nbeub matter 375 › ... · new clear free solutions evidence matter 375 6 january 18 2018 1 2.0...

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NBEUB MATTER 375 5

NB Power 2018-2019 General Rate Application and Request for Approval of AMI Capital Project 6

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Evidence Submitted by: 12

Chris Rouse 13

New Clear Free Solutions 14

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59 Summerville Rd 16

Summerville NB 17

E5S 1G6 18

New Clear Free Solutions Evidence Matter 375

1 January 18 2018

TABLE OF CONTENTS 1

1.0 INTRODUCTION .................................................................................................. 4 2

2.0 LEGISLATIVE INTERPRETATION ...................................................................... 6 3

2.1 How Should the Legislation be Interpreted? ......................................................... 6 4

2.2 Should the “Should”s and “Shall”s in Section 68 of the Electricity Act be 5

interpreted as both being legislated requirements? - No ...................................... 8 6

2.3 What guidance does Section 68 (a) of the act give? .......................................... 10 7

2.4 What guidance does Section 68 (b) of the act give? .......................................... 11 8

2.5 What are the requirements of Section 68 (c) and the conditions put on those 9

requirements? .................................................................................................... 12 10

2.6 Is it plausible that section 68 (b) (iii) “least cost of service to customers” is meant 11

to be interpreted as least cost revenue requirement as compared to least cost 12

rates? No ........................................................................................................... 13 13

2.7 Does section 103 (7) of the act require the board to approve NB Powers revenue 14

requirement when approving just and reasonably rates? - No ............................ 15 15

2.8 If the board is not given direct control over operational and capital spending 16

under $50 million how does it regulate NB Power spending? Rates ................... 16 17

2.9 How should the board interpret lowest possible rates for this hearing? Current 18

Rates ................................................................................................................. 16 19

2.10 How should the board balance NB Powers corporate objective of 20% equity and 20

lowest possible rates? ........................................................................................ 16 21

2.11 Is it plausible that the legislation intended the AMI cost benefit to not include lost 22

revenue from the reduced Kwh? No ................................................................... 17 23

2.12 Who does the legislation assign responsibility to develop the IRP? NB Power ... 17 24

2.13 What are the requirements put on the development of the IRP in section 100(2) 25

of the Act?.......................................................................................................... 18 26

2.14 Who approves the IRP? Executive Council ........................................................ 18 27

2.15 Who reviews and informs the Executive Council about the IRP? The Board ...... 18 28

2.16 Who has final approval of the capital projects within the IRP? The Board .......... 19 29

3.0 RATE INCREASE .............................................................................................. 20 30

3.1 Should the Board grant the 2% average rate increase? - No ............................. 20 31

3.2 Can you provide an graphical overview of the proposed electrode boiler DSM 32

program? Yes .................................................................................................... 23 33

3.3 Which of the California Tests Should the Board use to test NB Powers DSM 34

programs? All of them ........................................................................................ 24 35

4.0 ADVANCED METERING INFASTRUCTURE .................................................... 25 36

4.1 Should the Advanced Metering Infrastructure be approved? - No ...................... 25 37

4.2 What is 'Net Present Value - NPV'? ................................................................... 25 38

5.0 RATE ADJUSTMENT MECHANISM ................................................................. 26 39

5.1 Should the board approve the rate adjustment mechanism? No ........................ 26 40

6.0 INTEGRATED RESOURCE PLAN .................................................................... 27 41


2 January 18 2018

6.1 How should the board consider the IRP in both determining rates and approval of 1

capital project in these hearings? ....................................................................... 27 2

6.2 What additional information should the board order NB Power to include in the 3

next iteration of the IRP to be approved by Executive Council? ......................... 27 4

6.3 Is the proposed supply plan by NCFS in the “What was said” portion of the IRP 5

technically feasible? Yes .................................................................................... 29 6

6.4 Is the proposed supply plan by NCFS, in the “What was said” portion of the IRP, 7

materially different economically than the modeling NB Power did in matter 336 8

and Exhibit NBP14.58 of this hearing using the strategist modeling software? No30 9

6.5 Is NB Powers IRP consistent with the new Climate Change Act tabled 10

legislation? No ................................................................................................... 31 11

6.6 Is NB Powers IRP putting the province at substantial financial risk of getting the 12

Federal Backstop being applied to New Brunswick? YES .................................. 32 13

6.7 Is the proposed Climate Change Act, that is tabled in the legislature, 14

fundamentally different than the policy NCFS has been promoting since Matter 15

272? No ............................................................................................................. 33 16

6.8 Do you think the proposed Climate Change Act that is tabled in the NB 17

Legislature the best in the country and a model to be followed by other 18

Provinces? Yes .................................................................................................. 34 19

6.9 Of all the Sensitivity Analysis performed By NB Power can you rank them in 20

order from least cost rates to highest cost rates and indicate which ones have 21

wind power in them? Yes ................................................................................... 35 22

6.10 Are the assumptions for capital costs and O and M costs for wind power, that 23

was used in NB Powers IRP, reasonable compared to other reliable sources of 24

publicly available data or actual cost? No .......................................................... 36 25

6.11 Is NB Powers long-term load forecasts reasonable? No .................................... 36 26

6.12 Is NB Powers long-term fuel prices reasonable? No .......................................... 36 27

6.13 Can you provide some background information resources on the strategist 28

software? Yes .................................................................................................... 36 29

6.14 Can you provide some additional background resources on efficiency cost 30

effectiveness? Yes ............................................................................................. 36 31

7.0 10 YEAR PLAN .................................................................................................. 37 32

7.1 What additional information should the board order NB Power to include in the 33

next 10 year plan? ............................................................................................. 37 34

8.0 LIST OF ATTACHMENTS.................................................................................. 38 35

8.1 Attachment A Pan Canadian Wind Energy Study Atlantic Summary .................. 38 36

8.2 Attachment B Pan-Canadian Wind Integration Study Summary Report ............. 38 37

8.3 Attachment C Lazard’s Levelized Cost of Energy Analysis—Version 11.0 38

Summary ........................................................................................................... 38 39

8.4 Attachment D Letter to Anonymous Reader by NCFS ........................................ 38 40

8.5 Attachment E lazard-levelized-cost-of-energy-version-110 ................................ 38 41

8.6 Attachment F California Standard Practice Manual ............................................ 38 42

8.7 Attachment G Strategist Planning Solution ........................................................ 38 43

8.8 Attachment H Xcel Energy Strategist Modeling and Outputs .............................. 38 44

8.9 Attachment I Understanding Cost-Effectiveness of Energy Efficiency Programs 38 45

8.10 Attachment J Bill 39 Climate Change Act ........................................................... 38 46


3 January 18 2018

8.11 Attachment K EIA Cost and Performance Characteristics of New Generating 1

Technologies Annual Energy Outlook 2017 ....................................................... 38 2

8.12 Attachment L IRENA_2017_Power_Costs_2018_summary ............................... 38 3

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4 January 18 2018

1.0 INTRODUCTION 1

This evidence is submitted by Chris Rouse on behalf of New Clear Free Solutions to the New 2

Brunswick Energy and Utilities Board (“NBEUB”). The mandate of New Clear Free Solutions is 3

to provide energy oversight to the public and official decision makers using scientifically 4

objective regulatory and financial information. The objective of New Clear Free Solutions is 5

to help ensure safe, affordable, and sustainable energy solutions for the Canadian public and 6

environment. 7

New Clear Free Solutions seeks the following decisions from the Board: 8

-Deny the requested 2% rate increase; 9

-Deny the Advanced Metering Infrastructure Capital Spending; 10

-Deny the requested rate adjustment mechanism; 11

-Order additional information for next year’s 10-Year Plan (section 101 (2)) 12

-Order additional information to be included in the IRP and submitted to executive council 13

for approval (section 100 (3)) 14

-Qualify Chris Rouse, Industrial Control Technologist, as an expert witness in the field of 15

systems engineering/integration, project management, quality management, Industrial 16

energy systems, safety, integrated resource planning and government regulation and policy 17

We admire NB Powers first strategic objective of becoming top quartile. This a great objective 18

that should inform and set the basis for the rest of its objectives. 19

We think up until this point, NB Powers second strategic objective, to attempt to pay down some 20

debt and not take on any big capital spending to build some equity, was a generally good idea. It 21

has also given the chance for the utility to resolve performance and safety issues at Lepreau, 22

which seems to be working under the new management. By taking it slow the last few year New 23

Brunswick didn’t make any big mistakes, like signing high priced long-term wind power 24

contracts to private companies and have gotten a chance to really see how renewables are going 25

to perform, and waited for the costs to come down. 26

New Clear Free Solutions also thinks the smart grid is a really good idea too, but a smart grid 27

that is optimized to Reduce and Shift Demand was a bad idea and not in anyone’s interest. We 28

are also pleased NB Power has rebranded it’s Reduce and Shift Demand program to Energy 29

Smart. We encourage NB Power to not just rename the program but to fundamentally change it. 30

This was a good plan while it lasted but things are different now and we need a true vision for 31

sustainability and a clear path to get there. We are on the cusp of making some mistakes to the 32

benefit of nobody and encourage the Board and NB Power to really step back and have a good 33

hard look at the problem and what the real solutions are. Most of the solutions have been 34

revealed in Matters 272, 336 and in this matter. 35


5 January 18 2018

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The time for doing nothing is over and NB Power needs to have three new strategic objectives. 2

Our suggested new objectives are as follows: 3

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Strategic Objective 1 Be Best at what we do in the following key areas: 5

Lowest Rates 6

Lowest Emissions 7

Highest Reliability 8

Highest Safety 9

Highest Value to Shareholders 10

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Strategic Objective 2 Build equity by Investing the Carbon Tax and Reinvesting the 12

Earnings for the benefit of all New Brunswickers for now and in the future 13

Strategic Objective 3 Increase Load by Shifting Fossil Fuels to Low Carbon Renewable 14

Electricity 15

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6 January 18 2018

2.0 LEGISLATIVE INTERPRETATION 1

New Clear Free Solutions provides the following guidance to the Board regarding how best to 2

interpret the legislative scheme underpinning these proceedings. Specifically, New Clear Free 3

Solutions seeks to provide the following comments on legislative intent in the context of 4

approving lowest possible, and stable and predictable rates and approving capital projects over 5

$50 million. 6

2.1 How Should the Legislation be Interpreted? 7

A starting point for understanding the provisions in the Electricity Act, SNB 2013, c 7, is the 8

Interpretation Act of New Brunswick. Section 12 of the Interpretation Act states: 9

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An Act or regulation shall be considered as always speaking, and whenever a matter or thing is 11

expressed in the present tense, it shall be applied to the circumstances as they arise, so that effect 12

may be given to the Act or regulation and every part thereof according to its true spirit, intent 13

and meaning.1 14

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Secondly, common law principles of statutory also guide how the Electricity Act should be interpreted in 16

these proceedings. For instance, the modern principle of statutory interpretation posits the following: 17

Today there is only one principle or approach [to statutory interpretation], namely, the words of 18

an Act are to be read in their entire context and in their grammatical and ordinary sense 19

harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament2 20

This approach to statutory interpretation has been repeatedly endorsed by the Supreme Court of Canada 21

and remains the prevailing and preferred approach to statutory interpretation.3 22

Applying the modern principle of statutory interpretation requires the Board to analyze: 23

(i) the meaning of the legislative text; (ii) the legislature's intentions, including the rule it 24

intended to enact, the purpose it hoped to achieve and its intentions (if any) regarding specific 25

facts; and (iii) the consequences of adopting a proposed interpretation.4 26

Furthermore, arriving at an interpretation of a statute requires justification on the basis of: 27

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1 RSNB 1973, c I-13 2 Re Rizzo & Rizzo Shoes Ltd., [1998] S.C.J. No. 2 at para. 21, [1998] 1 S.C.R. 27 (S.C.C.). as cited in Halsbury’s Laws of

Canada, “The Modern Principle of Statutory Interpretation”, at para HLG-54 3 Ibid; 65302 British Columbia Ltd. v. Canada, [1999] S.C.J. No. 69 at para. 50, [1999] 3 S.C.R. 804 (S.C.C.); R. v. Sharpe,

[2001] S.C.J. No. 3 at para. 33, [2001] 1 S.C.R. 45 (S.C.C.); Bell ExpressVu Limited Partnership v. Rex, [2002] S.C.J. No. 43 at para. 26, [2002] 2 S.C.R. 559 (S.C.C.); Redeemer Foundation v. Canada (National Revenue), [2008] S.C.J. No. 47 at para. 15, [2008] 2 S.C.R. 643 (S.C.C.); R. v. Ahmad, [2011] S.C.J. No. 6 at para. 28, 2011 SCC 6 (S.C.C.); R. v. L.B., [2011] O.J. No. 891 at para. 51 (Ont. C.A.).

4 Halsbury’s Laws of Canada, “The Modern Principle of Statutory Interpretation”, at para HLG-55; Ruth Sullivan,

Sullivan on the Construction of Statutes, 5th ed. (Markham, ON: LexisNexis Canada, 2008) at 3.


7 January 18 2018

(a) its plausibility, that is, its compliance with the legislative text; (b) its efficacy, that is, its 1

promotion of legislative intent; and (c) its acceptability, that is, the outcome complies with legal 2

norms so that the result is reasonable and just5 3

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Lastly, in its analysis, the Board must also apply the ordinary meaning rule, wherein the following is 5

presumed: 6

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(1) It is presumed that the ordinary meaning of a legislative text is the meaning intended by the 8

legislature. In the absence of a reason to reject it, ordinary meaning should prevail.6 9

(2) However, even if the ordinary meaning seems clear, courts must also consider the entire 10

legislative context of the provision to be interpreted,7 including not only the text of the statute in 11

which the provision appears, but also legislative purpose, relevant legal norms and relevant 12

extrinsic aids. 13

(3) In light of these additional considerations, the court may adopt an interpretation that 14

modifies or departs from the ordinary meaning, provided the interpretation adopted is plausible 15

and the reasons for adopting it are sufficient to justify departure from ordinary meaning.8 16

Should the Board or a party to this proceeding seek to rely on an interpretation of the legislative text 17

which departs from the ordinary meaning of a phrase or term, they bear the burden of proof in 18

demonstrating that an interpretation other than the ordinary meaning is intended.9 19

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5 Ibid; Ruth Sullivan, Sullivan on the Construction of Statutes, 5th ed. (Markham, ON: LexisNexis Canada, 2008) at 3. 6 See, for example, Thomson v. Canada (Deputy Minister of Agriculture), [1992] S.C.J. No. 13 at para. 25 (S.C.C.),

where a majority of the Supreme Court of Canada adopted the ordinary meaning of the term “recommendations” because it found no basis for rejecting it, Cory J. noted: “There is nothing in either the section or the Act as a whole which indicates that the word 'recommendations' should have anything other than its usual meaning.” See also F. (M.) v.

Sutherland, [2000] O.J. No. 2522 at paras. 28-29 (Ont. C.A.). 7 See, for example, Chieu v. Canada (Minister of Citizenship and Immigration), [2002] S.C.J. No. 1 at para. 34, [2002] 1

S.C.R. 84 (S.C.C.), where Iacobucci J. noted: The grammatical and ordinary sense of the words employed [in a provision] is not determinative … . Instead [the provision] must be read in its entire context. This inquiry involves examining the history of the provision at issue, its place in the overall scheme of the Act, the object of the Act itself, and Parliament's intent both in acting the Act as a whole, and in enacting the particular provision at issue. See also Bristol-Myers Squibb Co. v. Canada (Attorney General), [2005] S.C.J. No. 26 at para. 43, [2005] 1 S.C.R. 533 (S.C.C.); Montréal (City) v. 2952-1366 Québec Inc., [2005] S.C.J. No. 63 at paras. 9ff, [2005] 3 S.C.R. 141 (S.C.C.). 8 Halsbury’s Laws of Canada, “Determining the Meaning of the Legislative Text”, at para HLG-59;

See, for example, Toussaint v. Canada (Minister of Citizenship and Immigration), [2011] F.C.J. No. 636 at paras. 35- 36,

2011 FCA 146 (F.C.A.), leave to appeal refused [2011] S.C.C.A. No. 295 (S.C.C.), where the court agreed that the

proposed interpretation of susbection 25(1) of the (CAN) Immigration and Refugee Protection Act, S.C. 2001, c. 9 Ibid


8 January 18 2018

2.2 Should the “Should”s and “Shall”s in Section 68 of the 1

Electricity Act be interpreted as both being legislated 2

requirements? - No 3

New Clear Free Solutions directs the Board to section 68 of the Electricity Act which reads: 4

PART 4 5

GOVERNMENT POLICY 6

Electricity policy of the government 7

68 It is declared to be the policy of the Government of New Brunswick 8

(a) that the rates charged by the Corporation for sales of electricity within the Province 9

( i) should be established on the basis of annually forecasted costs for the supply, transmission 10

and distribution of the electricity, and 11

( ii) should provide sufficient revenue to the Corporation to permit it to earn a just and 12

reasonable return, in the context of the Corporation’s objective to earn sufficient income to 13

achieve a capital structure of at least 20% equity, 14

(b) that all the Corporation’s sources and facilities for the supply, transmission and distribution 15

of electricity within the Province should be managed and operated in a manner that is consistent 16

with reliable, safe and economically sustainable service and that will 17

( i) result in the most efficient supply, transmission and distribution of electricity, 18

( ii) result in consumers in the Province having equitable access to a secure supply of electricity, 19

and 20

( iii) result in the lowest cost of service to consumers in the Province, and 21

(c) that, consistent with the policy objectives set out in paragraphs (a) and (b) and to the extent 22

practicable, rates charged by the Corporation for sales of electricity within the Province shall be 23

maintained as low as possible and changes in rates shall be stable and predictable from year to 24

year. 25

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Accordingly, New Clear Free Solutions submits that had the Electricity Act intended for all 27

subsections in s 68 to be read equally, it would not have differentiated between the terms 28

‘should’ and ‘shall.’ Therefore, it is important to make note of this distinction and query its effect 29

on the proceeding before the Board. 30

New Clear Free Solutions submits it is not reasonable to assume that the 20% equity objective is 31

a requirement because NB Power would have not been compliant with the legislation as soon as 32


9 January 18 2018

it was enacted. It is also not reasonable for the grid to be managed and operated as efficiently as 1

possible at all times, as that would require things that are outside of NB Powers control. 2

Applying the principles of statutory interpretation, the ordinary meaning rule requires the 3

meaning of shall to be an imperative, or a requirement. To the contrary, the normal meaning of 4

should is that of guidance. We offer the following sample from a Canadian Nuclear Safety 5

Commission regulatory document REGDOC 2.4.2 Probabilistic Safety Assessment: 6

Where this document is part of the licensing basis, the word “shall” is used to express a 7

requirement, to be satisfied by the licensee or licence applicant. “Should” is used to express 8

guidance or that which is advised. “May” is used to express an option or that which is advised or 9

permissible within the limits of this regulatory document. “Can” is used to express possibility or 10

capability10. 11

Sections 68 (a) and 68 (b) of the Electricity Act provide guidance on government policy and to 12

the greatest extent achievable, these sections should be followed. Based on the foregoing 13

principles of statutory interpretation, New Clear Free Solutions submits that the subsections in 14

section 68 are not requirements, and there are times when there are exceptions to this guidance. 15

When guidance is not followed the reasons should be justified, and reasonable, and if they are 16

not reasonable or justified there should be regulatory action taken to remedy the situation and 17

this should be done transparently and not inferred. 18

Sections 68 (c) is a legislative requirement. There are however conditions and context put on 19

these requirements which guides the board on how to balance NB Powers corporate financial 20

objectives with its responsibility to provide ratepayers the lowest possible rates that are 21

predictable and stable from year to year. 22

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10 January 18 2018

2.3 What guidance does Section 68 (a) of the act give? 1

68 It is declared to be the policy of the Government of New Brunswick 2

(a) that the rates charged by the Corporation for sales of electricity within the Province 3

( i) should be established on the basis of annually forecasted costs for the supply, transmission 4

and distribution of the electricity, and 5

( ii) should provide sufficient revenue to the Corporation to permit it to earn a just and 6

reasonable return, in the context of the Corporation’s objective to earn sufficient income to 7

achieve a capital structure of at least 20% equity, 8

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An important thing to consider when interpreting legislation is who the legislation is speaking 10

too, and who it assigns responsibility too. Section 68 (a) is generally, speaking to the board. 11

However, it is very important to note that the 20% equity target is the “Corporations “objective 12

not the boards objective, and certainly not the ratepayer’s objective. It also gives direction to the 13

corporation and board on what the earning should be used for. The legislation directs NB Power 14

to use the earnings to build equity until at least a minimum 20% equity target is reached. This 15

prevents the corporation from issuing dividends until the target is met, and would also prevent 16

the corporation from issuing a dividend that would reasonably jeopardize the objective once it 17

has been achieved. 18

Building equity via earnings creates the same compounding effect that New Clear Free Solutions 19

has been promoting as its Carbon Tax and Investment Plan policy. This compounding effect can 20

be seen in the evidence provided by NB Power in its 10 year plan scenario analysis as the debt to 21

equity ratio is exponential over time. This policy is generally consistent with the tabled 22

legislation Climate Change Act. See Attachment J Bill 39 Climate Change Act 23

This section gives guidance to the board on the scope of what it should considered when 24

approving rates. It gives direction that rates should be set based on forward looking costs not 25

retroactive cost that have already occurred. 26

The proposed rate adjustment mechanism is not consistent with the intent of the legislation and 27

there have been no sufficient reasons put forward for the board to accept this deviation from the 28

intent of the legislation. We believe any such deviation from the intent of the legislation would 29

be required to be done in the publics interest, not to help NB Power manage its corporate 30

objectives. The legislation does not fix a date for NB Power to meet its objective because it could 31

lead to higher than needed and unstable and predictable rates and wouldn’t be in the spirit of the 32

legislation. It is our opinion that the 20% equity target should not be the focus of the board, it 33

should be NB Powers corporate focus. Its NB Powers responsibility to reach the target as soon as 34

possible, not the boards. 35

There is good reason utility regulation legislation is forward looking. It leads to stable rates and 36

predictable rates, and encourages the utility to “earn” its just and reasonable return. This 37

encourages NB Power to be more efficient and should lead to lowest possible rates, and higher 38


11 January 18 2018

earnings. If our rates are adjusted after the cost have occurred, it would lead to very unstable 1

rates and guarantee’s NB Powers earnings which removes their incentive to become more 2

efficient. 3

Deferral accounts are useful to smooth and stabilize rates when a utility has an approved 4

weighted average cost of capital and lumpy spending that creates rate instability, but NB Power 5

does not have a fixed return on equity, and therefore net earning and equity are used to smooth 6

and stabilize rates and the rate adjustment mechanism is not needed. The rate adjustment 7

mechanism being proposed is a solution to someone else’s problem. 8

The use of should does give the board the ability to also look to the past when determining rates. 9

Consideration of the past should be for information purposes only because you can’t change the 10

past you can only learn from it. Looking back should include such things as cost trending to help 11

determine if forecasts are reasonable. We also think the board should consider past rulings to 12

help inform their decisions. While the board is not required to uphold previous rulings, except 13

for the prudence of past capital spending that can not be changed anyway, it should give 14

significant weight to past rulings. Especially rulings that have been consistently upheld by its 15

predecessors. The PUB decisions in 1991 and 2001 on capacity planning have both upheld that 16

lowest cost of service should be measured by lowest rates not lowest revenue requirements. 17

In respect to just and reasonable return in the legislation, it is our opinion that this is a privilege 18

to NB Power for fulfilling its responsibilities to provide a safe and reliable fair and low-cost 19

service, and is not a requirement. 20

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2.4 What guidance does Section 68 (b) of the act give? 22

(b) that all the Corporation’s sources and facilities for the supply, transmission and distribution 23

of electricity within the Province should be managed and operated in a manner that is consistent 24

with reliable, safe and economically sustainable service and that will 25

( i) result in the most efficient supply, transmission and distribution of electricity, 26

( ii) result in consumers in the Province having equitable access to a secure supply of electricity, 27

and 28

( iii) result in the lowest cost of service to consumers in the Province, and 29

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Section 68 (b) is generally speaking to the corporation about the scope of its corporate 31

responsibilities in managing the service it provides to ratepayers, in order for the privilege to 32

earn a just and reasonable return. The policy speaks to the corporation about how it should be 33

managed and operated, and should inform the corporations Vision, Mission, Values and strategic 34

objectives and strategic plans. 35


12 January 18 2018

When setting rates, the board should be looking at the guidance in this section to verify if NB 1

Power is living up to its part of the bargain. This was quite eloquently put by JDI council Mr. 2

Stewarts in his final arguments last year. “We do not want to pay more simply to create an 3

ever increasing spending cushion for the utility. There is an obligation on the utility to 4

live up to their part of the bargain” 5

NB Powers first corporate responsibility is to supply the service of the safe, reliable, and most 6

efficient supply, transmission and distribution of electricity. This is the service that NB Power is 7

providing that enables it to earn a just and reasonable return from ratepayers. 8

The second corporate responsibility is to act fairly in providing this service. This enables the 9

matters such cost allocation to be considered by the board. 10

The third corporate responsibility is to ensure the lowest cost of service is provided by the 11

corporation to ratepayers. 12

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2.5 What are the requirements of Section 68 (c) and the conditions 15

put on those requirements? 16

(c) that, consistent with the policy objectives set out in paragraphs (a) and (b) and to the extent 17

practicable, rates charged by the Corporation for sales of electricity within the Province shall be 18

maintained as low as possible and changes in rates shall be stable and predictable from year to 19

year. 20

This section is speaking to both the board and NB Power. The responsibility for low and stable 21

rates is directed towards the board because it is the boards responsibility to set rates. The 22

requirement of stable and predictable from year to year is generally directed towards NB Power, 23

as it is their responsibility to ask for any changes to rates in their applications each year, as well 24

as the responsibility of forecasted rate trajectory within the 10 year plan. 25

The legislation is clear that the ratepayers have priority and the board should always act in the 26

publics interest even when it is against government policy guidance. If the government does not 27

like the decision, it can create a law or regulation. The term practicable balances this requirement 28

in such a way that the board must assure that NB Power can fulfill all its legal and corporate 29

responsibilities and sustain itself which would not be in the publics interest not to do so anyway. 30

It would not be practicable for the board to starve NB Power of money in trying to maintain low 31

as possible rates, but it can determine NB Powers returns and if they are living up to their part of 32

the bargain. 33

The requirement for stable and predictable rates from year to year is also balanced with the term 34

practicable. This is further clarified in section 103 (3) of the act which allows for the corporation 35

to apply for interim rates. We think the legislation intends for this years and next years proposed 36

rate increase by NB Power to be know by ratepayers. It is very important to NB ratepayers to 37


13 January 18 2018

know in advance what rates are going to be, so they can appropriately budget themselves. A 1

lower rate than expected should always be considered though as it acts in the publics interest. 2

For example, if NB Power asked for a 3% rate hike next year we believe the legislation would 3

require NB Power to be asking for interim rate relief mentioned in section 103(3) of the act. The 4

standard the board should apply to interim rates should be much higher than a normal rate 5

hearing. Losses in expected net earnings due to an unforeseen but reasonably expected event like 6

an ice storm would not pass this test. NB Power is already receiving a significant risk premium 7

with return on equities in excess of 10% throughout the 10 year plan. It would have to pass a test 8

that would show it would be deleterious to the corporation if the interim relief was not met. 9

2.6 Is it plausible that section 68 (b) (iii) “least cost of service to 10

customers” is meant to be interpreted as least cost revenue 11

requirement as compared to least cost rates? No 12

The policy is clear that priority is given to low as possible rates. Lowest possible revenue 13

requires significantly higher rates as demonstrated in NB Powers evidence. 14

The boards predecessor, the PUB, has twice ruled that lowest cost of service should be reflected 15

as rates not revenue. This has also historically been NB Powers position in both of those 16

proceedings on capacity planning in 1991 and 2001. It appears there was a change in NB Powers 17

senior managements interpretation in NB Powers internal IRP in 2010. This position has never 18

been supported in a board decision, and if there was such a change in position it should require a 19

very detailed reason for their decision, and could be subject to a judicial review. 20

The 2011 energy blueprint, which should be used to show legislative intent, does not support the 21

interpretation of lowest revenue requirement vs lowest rates either. 22

Even in NB Powers own evidence, NBP (NBEUB) IR-214 Attachment - Average Cost of 23

Service - 2017 IRP, shows that cost of service is described as $/kWh not revenue requirement. 24


14 January 18 2018

1

2

The revenue requirement is NB Powers perspective not the customers. NB Power has a bad habit 3

of trying to use one metric to infer another and sometimes that is not valid and is bad practice. 4

Specifically, in this case revenue requirement can infer rates, but only if the load stays the same. 5

It is not appropriate to compare two different revenue requirements when the load changes. It 6

essentially changes the amount of service provided. The difference between the lowest cost 7

supply plan and the integrated plan is not because of reduced or deferred investments, the 8

revenue changed because NB Power sold less energy or provided a smaller amount of service. 9

The comparison NB Power made when choosing between the supply plan and integrated plan is 10

tantamount to comparing NB Powers revenue requirement and Hydro Quebec’s revenue 11

requirement and claiming that NB Powers is better. 12

13

14

15


15 January 18 2018

2.7 Does section 103 (7) of the act require the board to approve NB 1

Powers revenue requirement when approving just and 2

reasonably rates? - No 3

103( 7) In approving or fixing just and reasonable rates, the Board shall base its order or 4

decision on the Corporation’s revenue requirements, taking into consideration 5

(a) the policy set out in section 68, 6

(b) the most recent integrated resource plan approved or deemed to be approved by the 7

Executive Council under section 100, 8

(c) the most recent strategic, financial and capital investment plan filed with the Board under 9

section 101, 10

(d) any requirements imposed by law on the Corporation that may be relevant to the 11

application, including, without limitation, requirements regarding demand-side management and 12

energy efficiency plans and renewable energy requirements, 13

(e) any directive issued by the Executive Council under section 69 that may be relevant to the 14

application, and 15

(f) any policy established by a regulation made under paragraph 142(1)(f) that may be relevant 16

to the application. 17

103( 8) In approving or fixing just and reasonable rates, the Board may take into consideration 18

(a) accounting and financial policies of the Corporation, 19

(b) matters of cost allocation and rate design, 20

(c) customer service related charges, 21

(d) the Corporation’s demand-side management and energy efficiency plans, and 22

(e) any other factors that the Board considers relevant. 23

24

The legislation does not give the responsibility to the board to approve the revenue requirement 25

only that it must make its decision or order “based” on it. The legislation does not give the board 26

direct control over NB Powers operational spending or capital projects under $50 million, only 27

the rates NB Power charges for the services it provides. This has already happened when the 28

board has deemed spending not prudent, but NB Power has spent the money anyway. 29

30

The only real control over spending the board has is with regards to capital projects over $50 31

million. The board can also compel NB Power to spend operational money on providing 32


16 January 18 2018

information. The board can also control who should provide this information, and what the scope 1

of the information is. 2

The main purpose of this section of the legislation is mainly to determine the required scope and 3

relevancy of the rate hearings. In addition, the board “may” also consider section 103 (8). This is 4

like the intent in sections 107 (11) for approval of capital projects over $50 million which 5

determines the scope and relevancy of approving capital projects. 6

7

2.8 If the board is not given direct control over operational and 8

capital spending under $50 million how does it regulate NB 9

Power spending? Rates 10

At a minimum we feel the board should recommend in a decision that the spending not be 11

undertaken and why it does not think it is in the publics or shareholders interest. If NB Power 12

spends the money anyway NB Power can answer to its shareholder for non-prudent spending. 13

The board can also adjust rates if it chooses to do so, depending on the circumstances. We have 14

made a recommendation to the board in our rate adjustment mechanism section on how to do 15

this. 16

2.9 How should the board interpret lowest possible rates for this 17

hearing? Current Rates 18

We feel the board should adopt the view for this hearing that lowest possible rates should be 19

viewed as the current rates. 20

Operational costs should be assessed by the board by lowest cost and capital spending should be 21

assessed by return on investment and its effect on rates, unless it can be determined it is required 22

to provide a safe and /or reliable system. 23

2.10 How should the board balance NB Powers corporate objective of 24

20% equity and lowest possible rates? 25

We generally agree with NB Power that till the target is met the revenue requirement “should” 26

demonstrate progress toward the equity target. It does not require a rate increase to do so 27

however. There are many ways to reach objectives and rates should be the last resort not the first 28

resort. This should also apply to other issues such as cost allocation. There is an instinct to try 29

and fix all problems with rates when other methods should be considered first. When all you 30

have is a hammer everything looks like a nail, and we encourage NB Power to look for better 31

tools. 32


17 January 18 2018

There has been no evidence supplied by NB Power that shows progress to the equity target will 1

not be made even without the rate increase, except for the scenario they provided to us with no 2

rate increase for the entire 10 year plan. Even then there is no increase in capital structure for 6 3

years. 4

5

2.11 Is it plausible that the legislation intended the AMI cost benefit 6

to not include lost revenue from the reduced Kwh? No 7

The cost-effective test NB Power has used to justify the AMI spending is essentially the TRC 8

test. This test does not inform NB Power or the Board about the affect this capital project has on 9

rates or net earning without considering lost revenue. It is not possible to assess return on 10

investment without including this. This is not the intent of the legislation and the consequences 11

of adopting this interpretation would be significantly against the public interest. 12

2.12 Who does the legislation assign responsibility to develop the 13

IRP? NB Power 14

An integrated resource plan is NB Powers business plan, and as such it should be their 15

responsibility to develop it. The legislation assigns NB Power the responsibility to develop it in 16

section 100 (2) 17

100( 2) Subject to any changes requested under subsection (7), an integrated resource plan shall 18

be developed by the Corporation in accordance with the principles of least-cost service, 19

economic and environmental sustainability and risk management. 20

The test year, 10 year plan, and Integrated Resource Plan are all the same plan just looking at it 21

from different times. The test year is the current year of the IRP, the 10 year plan is the first 10 22

years of the IRP and the IRP is the long term plan. These should all be consistent with each other 23

as per section 101 (3) 24

25

101( 3) A plan filed under subsection (1) shall not be inconsistent with the latest 26

integrated resource plan approved or deemed to be approved under section 100. 27

It was not appropriate for Mr. Fury to claim it needed direction from the board regarding what 28

assumptions to use if it were to extend the 10-year plan at motions day. These assumptions 29

should have already been approved in the IRP. 30


18 January 18 2018

2.13 What are the requirements put on the development of the IRP in 1

section 100(2) of the Act? 2

The legislation requires a balance between, least-cost service, economic and environmental 3

sustainability and financial risk. This balance has been confirmed by NB Power in their response 4

to our IR’s. 5

In the past, the balancing between the economy and environment often conflicted with least cost, 6

because renewables were more expensive. Therefore, there was a balance put in the legislation, 7

because the environment and economy must go hand and hand. The pillars of sustainability only 8

protect society if they are balanced. In the last few years the cost of renewable energy has 9

become lower cost than fossil fuels and still trending down, and there is no longer any conflict, 10

with least cost environment and economic sustainability and financial risk all working together 11

for a strong sustainable society. 12

In balancing these requirements NB Power can insert higher cost options. As Mr Furey said on 13

motions day, the lowest cost is not always the best cost. This must be done transparently though. 14

The principles of least cost should be done transparently and with accountability. 15

The least cost plan selected should be selected by the strategist software and must not contain 16

any policy that is not a legislated requirement like the RPS. This avoids any possible human bias, 17

and should be the baseline against all other changes. The baseline should be known and 18

transparent to ratepayers, the government, and the board. 19

If NB Power is going to insert something that is not the least cost, like it did with Lepreau at the 20

end of the IRP, it must be known to the government and the cost needs to be identified and 21

justified. It is not reasonable to accept deviations from least cost without justification and 22

accountability to ratepayers. If it is not done this way the board will not know what is 23

government policy or what is NB Power policy. 24

2.14 Who approves the IRP? Executive Council 25

The legislation then assigns responsibility to the government to approve the IRP within a certain 26

timeframe or it is deemed approved after 90 days. The executive council can inject additional 27

government policy. This should also be done transparently and with accountability. Any 28

additional cost put on rates via government policy decisions should also be known and contained 29

in the IRP, and the request should be transparent. Energy policy is too important to the New 30

Brunswick economy to be making un-costed decisions. 31

2.15 Who reviews and informs the Executive Council about the IRP? 32

The Board 33

The IRP is within the scope of both the rate hearing and capital project approval process, and the 34

board should be reviewing the IRP every year. If the board would like to see additional 35

information, or think the Executive council needs to see additional information in the IRP, the 36

legislation gives the board the power to order NB Power to do so. We encourage the board to use 37


19 January 18 2018

this process every year as it is critical that the Executive Council get feedback from the economic 1

regulator that NB Powers business plan is prudent and one that will deliver lowest possible rates 2

now and in the long term. It can be as simple as requesting NB Power to submit that the board 3

finds the IRP to be prudent. 4

Silence should not be construed as approval. The three levels of government should be speaking 5

to each other through the IRP in a transparent way to ratepayers. 6

2.16 Who has final approval of the capital projects within the IRP? 7

The Board 8

While the Executive Council approves the IRP, it does not approve the spending. The board has 9

the final say over the projects within the IRP and is an important responsibility. The board 10

should take the approach that executive councils approval of the IRP is policy guidance not a 11

requirement, and the board should always act in the public’s interest. If a project is not prudent 12

the board should not approve it. If the executive council still wants to proceed the Executive 13

Council can make a law or regulation, then the board will have to approve it, but the final say 14

will always be the board. 15

16

17

18

19

20

21

22

23

24

25

26

27

28

29


20 January 18 2018

3.0 RATE INCREASE 1

3.1 Should the Board grant the 2% average rate increase? - No 2

We ask the board to deny the proposed rate increase by NB Power. The reasons for our request 3

for denial is that the application has not passed the lowest possible rates test in the test year, 10 4

year plan or 25 year integrated plan. The evidence provided by NB Power clearly shows that if 5

they were to cancel the energy smart programs or portions of them that the rate increase would 6

not be needed, and would result in even larger net earning and progress on their equity target. 7

Even if NB Power continued to spend on the energy smart program without the rate increase the 8

revenue requirement shows that NB Power would still be profitable, and progress made on the 9

equity target. 10

We believe that viable alternatives must always be considered. NB Powers least cost supply plan 11

shows that the proposed NB Power smart energy programs are driving NB powers earnings 12

down, delaying progress in NB Powers equity target, will have little environmental benefits, 13

creating inequity between participants and non-participants and will create higher than possible 14

rates in the test year all the way to the end of the IRP timeframe. 15

16

17


21 January 18 2018

1

2

3

4

5

6

7


22 January 18 2018

The energy smart programs also do not pass an equitable test for non-participant ratepayers with 1

less than 1% of ratepayers benefiting and the other 99% paying for it. 2

3 4

Not only does the energy smart programs not pass the lowest possible rate test, the energy smart 5

programs being offered by NB Power fail almost all the tests. Many of the programs do not pass 6

the total resource cost test or even NB Powers own self determined primary metric Program 7

Administrator Cost Tests. The only test that passes with flying colors is the participant test, 8

which the evidence shows is less than 1% of ratepayers. 9

10

11


23 January 18 2018

The legislation is clear that NB Power must have DSM programs, but it does not require these 1

programs to be approved by the board. New Clear Free Solutions has offered 4 viable 2

alternatives that will lower rates and increase earnings. These are: 3

1. Industrial Electrode Boilers 4

2. Electrification of Transportation 5

3. Solar Leasing 6

4. On Bill Efficiency loans 7

These viable alternatives are wins from all perspectives. From ratepayers perspective, NB 8

Powers corporate perspective, gas utilities perspective, and the environments perspective 9

everybody wins. There are no looser in these programs only winners. 10

Unlike the 40% Renewable Portfolio standard there is no legislated DSM target, and without that 11

this spending should not be deemed prudent, and even with DSM targets these programs would 12

not pass the prudency test because there are viable alternatives that are lower cost. We want to be 13

clear to the board and NB Power that we are not against efficiency, we are just don’t approve of 14

the programs being proposed by NB Power. 15

3.2 Can you provide an graphical overview of the proposed 16

electrode boiler DSM program? Yes 17

18

19


24 January 18 2018

3.3 Which of the California Tests Should the Board use to test NB 1

Powers DSM programs? All of them 2

We believe all the California tests should be used but in various ways to support different 3

objectives. In general, we support the methods approved by the PUB in the 1991 decisions on 4

capacity planning. Specifically, we support this from the decision: 5

“The Board believes that the fourth criteria [RIM] should be used as a standard against which 6

NB Power’s approach may be compared to ensure that no customer is worse off as a result of the 7

adoption of a DSM project.” 8

Well thought out programs can be designed so that all tests can be passed, even without any 9

legislated targets. The Rate Impact Measure should always be the test the board applies to DSM 10

projects. The TRC test should be used to assure NB Power is not pushing less efficient measures 11

and protects ratepayers. The TRC test effectively is a test of the technology. The participant test 12

and the program tests should be used together to ensure fairness and equitable program design. 13

The RIM test is from both the ratepayer and corporation’s perspective depending on rate design. 14

A lower RIM can affect rates or earning or combination of both, and that is why it should be the 15

primary test. 16

17

18

19

20

21

22

23

24

25

26

27

28

29

30


25 January 18 2018

4.0 ADVANCED METERING INFASTRUCTURE 1

4.1 Should the Advanced Metering Infrastructure be approved? - No 2

New Clear Free Solutions requests that the board not approve the Advanced Metering 3

Infrastructure project. We ask this for the same reasons as our request for the board to not 4

approve the requested rate increase. 5

In addition, we provide these additional comments. Capital projects are the only way the board 6

can control NB Power spending. Due to the small nature of DSM spending this may be the only 7

DSM capital project that is required to be approved by the board. The board should view this as 8

not only approval to spend capital on AMI, but the whole Reduce and Shift Demand (energy 9

smart) programs. It should also be viewing this as a test on NB Powers third strategic objective 10

to defer investments to achieve their second strategic objective to pay down debt. 11

The board has questioned RASD spending before, and member Herron made it clear that the 12

board needed to see the linkage between investing in efficiency and deferring investment in 13

generation. The comparison we provided above, using the evidence supplied by NB Power, 14

shows the linkage. It shows that this is not in the ratepayer’s interest or the utilities interest. 15

It is not appropriate for NB Power to not be including lost revenue due to reduced kwh in their 16

current assessment of AMI, especially if it is not required for reliability or safety reasons. 17

Without taking lost revenue into account there is no way for the board to see its affects on rates 18

or NB Powers earnings and capital structure. It is not plausible that the legislation intended the 19

board to approve capital spending without knowing its affect on rates. It is also not consistent 20

with fundamentals of Net Present Value that should consider cashflows in and out. 21

4.2 What is 'Net Present Value - NPV'? 22

Net Present Value (NPV) is the difference between the present value of cash inflows 23

and the present value of cash outflows. NPV is used in capital budgeting to analyze the 24

profitability of a projected investment or project.11 25

26

27

28

29

30

31

11 https://www.investopedia.com/terms/n/npv.asp

https://www.investopedia.com/terms/c/capitalbudgeting.asp

https://www.investopedia.com/terms/i/investment.asp


26 January 18 2018

5.0 RATE ADJUSTMENT MECHANISM 1

5.1 Should the board approve the rate adjustment mechanism? No 2

The test the board should apply to this request is, will it lead to lowest possible, stable and 3

predictable rates? This mechanism will lead to possibly higher rates, less stable and less 4

predictable and its purpose is to help reach NB Powers corporate objective and not in the publics 5

interest. NB Power can ask for interim rates if it wants too, but the board should make it clear to 6

NB Power that the standard would have to be much higher than lost net earnings and that NB 7

Power would have to demonstrate that it is in the public interest to do so. 8

NB Powers primary rate adjustment mechanism is the 10 year plan which they have already been 9

using but not very transparently. Any changes in the planned rate trajectory should be noted in 10

each 10 year plan with reasons justifying the changes. 11

In contrast to the NB Powers proposed rate adjustment mechanism New Clear Free Solutions 12

offers the board a similar solution as a mechanism to adjust rates for un-prudent operational 13

spending and under $50 million capital projects. If the board adjusts rates based on un-prudent 14

spending in the test year, it will affect not only the test year but the all subsequent years as well. 15

This could have the effect of altering a long-term rate trajectory. If the board finds un-prudent 16

spending in a test year it should spread these costs out over a reasonable amount of time and 17

adjust the current years rates based on that, and not the full amount in the test year. 18

19

20

21

22

23

24

25

26

27

28


27 January 18 2018

6.0 INTEGRATED RESOURCE PLAN 1

6.1 How should the board consider the IRP in both determining 2

rates and approval of capital project in these hearings? 3

While the board does not “approve” the IRP is should be testing it for prudence and 4

reasonableness. The board should be testing if the methodology, assumptions and applied 5

principles of section 100 (2) are reasonable. The board should also consider if good project 6

management has been applied to the plan, as well as good quality management. The board 7

should consider the approval by executive council as only policy guidance, as opposed to things 8

like the Renewable Portfolio Standard which is policy requirements. Policy guidance should 9

always be tested for prudence as this is the key function of the board regarding the IRP. 10

One of the key things the board should consider when reviewing policy guidance is if the 11

executive council had enough information to make a good balanced decision. We feel that is not 12

the case with the energy smart program. There is nothing in the IRP that shows its effect on rates, 13

which is a requirement of the act, and it did not inform the shareholders on their return on 14

investments, earnings, or capital structure. 15

The only comparison, in the IRP, that is made without the energy smart programs is the least cost 16

supply option, and it only compared the difference between revenue requirements of two plans 17

with different load forecasts which is not appropriate. The sensitivity analysis performed by NB 18

Power, in the IRP, all contain the energy smart program, so there is no real viable alternative 19

comparison made in the IRP. 20

There has been a considerable amount of new information brought out in these hearings that 21

shows the energy smart program is not in anybody’s interest except for 1% of ratepayers who are 22

the participants. The board needs to consider that the Executive Council was not aware of this 23

information when it made its decision to approve the IRP. 24

6.2 What additional information should the board order NB Power to 25

include in the next iteration of the IRP to be approved by 26

Executive Council? 27

We would like the board to order the requested information we provided to NB Power in the 28

“what was said” portion of the IRP stakeholder consultations at a minimum. We are also very 29

concerned about the methodology NB Power is using in developing their IRP, and will highlight 30

our concerns via cross examination and final argument and make any additional requests then. 31

32

33

34


28 January 18 2018

NB Power did not only ignore our request for a IRP with increasing renewables even as a 1

sensitivity, they ignored all New Brunswickers, as it was clear that it was the highest priority. 2

3

We also request that the board order NB Power to follow the methodology approved by the PUB 4

in its 1991 capacity planning decision. 5

6

7

8

9

10

11

12

13

14

15


29 January 18 2018

6.3 Is the proposed supply plan by NCFS in the “What was said” 1

portion of the IRP technically feasible? Yes 2

We have included Attachment A Pan Canadian Wind Energy Study Atlantic Summary, and 3

Attachment B Pan-Canadian Wind Integration Study Summary Report that confirms the amount 4

of wind power NCFS suggesting is technically feasible. 5

From Attachment A 6

7

The supply mix shown in the “what was said” document shows % in Province Generation and 8

did not include the percent including exports. Below is a chart showing the % total generation. 9

Generation MWh/Year % Total Generation Stage 1 RPS- Percent Of In Province Generation to In

Province Demand

Hydro 3,412,000 18% 25%

Geothermal 4,094,400 22% 30%

Biomass 706,720 4% 5%

Wind 4,094,400 22% 30%

Hydro HQ 5,720,434 31% 7%

Natural Gas 607,478 3% 4%

(Curtailment) 102,166 0.55%

Total 18,533,265 100%


30 January 18 2018

6.4 Is the proposed supply plan by NCFS, in the “What was said” 1

portion of the IRP, materially different economically than the 2

modeling NB Power did in matter 336 and Exhibit NBP14.58 of 3

this hearing using the strategist modeling software? No 4

We want to remind the board that NB Power was asked in matter 336 about the methodology of 5

our modeling and they did not have any issues with the methodology itself. NB Power only had 6

concerns with assumptions and primarily the displaced fuel cost that was used, or what was 7

referred to as the PPA portion of the model. In the updated version of the model, that we 8

provided with our submission of comments on NB Powers IRP, we took the recommendations 9

from NB Power regarding that assumption. We provide the following comparison of displaced 10

fuel and purchased power cost from the strategist software and our accumulated reinvestment 11

(Fuel and PP displaced costs) portion of our modeling in the what was said report. 12

13

14

This shows that the modeling done by NCFS is conservative compared to the modeling NB 15

Power provided. 16

17

18


31 January 18 2018

6.5 Is NB Powers IRP consistent with the new Climate Change Act 1

tabled legislation? No 2

It will be impossible for the province to meet the 2030 target with the current IRP. NB 3

Power emissions are going up not down. There has also been a commitment to phase out 4

coal by 2030 that is not in the IRP. 5

6

7

8

9

10

11

12

13

14

15


32 January 18 2018

6.6 Is NB Powers IRP putting the province at substantial financial 1

risk of getting the Federal Backstop being applied to New 2

Brunswick? YES 3

It is not the policy that the federal government wont like, it will be NB Powers IRP. We need to 4

show them how we can significantly reduce our emissions without any additional measures. NB 5

Power’s IRP will not satisfy the Federal government, and if we get an additional gas tax it will 6

be NB Powers fault. 7

As well NB Powers IRP does not fulfill the environmental sustainability pillar for section 100 8

(2) of the Act. 9

10

The plan to start investing in even more efficiency to help with climate change is going to make 11

rates even higher, and more than likely not be able to reduce emissions enough to satisfy the new 12

climate change act or the federal government. 13

14


33 January 18 2018

6.7 Is the proposed Climate Change Act, that is tabled in the 1

legislature, fundamentally different than the policy NCFS has 2

been promoting since Matter 272? No 3

The province has created a fund like NCFS has been promoting in section 4 (1). 4

4(1) There is established a fund called the Climate 5

Change Fund. 6

This legislation also allows these funds to be invested in section 4 (4) like NCFS has been 7

promoting. 8

4(4) The Minister of Finance may invest the money in 9

the Fund in the manner authorized by the Trustees Act 10

and may invest in securities issued under the Provincial 11

Loans Act. 12

13

The funds can be used for emission reductions 4 (8) (i) like NCFS has been promoting. 14

4(9) The assets of the Fund may be used 15

(a) to pay the costs of measures for: 16

(i) greenhouse gas reduction, limitation, avoidance 17

or capturing; 18

The fund is unique in Canada in that it has a mechanism to direct the return on investments back 19

into the fund to be reinvested again in section in s 4 (8)(C). This has been the cornerstone of the 20

policy that NCFS has been promoting since matter 272, and when investments are made into 21

renewables it creates a very powerful compounding effect that will provide all the cash flow 22

needed to transition to a low carbon economy. The extra cash flow from the compounding effect 23

will be created by the displacement of fuel and purchased power without the need for rate 24

increases. 25

4(8) The Fund shall be credited with the following 26

amounts: 27

(c) the income generated by the investment of the 28

sums credited to the Fund 29

30

NB Power will have access to these fund for capital expenditures into emissions reductions, as 31

per section 4 (9) (b) and 4 (10) (a) like NCFS has been promoting. 32

4 (9)(b) to reimburse any department or agency of the 33

Government of New Brunswick or any provincial 34

Crown corporation that makes an advance to cover 35

the costs of measures referred to in paragraph (a). 36

37

and 38

39


34 January 18 2018

4(10) For greater certainty, the assets of the Fund may 1

be used to pay any operating or capital expenditure related 2

to any measure referred to in subsection (9). 3

6.8 Do you think the proposed Climate Change Act that is tabled in 4

the NB Legislature the best in the country and a model to be 5

followed by other Provinces? Yes 6

Please see Attachment D which is a letter to an anonymous reader describing why we think it is 7

the best policy in the country. As well please find below a link to a TMI Podcast with Host 8

David Archer in which we discuss many of the issues in these hearings 9

http://tmi.twxnet.com/ 10

According to NB Powers evidence this will be the effect on rates if the Federal GHG plan is 11

forces upon us. 12

13

http://tmi.twxnet.com/


35 January 18 2018

6.9 Of all the Sensitivity Analysis performed By NB Power can you 1

rank them in order from least cost rates to highest cost rates 2

and indicate which ones have wind power in them? Yes 3

4

5

6

7

8

9


36 January 18 2018

6.10 Are the assumptions for capital costs and O and M costs for 1

wind power, that was used in NB Powers IRP, reasonable 2

compared to other reliable sources of publicly available data or 3

actual cost? No 4

Please see the following: 5

Attachments C, E, K, and L 6

Some additional links 7

https://www.greentechmedia.com/articles/read/irena-renewable-energy-competitive-fossil-fuels-8

2020#gs.3vIJcyw 9

https://www.vox.com/energy-and-environment/2018/1/16/16895594/colorado-renewable-10

energy-future 11

http://www.cbc.ca/news/canada/calgary/wind-farm-rachel-notley-alberta-university-calgary-1.4448323 12

13

6.11 Is NB Powers long-term load forecasts reasonable? No 14

The only credible solution to climate change is the electrification of our economy with low 15

carbon electricity and this is not reflected in the load forecast. 16

6.12 Is NB Powers long-term fuel prices reasonable? No 17

With renewables now lower cost than fossil fuels it is unlikely fuel and purchase prices will 18

increase as assumed by NB Power. 19

20

6.13 Can you provide some background information resources on the 21

strategist software? Yes 22

Please see Attachments G and H. 23

24

6.14 Can you provide some additional background resources on 25

efficiency cost effectiveness? Yes 26

Please see Attachments F and I. 27

https://www.greentechmedia.com/articles/read/irena-renewable-energy-competitive-fossil-fuels-2020#gs.3vIJcyw

https://www.greentechmedia.com/articles/read/irena-renewable-energy-competitive-fossil-fuels-2020#gs.3vIJcyw

https://www.vox.com/energy-and-environment/2018/1/16/16895594/colorado-renewable-energy-future

https://www.vox.com/energy-and-environment/2018/1/16/16895594/colorado-renewable-energy-future

http://www.cbc.ca/news/canada/calgary/wind-farm-rachel-notley-alberta-university-calgary-1.4448323


37 January 18 2018

7.0 10 YEAR PLAN 1

7.1 What additional information should the board order NB Power to 2

include in the next 10 year plan? 3

We would like to see the 10 year plan extended to the end of the IRP. We recommend that, to the 4

extent practicable, the same assumptions being used in the IRP be used in this plan. This does 5

not need to be done every year but years with a new IRP or substantially changed IRP. 6

We will keep track of any other request we may have over the hearings, and will make any 7

additional requests or clarifications in our final argument. 8


38 January 18 2018

8.0 LIST OF ATTACHMENTS 1

8.1 Attachment A Pan Canadian Wind Energy Study Atlantic 2

Summary 3

8.2 Attachment B Pan-Canadian Wind Integration Study Summary 4

Report 5

8.3 Attachment C Lazard’s Levelized Cost of Energy Analysis—6

Version 11.0 Summary 7

8.4 Attachment D Letter to Anonymous Reader by NCFS 8

8.5 Attachment E lazard-levelized-cost-of-energy-version-110 9

8.6 Attachment F California Standard Practice Manual 10

8.7 Attachment G Strategist Planning Solution 11

8.8 Attachment H Xcel Energy Strategist Modeling and Outputs 12

8.9 Attachment I Understanding Cost-Effectiveness of Energy 13

Efficiency Programs 14

8.10 Attachment J Bill 39 Climate Change Act 15

8.11 Attachment K EIA Cost and Performance Characteristics of New 16

Generating Technologies Annual Energy Outlook 2017 17

8.12 Attachment L IRENA_2017_Power_Costs_2018_summary 18

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nbeub matter 375 › ... · new clear free solutions evidence matter 375 6 january 18 2018 1 2.0...

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