Managing Your Power Bill

The Liberal plan for Efficiency Nova Scotia (ENS) bears no resemblance to its campaign promises.Their platform said:

“We support Efficiency Nova Scotia, but we’re not in favour of making you pay an NDP tax for programs that many of you can’t afford to access. By forcing Nova Scotia Power to pay for Efficiency Nova Scotia, we’ll save you $46 million per year, while we strengthen energy efficiency programs and ensure that you see real, measurable results.”

That is not what is going to happen.

The province will continue to contribute $12.7 million a year toward retrofitting low income homes that use fuel for heat. Not much change there. In addition Emera/NSPI will contribute $3.4 million per year to retrofit electrically heated low income homes.

Starting in 2015 a reformed ENS will continue to operate under supervision by the Utilities and Review Board (UARB) with a first year spending cap of $35 million, perhaps $5 million less than  before after adjusting for HST. Projects are to be approved if the fuel savings amortized over future years are greater than project costs.

Any reasonable reading of the Liberal platform would conclude that NSPI shareholders would absorb those costs. In fact they are to be passed on to all customers in their rates. But the $35 million will not be charged to customers in 2015 and only amortized over future years.

This is good news for the folks at NSPI. It means that they get to add $35 million to the asset base on which they make a profit in 2015 and more in subsequent years. Instead of being out of pocket $46 million they will be adding to their profits. In a few years that will more than compensate them for the $3.4 million annual contribution to retrofitting low-income houses. That’s quite a turnaround. No wonder Chris Huskilson and his team are paid so well.

The celebrations will continue if their proposal to put off collection of this year’s $95 million fuel cost overrun to future years is approved. This profit boost for NSPI is also supported by the Minister, who seems determined to postpone as much expense as necessary to produce a rate decrease in 2015.Ratepayers will of course be paying for the $95 million later, with interest added.

The government’s program is not without merit. Continuing to help low-income houses reduce their energy costs is good. The contribution from Emera shareholders is welcome (though not in the legislation). There will be tighter scrutiny and governance on spending at ENS. It looks like the new structure will save more than $1 million in federal HST. That being said, there are many complicated and unanswered questions.

What will NSPI’s role be in estimating fuel savings? What happens if the projects fail to deliver the anticipated benefits? What happens if fuel prices behave differently than anticipated when the project was approved? If an industrial user such as Irving or Michelin is the beneficiary of a successful project do they get all of the savings from reduced consumption while the ENS costs are shared among all customers?

But the real problem is with how all of this was packaged. The press release trumpets the savings that people will see as a result of the change. What is primarily driving those savings is not some stroke of genius by the government, nor the fulfillment of their campaign pledge. Rather it is the fact that the bill customers will pay has been postponed to later years, with interest on it to the benefit of NSPI.

It would have been so much better to have received a press release that said, more or less:

“We made a promise that on reflection seems unwise. We aren’t going to do that but we are making some changes that will result in better oversight and cost-effectiveness of Efficiency Nova Scotia. We and Emera/NSPI will be making important investments to help low income homes with their energy costs. You won’t see the charge for Efficiency Nova Scotia as a separate item anymore but it will be in your power bill.”

At the recent NDP convention interim Leader Maureen Macdonald apologized to Nova Scotians for the NDP government’s mistakes. She missed the point. The most unattractive feature of the previous government was not, as she would have us believe, that they tried to do too much, or were slow on infrastructure, or didn’t use social media effectively. Rather it was their less than forthright messaging, and a growing tendency to dress up failure and pretend it was a success. As a result, when they finally proclaimed a balanced budget there was widespread doubt that it was real.

The real casualty of the ENS announcement is the government’s credibility. There will now be skeptical inspection, or worse cynical dismissal, of every press release, including those announcing promising initiatives.

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