate review is required. A rate study is prepared either by staff or an external consultant which looks at what rates are required to cover future projects and expenses. The type of information that is required in a rate application includes: Proposed Electricity Rates and Revenue; System Description; Historical and Projected Financial Information.
The completed rate study must first be presented to Municipal Council (or an equivalent body) for a resolution authorizing that the application be filed with the Board for approval.
The Utility files with the Board a copy of the completed rate study and evidence showing that it has been approved by Council.
Board staff then reviews the application and supporting documents. If additional information is required, Board staff will request clarification. Once the application is complete, the Board drafts a notice of the public hearing and after consulting with the Utility determines a date and location in the community for the hearing. The hearing date is usually eight to ten weeks following complete information being filed with the Board.
The Board issues an Order which specifies the dates that the notice is to appear for three consecutive weeks in a local newspaper(s) as well as the town or municipality’s social media pages and website. Ads will also be posted in appropriate public locations such as the post office, grocery store bulletin boards and the town office. The Utility is responsible for ensuring that the notice is published on the specified date and is also responsible for payment of associated costs. Evidence confirming that notice was placed in the various locations, as specified in the Order, are required to be filed at the start of the public hearing and are entered as exhibits, along with other pre-filed evidence.
The Utility must have copies of the rate study available at its offices and/or an agreed upon central location for public viewing during the application and hearing process.
The Board issues Information Requests (IRs) to the Utility for response, within two weeks. The responses to the IRs are identified as a pre-filed exhibit at the public hearing.
To review a video explaining the Public Hearing process click here: [coming later]
b) Pass Through for NS Power Rates
NS Power’s municipal rate increases when there is a Board approved NS Power rate increase. In order to recover increased costs, and upon application by the Utility to the Board, the Board may amend the rates without a public hearing for many different rates based on a formula approved by the Board. These include Domestic Service, Small General Service, General Service, Domestic Service Time-of-Day Rate, Industrial Rate, Street & Yard Lighting Rates, and Other Lighting & Miscellaneous Small Load Rates.
The Utility can apply to have the Board approve, without a hearing, an increase in its rates to allow the Utility to pass through the approved NS Power rates to its customers.
The Utility makes written application to the Board, including the following required information:
- Second previous year’s power purchase cost from NS Power
- Second previous year’s total sales for the classes noted
- Previous year’s power purchase cost from NS Power
- Previous year’s total sales for the classes noted
- A proposed rate schedule, based on the formula referred to above
The Utility also files evidence showing Council’s approval. Board staff then reviews the application and supporting documents. Additional information may be required. If so, Board staff requests clarification through IRs.
After the Board has reviewed all the required information, it issues an Order approving the schedule of rates.
Applications for Capital Expenditures
Board approval is required, in advance, for each capital acquisition or construction project by the Utility costing $250,000 or more. In addition, Board approval is required for any capital projects for which the proposed source of funding includes the Utility’s depreciation funds, any utility reserve fund, or debt.
Capital costs requested for Board approval may include costs such as the purchase price of the asset; construction costs (materials, labour, project management, overhead, etc.); site preparation costs; engineering costs; professional fees; and interest during construction.
There is no set or prescribed form for a Utility to use in requesting approval for a capital project. It can be as simple as a one-page letter or a covering letter with several attachments or enclosures to describe the project. Major capital projects that occur infrequently such as a building, or a substation addition, will require a more detailed explanation than routine projects that occur on a regular, on-going basis. Generally, the Board requires the following information for any capital expenditure approval:
Each capital expenditure and associated cost should be listed separately, with a brief description of the project and the need for the project. The project cost should, where possible, be identified by major category such as: contractor; materials/supplies; professional fees; engineering and design; communications; equipment purchase or rental; other labour; administrative; land purchase; capitalized interest; and any additional information seen by the Utility as being helpful in explaining the project.
The source of funding for the project should be identified. If the source of funding is through the Utility, information indicating that the funding source is available should be provided. For example, if the funding is through the Utility’s depreciation funds, an indication of the balance in this fund is required. For larger projects which involve long term debt financing, pro forma statements, setting out the annual non-operating expenditures associated with the debt charges, and the effect of these payments on the Utility’s financial health, should be provided. Copies of the Utility’s most recent financial statements should be filed with the Board in order to provide current information on the fund balances and the Utility’s overall financial health.
If external funding is to be used to fund the project’s costs, documentation indicating that the amounts specified have been approved by the funding sources should be filed.
IRs are developed for clarification on certain aspects of the application or to provide information if it is deemed to be incomplete. These IRs can be asked over the telephone, sent by email, or more formally sent out by the Clerk. Often the IRs are informal and dealt with through communication between a Board Advisory Staff member and the applicant Utility.
The Utility is expected to respond within three weeks.
When the Board receives the answers to the IRs they are reviewed for completeness. If required, a second set of IRs can be issued. This step does not happen frequently.
The Board then reviews the material before it and determines whether the application should be approved, or denied, and the Utility is advised accordingly.
The Board investigates customer complaints about municipal water utilities. These complaints may involve issues about the supply of water, billing processes, connection and disconnection, and other matters. For information on how the Board deals with complaints, please refer to our Complaints page .