Residential customers will pay about $6 more a month for electricity in 2012 under a rate settlement deal tabled Monday with the Utility and Review Board.
The agreement, subject to board approval, will increase power rates by an average of about five per cent next year, down from the 7.2 per cent Nova Scotia Power Inc. asked for in a filing with the board in May.
"I think it’s a very good settlement for ratepayers, obviously," said provincially appointed consumer advocate John Merrick after the agreement was announced at the start of a scheduled hearing on the rate increase application.
"It’s brought down the request for revenue increases by about $24 (million) or $25 million — we’re still working the calculation of the fine numbers — the executive bonuses are gone, the rate of return that they were seeking to increase from 9.35 (per cent) to 9.6 is down to 9.2," Merrick said.
"We think they moved considerably; they moved to where we wanted them to be and we’re quite comfortable with the outcome."
The agreement reduces Nova Scotia Power’s revenue requirements for 2012 to $66.5 million from $94.4 million.
Merrick, a Halifax lawyer, said the return on equity concession was particularly important, since it governs the amount of money Nova Scotia Power is allowed to put in its own pocket.
"That’s been something that’s troubled us for some time. We started out wanting to see that reduced and it got reduced."
Return on equity is fixed at 9.2 per cent for 2012, with an allowed range of 9.1 per cent to 9.5 per cent.
The agreement includes a deferral mechanism that will allow Nova Scotia Power to recover about $30 million in fixed costs for 2012 associated with this month’s shutdown of the NewPage Port Hawkesbury paper mill, the utility’s largest customer.
"The differential for the load retention of NewPage is still a cost that consumers are going to have to pick up," Merrick said. "All we’ve managed to do is to defer it for one year."
The consumer advocate said his office will push Nova Scotia Power to minimize the impact of the NewPage closure, which he said could increase consumer rates by another two to three percentage points.
Rob Bennett, Nova Scotia Power’s president and CEO, said he was happy with the agreement, which maintains tree-clearing and storm repair budgets for 2012 at current levels.
"We’re trying to create a new energy future here in Nova Scotia and this open, transparent dialogue with customers is an important part of that," he said Monday.
Bennett said the agreement reflects the utility’s efforts to move away from its dependency on fossil fuels such as coal toward more renewable energy sources.
"Fossil fuels are a huge part of the driving force behind rate increases and they have been for years. We’re trying to change that."
Government-mandated conservation charges could add another two percentage points to consumer rates, but Bennett said conservation will ultimately save customers money.
"While rates may be impacted slightly by conservation programs, we have to remember that that allows the average customer to save money on their power bill."
Premier Darrell Dexter said he’s looking forward to the review board’s reaction to the agreement.
"Anything that’s less than what was anticipated will be welcome, but the reality is that it’s still tougher, when the cost of electricity goes up, for people to make ends meet," Dexter said Monday.
He said the rate increase underlines the need to reduce the reliance on fossil fuels to generate electricity.
"What people have to understand is that the price of coal over the last six years has gone up by 75 per cent. The only way that we can stop the price of power from going up is to stop buying coal.
"So we need to have a program that gets us off of those kinds of fossil fuels into renewables."
Progressive Conservative Leader Jamie Baillie applauded the agreement’s return on equity and executive bonus concessions, which mirror legislation his party plans to table in the next sitting of the legislature.
"There’s a lot government can do to moderate power rates," he said.
Utility spokesman David
Rodenhiser said 2012 executive compensation incentives aren’t being cut but the 50 per cent portion that previously came from rates will come from shareholders.
Power company representatives will answer questions about the proposal from review board members and interveners on Wednesday.
Nova Scotia Power stock was trading for $27.50 a share on the Toronto Stock Exchange on Monday afternoon, down 13 cents from its previous close.
With files from David Jackson
http://thechronicleherald.ca/Front/1264042.html
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