Nova Scotia Power blames millions in overspending on more storms
Nova Scotia Utility and Review Board approved the hike in costs May 10
The province's Utility and Review Board has approved millions in overspending last year by Nova Scotia Power, including more than $7 million for the unplanned replacement of deteriorated equipment.
The utility is blaming increased storm activity over the last several years for the hike in costs.
"We typically budget for an average level of storms, and in the last three years we've seen more and more storms, more than average, so when that builds up over a couple of years, that's when we start to see the accelerated spending," said Paul Casey, vice-president of transmission and distribution at Nova Scotia Power.
On April 1, Nova Scotia Power applied to the Utility and Review Board to authorize overspending in its 2018 annual capital expenditure plan.
The extra costs included $7,086,761 for the unplanned replacement of deteriorated equipment and $6,448,276 in storm costs.
2018 storm numbers
The utility noted there were six "major" storm events and two "extreme" storm events in 2018.
Casey said those included multiple days in which winds reached more than 100 km/h, and storms with heavy, wet snow.
"In high winds, particularly winds exceeding 100 km/h, we'll see trees falling, we'll even see healthy trees breaking … and falling into our equipment, as well as some of our equipment failing, some poles breaking," said Casey.
"Heavy, wet snow can be built up on trees and can cause trees to fall into the lines, as well as some of our equipment actually to fail."
Casey said the overspending "would have no affect on rates" because it falls within the "envelope of the capital spend."
Review board deems costs 'justified'
In its decision dated May 10, the review board said it "accepts that the over-expenditures are justified."
"[Nova Scotia Power] also noted that, assuming average storm activity, it expects that the increased spend this year on reactive replacements, as well as storm hardening, should result in a decreased need for reactive replacements in the upcoming several years," the decision said, signed by member Steven Murphy.
The decision also said Nova Scotia Power anticipates that as it and the industry improve their asset management practices, the company will be able to spend more "under planned conditions rather than reactive."
The utility noted that work will ultimately benefit customers because planned replacements are cheaper than reactive replacements, the board's decision said.
How Nova Scotia Power evaluates trends
Nova Scotia Power typically looks at trends over a five-year period, said Casey.
He defended the utility's practice of using historical averages to inform yearly budgets, calling it a "really strong process."
"We're not anticipating something that might not be there, and we're also not underestimating," he said.
"We're looking at averages, but then having a mechanism with the regulator to back and explain why things were different."
Nova Scotia Power spokesperson David Rodenhiser said the overspending in 2018 does not impact this year's annual capital expenditure plan.