Municipal Electric Utilities of Nova Scotia

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The Municipal Electric Utilities of Nova Scotia (MEUNS) is a co-operative of five public power districts and one rural electric cooperative in Nova Scotia. They are the focus of some Nova Scotia sustainability proposals that may resolve some micro-grid controversies and choices that the new grid requires. A unified district utility business plan has been discussed in two MEUNS towns already. The five active members of MEUNS are:

  • Riverport Electric Light Commission in Riverport District (the only rural electric cooperative), claims to have "about 800 customers", 90% residential, one fulltime employee, and serving "Lower LaHave, East and Middle LaHave, Upper and Lower Rose Bay, Upper and Lower Kingsburg, and Riverport." [1]. The number is assumed to be subscribers although with no corresponding political unit it's hard to estimate.
  • Town of Lunenburg Electric Utility (public power district) claims to serve "approximately 2100 customers" in Lunenburg and vicinity [2], however its population is only 2313 so that number represents likely households, not actual subscriber accounts. (see Lunenburg Board of Trade 20120110 regarding its unique business prospects and a unified district utility business plan being developed for it).
  • Electrical Department of Mahone Bay (public power district) [3] claims to serve "725 customers in town plus 26 near Mader's Cove", though its population of under 950 suggests that too is an estimate of population served or includes businesses - it has 2 employees
  • Berwick Electric Commission - (Berwick public power district) [4] serves "the Town (population 2454) and some adjacent areas of Kings County" and "employs 3 Powerline Technicians who conduct meter work and hydro operations", this being a dam [5] "The Commission operates one fully capable double bucket truck, a digger derrick for pole setting, a van for general transportation and a diesel 4x4 and a tracked vehicle for hydro operations." Its documents are visible at [6] It is the only one of these small utilities, as of January 2012, on public backhaul (See Berwick VCFN for details.)
  • Town of Antigonish Electric Utility (public power district) [7], the largest of these utilities, serving "2800 residential customers and over 500 commercial customers in the Town and surrounding area, known as the fringe." That is clearly a subscriber account number as the Town's population is over 4500 people. It has "gross revenues in excess of $9,000,000 from sales of more than 100,000,000 kilowatt hours."

Judging only from these numbers, the residential population served by these utilities is about 800+2313+2454+4500+950 or about 11,000 people excluding Canso's 485 customers.

Canso[edit]

Canso's public power district serves 485 customers in the former Town of Canso, according to a comprehensive study of its assets done in 2011. As of July 1, 2012, its utility is owned by the Municipality of the District of Guysborough, under Warden Hines, MODG took the "position that they do not wish to run the electric utility. The town is entertaining offers but there is no firm commitment from any buyer. If at dissolution the utility remains a town asset, the MODG will continue to look for buyers. Hines says the MODG is quite capable of taking over the water treatment plant and wastewater facility that serve the Canso area." [8] There was of course no information on what those "offers" (plural) were or are, from whom or how they valued the utility.

This appears to be a political not economic decision. Canso's electric utility had substantial "infrastructure debt related to Canso’s sewer system and electric utility". NS agreed to "provide up to $6 million to help bridge any funding gaps created by the district’s takeover of the town’s financial burdens" but requires also "the future sale of the electric utility. The funds from that sale will be spent on projects in the Canso area." [9] A review of Canso’s electric utility was part of the review process the municipalities have been working on for more than 15 months. With those findings in mind, Hines said his council passed a motion saying that it had no objections to the town selling the utility prior to the dissolution. “And, if it wasn’t sold, we would be selling it.“ "As part of the agreement that we have signed, it was decided that the proceeds from that sale would remain in the new District of Canso – District 8 – to help with the capital repairs down there,” Hines said. [10] The study was predicated on Guysborough's inability or reluctance to run the utility. Pages 20 to 23 of the report contain only benchmarking against Ontario utilities that do not offer any smart grid or home services, nor any communications or other metering services, extremely odd for a 2011 report [11] - see unified district utility business plan for an explanation of the appropriate scope for a modern public power district's business/operations plan.

"CHAPTER 6 OPERATION OF THE UTILITY

Operation of an Electric Utility requires several fundamental functions. Connection and disconnection of customers, meter reading and billing, service restoration, and ongoing maintenance of the utility plant. Additional services such as provision of street lighting require the same basic functions (install/remove, bill, and maintain/repair). In addition, planning and engineering services, administration and customer service and other support services must be provided or acquired on a contract basis. From the information provided it appears that the Town provides administrative and billing services with internal staffing, connection, disconnection and maintenance services with contract staff (one day a week), and relies on Nova Scotia Power resources to provide outage restoration and other emergency services. Based on the costing information provided by the Town (Appendix 1, Table 1) it appears the Town has provided the above services at a cost (energy cost and revenue excluded) varying from a low of $125,040 (in 2006/2007) to a high of $317,220 (in 2004/2005). Much of the variability is a result of the timing of capital expenditures (including Wind Farm and Utility Evaluations) and Bad Debt Expense. With these expenditures normalized the net cost of operations is between $175,000 and $254,000 (current year budget). This represents less than 10% of the replacement value of the utility assets. Details of past and current budgets, with the major variables normalized, are contained in Appendix 1, Table 2. The cost of Operation and Administration of a utility of this size is highly dependent on the ability of the Town to acquire skilled technical resources and efficiently manage the workload with part time resources and staff. Due to the small size, and geographically isolated location of this utility there are few synergies with neighbouring areas (or indeed the provincial utility) or the economies of scale enjoyed by their larger counterparts in other areas. Based on the (adjusted) cost of $212,653 for 2009- 2010, Canso supplies its customer base with services for approximately $425 per customer per year (Appendix 1, Table 2). In a recent benchmarking study conducted with small Ontario utilities of comparable size (less than 1000 customers) Operating and Administrative costs ranged from $212 to $382 per customer (Figure 2) It is noteworthy that the high and low figures represent costs at the same utility in various years, demonstrating the high variability typical of operations of this size. In the same period, the Town of Canso Operating costs averaged $405 per customer. Page 21 CBCL Limited Operation of the Utility 16 Table 6.1 Ontario Utility Benchmarking Customers OM&A – Avg. Avg. OM&A Per Customer 2005 2004 2003 2002 Dutton Hydro 586 $155,646 273 266 382 232 212 Grand Valley Energy 682 $171,219 259 299 253 235 249 Newbury Power 189 $42,155 237 215 259 N/A N/A Terrace Bay Superior Wires 938 $278,342 310 331 280 300 328 Canso 500 $202,628 405 375 393 445 408 None of the Ontario utilities are as geographically isolated as Canso, or are exposed to the same coastal weather challenges that typically increase costs. Based on this, it is the opinion of CBCL Limited that the operating and administration costs observed over the past ten years are a reasonable indicator of future costs. It is important to note that the comparison of operating costs must be evaluated with limitations. There is little publicly available information for private utilities. Not all utilities measure the same performance metrics, and accounting and reporting policies and treatments may differ. For these reasons any comparison of metrics and indicators should only be used as a guideline. 6.1 Timing and Staffing Options The Capital Replacement and Maintenance costs have been estimated based on a single project to bring the plant to an “average “ condition, and a sustainable annual expenditure profile that would maintain the plant in a reasonable condition. These costs are highly dependent on the cost of labour. The effort required in person days is a good approximation of the total workload, but care must be taken in the interpretation of costs, due to the variability of labour costs based on the approach. Typical direct labour rates for Powerline Technicians, for example are in the $35-$40 per hour range, which forms the basis for the estimates provided. To support this workload, additional indirect costs for vehicles and tooling, travel, delay and non-productive time (vehicle breakdowns, bad weather etc.) have been added. This may not be an acceptable approach for some of the work as it assumes the workload can be structured in such a way as to keep a constant workforce productively and efficiently applied to the workload. Any peaks and valleys resulting from consolidating the workload (to gain efficiencies for example) would result in peaks and valleys in the staffing profile, a situation that would present serious resourcing challenges given the location of the work and the current shortage of trained and qualified Powerline Technicians in the work force. Assuming the Capital investments outlined in this report are completed, the annual workload may be sufficient to support a full-time technician. The annual Capital workload is approximately 120 person-days, which, when combined with the operating costs which equate to approximately 75 person-days, appear to provide almost enough work for a single technician. If a contracting approach is applied to the workload identified, a more appropriate labour cost would be in the $100 per hour range, including tools and equipment, travel and delay. This approach provides much more control and certainty about the final cost of the work, and requires significantly less

Page 22 CBCL Limited Operation of the Utility 17

management effort, as the contractor deals with the scheduling and management of the work, once the tender has been awarded. If staff is maintained by the Town for any of the work, the overall cost of a contracting approach for a subset of the work would be greater than estimated, due to the embedded costs of management and supervision for the operation, but this would be offset by efficiency gains on the operations side of the business. The short term capital requirements may be structured in a number of ways. The work can be structured as a continuous workload with internal or contract resources, or completed in blocks with contract resources to maximize the efficiencies of consolidating the workload. For the purposes of this report, a contracted workforce is assumed. Similar direct costs could be obtained with an internal workforce only if the loss of productivity due to scheduling challenges identified above is ignored. To operate the Town Electrical Utility the following staff are required: 1. Management – A part time utility manager is required to budget and plan the work, manage the day-to-day service activities, and ensure staffing, billing and service issues are resolved. 2. Technician – A part time powerline technician is required to perform routine maintenance and repairs, connect and disconnect, and support the Manager in the identification and prioritization of the Capital workload. 3. Meter reading – A part time labourer is required to read the utility electrical meters 4. Billing, Accounting, Purchasing, and General Administration – A part time clerical staff with a solid accounting background is required to complete the administrative functions. Depending on the skills of the individual, accounting support may be required on an infrequent basis to prepare financial statements, annual budgets etc. The Town currently provides these services with a mixture of part time, full time, and contract resources. Sufficient work exists to support full time staff if more than one of the above functions are combined (for example the Manager currently also reads the meters) . Depending on the level of Capital expenditures in a given year, a full time Powerline technician engaged in both operations and Capital construction would be effective, and would reduce the requirement for support from NSP."

The only reference, on Page 23, is to:

"BENCHMARKING THE COSTS OF ONTARIO POWER DISTRIBUTORS, Mark Newton Lowry, PhD, Lullit Getachew, PhD , Steve Fenrick , Pacific Economics Group, LLC."


Kentville[edit]

In January 1998 when Municipal Electric Utilities of Nova Scotia was formed, Kentville also owned its own electric company which it sold to Nova Scotia Power [12]. Some sources believe this was a serious mistake and that Kentville paid 15% more for electricity ever since.