Manipulating Electricity Rates

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  • Bill, you state “Given the chance, governments will always be tempted to manipulate them (power rates) to hide and postpone the true cost. ” I agree , but that is NOT unique to power rates it applies to everything. Lets face it Governments manipulate, hide and postpone the truth. It can be summarized as: they lie.
    (Andrew Coyne had an interesting article in the Nation Post recently about why politicians lie. Darrell Dexter was mentioned as a prime example)
    I do not agree, to the extent that you imply, that governments are independent from the power rate setting process. Their interventions and policies have had a significant impact on the power rates we pay. The 4% efficiency tax is a prime example. I would suggest that government decisions have increased our power rates by 15 to 20 % beyond what the actual rate would otherwise be. Given our “leaders” are at the top of the food chain there is nothing that NSP or the UARB can do about those costs and they do not receive the attention or analysis they deserve.
    You mention that our great (my characterization , not yours) minister Younger has stated he wants to bring in legislation that changes ” the relationship between Nova Scotia Power and the Utility and Review Board. ” In my opinion there is no doubt that the Minister is a aggressive politician who comes across as enamored by his new found power. He appears upset that the UARP did not get the memo that he is more powerful than them– thus the threat to impose his will through legislation. To hell with consumer groups or the long term benefit to consumers, he stated his position and lost, that cannot be tolerated by such a powerful person.
    You are correct, we must be very diligent that we act against these threats to dissolve the already weak controls that we have over power rate setting. It appears Minister Younger would prefer to be referred to as Czar Younger, a wish we can grant. (Def: any person exercising great authority or power in a particular field: a czar of industry)
    However the reality is there is very little he can do and will want to do because of the paragraph 3 above. The Government uses this system extensively without accountability or without examination. A czar that changes that relationship, risks exposing their manipulation and impact on the rates. Sure he will want to do something that soothes the wounds he has incurred. He has publicly stated his position, he lost and the wounds are deep. Rational thinking will not prevail. There is an old saying I do not get mad I get even.
    The current system works perfectly for a government. Look at the comments posted here— who is raked over the coals – NSP and UARB. Why would a government want to change a system that they currently manipulate without getting any of the heat they deserve. It is perfect, so Minister Younger will find some token change so he can claim he acted ( aka save face) but substantial change is not in the offing.
    That is my bet and I am sticking to it.
    On the subject of “Guaranteed Profit” for NSP, I would like for someone to show me the legislation, documentation, regulations that state NSP is guaranteed a profit. I do not believe there is such a thing and I do not believe that NSP is “guaranteed” a profit. The government loves it when we focus on that kind of rhetoric. It directs our emotion to the wrong place and lets them off the hook for the impact that they can control but would prefer remains secretly hidden from us.

    Barry H | December 7, 2014 | Reply

  • Before I say anything or reply to anyone, can someone tell me, with certainty, which company is making the actual cash investment in Muskrat Falls.
    There is considerable emotion expressed here, but I am not sure the statements are based on the facts or the emotion.
    No sense criticizing Minister Younger if our own arguments / facts cannot hold water.

    Barry H | December 6, 2014 | Reply

    • Barry, an Emera subsidiary (NSPML) is investing more than $1.5 bn on Muskrat related projects. The nature of the UARB approval for that project gives it the same kind of returns as NSP. I think Jon’s comment overstates the guarantee aspect somewhat in the last paragraph.

      Bill

      Bill | December 6, 2014 | Reply

      • Thanks Bill. I take/ interpret the following from your reply and your article. NSPML is not a regulated entity. It owns Emera assets from Muscrat Falls, such as the transmission lines. It earns no revenue directly from this investment, such as would flow from transmission rates. In order for its $1.5B investment to be included in the power rate setting process, the UARB allows the investment to be “deemed” an NSP investment. Thats the big picture view that works for me.

        Barry H | December 6, 2014 | Reply

        • Barry this is complex and I risk becoming imprecise. But as I understand it NSPML is also an entity regulated by the UARB. For way too much detail go to http://uarb.novascotia.ca/fmi/iwp/cgi?-db=UARBv12&-loadframes

          Bill | December 6, 2014 | Reply

          • You are probably correct. It would make sense that the UARB would want the ability to review its investment outlays. That said, even if it is regulated I don’t think it changes anything else I concluded. There appears to be a process that provides for NSPML investment costs to be rolled into NSP investment costs for rate setting purposes.
            I am going back to the original subject of your posting. Thanks Bill (I could not open that website you forwarded– will try again later)

            Barry H | December 6, 2014

  • I took steps to cut my electric bill years ago, including: doubling the thickness of walls, improving insulation, buying energy star appliances, using “twirley” lights, and installing energy efficient doors and windows. I reduced my consumption by a third BEFORE there was an Efficiency Nova Scotia. I still get dinged with what I like to call a tax on provident consumers. Nothing in the new plan will change except that the cost of ENS will be hidden and not show up on my power bill as a line item. We should be getting rid of ENS. John Bragg and the owners of large fisheries companies can make changes in how they run their operations without financial support from me and other consumers.

    The NSP problem begins by guaranteeing a return on investment of 9% +. Who else has a guaranteed profit? Only monopolies, that’s who. A government with guts would legislate the provision of a guaranteed profit margin out of existence.

    Then it would impose standards for the number of linemen, for the number of miles of buried power lines every year and for the fat salaries these guys pay themselves. I would also impose a mandate to force NSP’s profits to be invested in Nova Scotia. We don’t need to subsidise investments in the USA and the Caribbean.

    Applications for rate increases should not be a bargaining process where NSP asks for twice what they want and settle with the UARB for what they really wanted or needed in the first place.

    Force goals on NSP, including: what the power rates will be over the next ten years. Impose real penalties if they fail to meet those goals. Right now, Emera milks profits from NSP for investment elsewhere. NSP is Emera’s cash cow. The guaranteed return on investment is like the cost plus 10% system used during World War II to produce quick results. Everyone knew that the costs were inflated just as Emera ensures that there will be ample future investments they will use to earn guaranteed profits. Why anyone would guarantee a 9%+ rate of return on the cost of financing the fixed link whose cost is already guaranteed by the federal and provincial government. Where else can you get a guaranteed profit on a no-risk project? The answer is only in Nova Scotia where the government is too gutless to take the management of this corporation out behind the woodshed and giving them the thrashing they so richly deserve.

    Jon Coates | December 5, 2014 | Reply

    • Thank you J.C, you have certainly covered the waterfront and nicely so…

      bob mackenzie | December 6, 2014 | Reply

  • Why are we paying a “deferred” fuel bill for all of Emera, not just NSP? DO you think the Emera customers at Bangor Hydro are paying for the fuel? No. Ever notice that when Emera’s other customer’s rates are forced down by a Utility & Review Board that has real clout, our rates go up by the amount that was rolled back. The UARB works for NSPI and has a vested interest in NSP doing very well. There are several board member’s who have a direct conflict of interest and this would not happen in the USA. Russia or China maybe, but shouldn’t be here.

    Craig | December 5, 2014 | Reply

  • This whole NSP rate setting and URB process is just not working .
    We were on coal fired and oil fired and hydro plants . We reduced the numbers on coal , we changed from oil to gas , we have added dozens and dozens of wind turbines , and still rates climb and climb . Efficiency NS advertises how they have helped big outfits like Oxford Berries reduce their costs as an example, but poor Mrs. Jones costs really haven’t decreased ,have they ? Thousands of us have changed to CFL and LED lights , and no one says they have seen their bills reduce . There is no attempt to bury lines ,even at the wind farms and any new rural construction or newer subdivisions . You talk to the linesmen and they say they have fewer staff to work with than ever , yet we know Exec salaries have not decreased . Too bad we can’t look at the books .

    Peter S | December 5, 2014 | Reply

  • As far as I’m concerned this entire EMERA, NSPC,URB,Govt of the day, arrangement amounts to one giant shell game in which the end Consumer/Taxpayer bears the entire INFLATED expense,including a usuerous rate of interest that is applied…I really do not expect to experience any improvement in this situation unless/until some future government displays the spine to deal with it head on and I am certainly not holding my breath for that to happen.

    bob mackenzie | December 5, 2014 | Reply