SYDNEY, N.S. — In his closing submission to the provincial regulator, the province’s consumer advocate says a proposed rate structure to provide Port Hawkesbury Paper with electricity should be approved, subject to the implementations of some protections for other ratepayers.
The Nova Scotia Utility and Review Board recently held a hearing into the joint application by the mill and the private utility for a new extra-large industrial demand control tariff. The rate had been approved on an interim basis when the previous rate expired at the end of 2019.
In his closing submission, consumer advocate William Mahody wrote, if Port Hawkesbury Paper paid a rate that fully recovered the embedded and incremental costs to serve, the rate would be more than $80 per megawatt hour.
He went on to write that the proposed tariff “purports to recover only the incremental costs to serve plus a contribution to embedded costs such that PHP will be charged approximately $61 per megawatt hour.
Usage control
Under the proposed rate, NSP would have more authority to scale back or ramp up the mill's power usage, with Port Hawkesbury Paper turning over the keys to the utility from an electricity supply perspective depending upon the system load. In essence, it would treat the mill as a part of its system — NSP tells its own plants what load to run, and now that would also be extended to the Richmond County mill.
“The ELIADC tariff is a novel construct that has the potential to significantly benefit all NSP customers,” Mahody wrote. “This benefit is rooted in NSP’s ability to control the dispatch of PHP’s load and is particularly valuable given the volume of renewable generation on NSP’s system.”
But he called for modifications to protect other ratepayers to ensure that the rate is recovering the incremental costs of serving the mill’s load. They include resetting terms in the tariff around the active demand control benefit sharing, mill sustainability and additional reporting.
“To ensure that the ELIADC rate continues to be just and reasonable and in the public interest, the consumer advocate would urge the board to require periodic filings to ensure that the proposed contribution to fixed costs remains reasonable in light of all the factors influencing the performance of the Mill,” Mahody wrote.
In its concluding submission, Port Hawkesbury Power wrote it was encouraged by the collaborative operation of the rate during the first two months of its operation.
“The ELIADC tariff is a unique, innovative and progressive new form of tariff specifically designed to respond to the changing nature of NSP’s electricity system,” the document states. “It represents a fundamental paradigm shift in the manner in which PHP takes service from NSP that involves significant risks and challenges, but also offers the opportunity to deliver enhanced new operational benefits and costs savings to NSP and its customers.”
It asked that the rate be approved as submitted in the application subject only to modifications that will allow all parties to continue to focus on maximizing the potential benefits for all stakeholders.
In its submission, NSP noted that the proposed tariff includes provisions aimed at providing stakeholders and the board more comfort — including a reopener clause, intra-year modification, and minimum payment provisions, as well as reporting and approval requirements.