Complicated clarity on Nova Scotia Power’s climate-based billing estimation plan

We’re learning more about how some Nova Scotia Power customers are going to have their bills adjusted, based in part on weather from years and years ago.

Ordinarily, customers paying their bills on a monthly budget, or ‘Equalized billing plan’, have their budget payment calculated once a year based on their power usage over the previous twelve months.

Now, under a formula approved months ago by the Utility and Review Board, an additional factor will be used to determine the budget amount: past climate data.

Say, for example, you ordinarily paid $250 a month, but it was a warm winter, so you paid too much. Maybe they’d lower your budget to $200 a month. But the next year, it’s a cold winter, so you underpaid, so they raise your budget and pay more.

With the new formula, the ups and downs should be smoothed out.

“They’ll still see debits and credits at the end, but they won’t be the wide fluctuations they’re seeing today,” says Patty Faith at Nova Scotia Power.

NSP calls the formula ‘Weather normalization’.

“Rather than basing a budget billing amount on what a customer would’ve paid in the previous year, it’s looking at weather patterns over a period of ten years, to provide a more predictable outcome,” says Faith.

And how does the formula work, exactly?

That’s a little tricky.

According to Patty Faith, the weather element uses a concept called the “heating degree day”. A Wikipedia article describes the heating degree days as “quantitative indices designed to reflect the demand for energy needed to heat a home or business. These indices are derived from daily temperature observations, and the heating requirements for a given structure at a specific location are considered to be directly proportional to the number of HDD at that location.”

Environment Canada’s description is more straightforward: “Heating degree-days for a given day are the number of Celsius degree that the mean temperature is below 18 Celsius degree. If the temperature is equal to or greater than 18 Celsius degree, then the number will be zero.”

A document at Nova Scotia Power’s web site, part of a 2008 consultant’s report titled “WEATHER NORMALIZATION BENCHMARKING STUDY”, defines it as follows: “Weather normalization is the phrase used for estimating what energy consumption would have been if “normal” weather had occurred. Most utilities adjust their actual monthly sales and net generation results to remove the effect of weather
deviations from normal. Looking forward, normal weather inputs are typically used to generate budget forecasts and long-term planning forecasts.”

The heating degree-day number is to be factored in with the year’s past power usage to estimate the next year’s budget amount for Nova Scotia Power customers on the monthly equalized payment plans.

So far, we don’t have the precise formula NSP will be using.