N-1Application
7 passages
e clear that the Digby project as structured was not going to 16 be developed by Skypower or another Independent Power Producer and the 17 energy would not have been delivered pursuant to the PPA. 18 19 Skypower commenced a formal process...
AI summary The Digby project's development relied on NSPI's affiliate acquiring Skypower's assets under CCAA protection, preventing PPA termination. Without NSPI's involvement, the project might have been unavailable at higher costs via future competitive bids.
DATE FILED: July 23, 2010 Page 11 of 26 1 4.0 CODE OF CONDUCT COMPLIANCE 2 3 The enclosed application provides for the purchase of the Digby Wind Farm development from 4 NSPI affiliate 324 NSL. The affiliate transaction is encompassed by t...
AI summary The document outlines the application for the purchase of the Digby Wind Farm development from an NSPI affiliate, detailing the agreements involved, including a PPA, asset purchase agreements, and a promissory note. The Code of Conduct compliance section emphasizes that all transactions must provide demonstrable benefit to customers and be approved by the Board for fair dealing.
1 11.0 CONCLUSION 2 3 NSPI's investment in the Project will contribute to the achievement of 2010 in-service dates for 4 six of the original seven 2007 selected PPAs. The Company's ownership of the facility will 5 retain and enhance the be...
AI summary NSPI's investment in the Digby Wind Project will add 30 MW of wind generation by 2010, contributing to RES compliance and generating 110 GWh annually. The project's cost is lower than the original PPA, saving customers $4.9 million. NSPI requests UARB approval for capital applications totaling $82.9 million and confirmation that affiliate transactions comply with the Code of Conduct.
Conclusion NSP! seeks to confirm that the UARB has no objection to NSP! continuing with project construction, pending the Capital Work Order review and approval process and before receiving a Board decision on the Capital Work Order Applic...
AI summary NSP! requests UARB's confirmation to proceed with the Digby project construction pending Capital Work Order approval. Customers will not bear costs unless the UARB approves the Capital Work Order Application. The Affiliate Code of Conduct applies due to the affiliate transaction, and NSP! offers to provide additional information if needed.
Nova Scotia Power Inc. - Digby Wind Proiect - P-128.1 0 This letter is further to correspondence from the Board dated April 16, 2010, with respect to NSPl's request involving the above-noted project. The Board has reviewed NSPI's request a...
AI summary NSPI requests approval to proceed with the Digby Wind Project construction before Capital Work Order (CWO) approval. The Board notes no objection to advance expenditures at shareholders' risk, provided they are not deemed CWO approval. The affiliate transaction with 3240384 Nova Scotia Limited will undergo rigorous review under the Affiliate Code of Conduct.
and, upon satisfaction of such conditions, the assignor shall be released from its obligations and liabilities under the PPA and any Performance Security provided by it will be returned or released. - (c) Notwithstanding anything to the co...
AI summary The text outlines conditions for assigning a Power Purchase Agreement (PPA), including releasing the assignor from obligations upon meeting criteria, requiring joint liability for affiliate assignments, and mandating a CAA with NSPI when assigning to a Facility Lender. Performance Security terms and conditions are also detailed.
Deemed subsidiary - 2(4) A company shall be deemed to be a subsidiary of another company if - (a) it is controlled by - (i) that other, or - (ii) that other and one or more companies each of which is controlled by that other, or - (iii) tw...
AI summary The text defines legal terms related to corporate subsidiaries and affiliates, outlines ancillary services, applicable laws, reliability standards, and the role of the Nova Scotia Utility and Review Board. It establishes statutory criteria for deeming companies as subsidiaries or affiliates, emphasizing control structures and regulatory compliance.
N-8Order of the Board dated February 24, 2009 regarding NSPI Revised Code of Conduct
10 passages
-and- IN THE MATTER OF A CODE OF CONDUCT to govern the relations between NOVA SCOTIA POWER INC. and its AFFILIATES BEFORE: ~peterW. Gurnharn, a.c., Chair p<2,fj<ulvinder S. Dhillon, P. Eng., Member "",-"",,.....,,:,
AI summary This document pertains to a code of conduct governing the relations between Nova Scotia Power Inc. and its affiliates, with the proceeding before a regulatory authority.
ORDER WHEREAS Nova Scotia Power Inc. (NSPI) is a body corporate incorporated pursuant to the Companies Act and is engaged in the production and supply of electrical energy in Nova Scotia; AND WHEREAS NSPI is a public utility and its busine...
AI summary The document outlines an order approving the Revised Code of Conduct Governing Affiliate Transactions by Nova Scotia Power Inc. (NSPI), effective June 1, 2009. The process involved consultations with NSPI, interested parties, and Liberty Consulting Group. The Board directed revisions to the Code to establish a clear standard for assessing the benefit to customers from affiliate transactions.
'Lei PURPOSE 1.1 The primary purpose of this Code of Conduct is to ensure that all transactions Nova Scotia Power Inc. (NSPI) enters into with affiliates 1 are designed and carried out in a manner reasonably expected to produce demonstrabl...
AI summary The Code of Conduct aims to ensure that transactions between Nova Scotia Power Inc. (NSPI) and its affiliates provide demonstrable benefits to customers compared to other available options.
2.0 STATEMENT OF PRINCIPLES - 2.1 NSPI will precede any transaction by which it acquires from or provides to an affiliate any goods, services, leases, asset transfers, or other exchanges of value, with a sound, objective, and transparent p...
AI summary NSPI must follow a transparent and objective process when engaging in affiliate transactions, ensuring that such transactions are in the best interest of customers and do not impair market competition. Transactions below $125,000 may have abbreviated documentation.
Objectives To separate regulated electric and other utility services 2 from affiliate activities.
AI summary The objective is to separate regulated electric and other utility services from affiliate activities, ensuring clear distinction and regulatory compliance.
Protocols - 3.1 EMERA, the parent company of NSPI, will create and maintain a corporate organizational structure which ensures that regulated electric and other utility services are provided solely by NSPI and by no other affiliate. - 3.2...
AI summary The document outlines protocols for corporate structure and disclosure requirements, ensuring that regulated utility services are provided exclusively by NSPI and that the Board has access to a complete list of NSPI's affiliates, including their details and officers.
Protocols - 5.1 NSPI's capital structure will reflect the Board approved capital structure. - 5.2 NSPI's capital structure will not be used to subsidize affiliate activities. Affiliate risks or losses will not be borne by NSPI's customers....
AI summary The document outlines protocols regarding NSPI's capital structure and restrictions on affiliate activities. It specifies that NSPI's capital structure must align with the Board's approval and prohibits using it to subsidize affiliates or bear their risks and losses.
Objectives To avoid discrimination in the matter of pricing or in any other manner against non-affiliated buyers of regulated electric utility services. To avoid subsidy by NSPI of the costs, revenues, or activities of affiliates.
AI summary The objectives focus on preventing discrimination against non-affiliated buyers of regulated electric utility services and avoiding subsidies by NSPI to its affiliates.
Protocols - 6.1 NSPI will provide access to regulated utility services on a non-discriminatory basis and will not in respect of those utility services directly or indirectly state, imply or offer any preference or favored treatment to NSPI...
AI summary The document outlines protocols for NSPI to ensure non-discriminatory treatment of affiliates, maintain financial separation, and apply fair market value pricing for goods and services exchanged with affiliates. It also emphasizes the need for Board approval for asset transfers and fair allocation of corporate support costs.
Protocols - 7.1 NSPI shall report annually to the Board the following information: - (a) A detailed listing of all assets, services and products provided to and from NSPI and each of its affiliated companies. - (b) Each item on the listing...
AI summary NSPI is required to annually report detailed information on its affiliate transactions to the Board, including asset listings, pricing, cost allocations, and explanations of fair market value determinations. The Board also reserves the right to audit these transactions as needed.
06537Board Decision
18 passages
h review and analysis, this Decision will be based on the answers to the following straightforward, commonsense questions: - 1. Is NSPl's acquisition of the DWP necessary for customers and for NSPI? - 2. Is the $82.8 million cost of the DW...
AI summary The Board has determined that NSPI's acquisition of the DWP is necessary for customers and NSPI. However, the $82.8 million cost of the DWP requires reductions, including a $1 million reduction in a bonus payment to EUS due to non-compliance with the Code of Conduct. The Board also finds that the acquisition provides the best available deal after cost reductions.
II BACKGROUND [8] On April 16, 2010, NSPI filed a letter with the Board requesting that: NSPI seeks to confirm that the UARB has no objection to NSPI continuing with project construction, pending the Capital Work Order review and approval...
AI summary NSPI requested the UARB's approval to proceed with the Digby project before a Capital Work Order decision, noting that customers would not bear costs unless approved. The Board referenced a prior case and stated it had no objection to NSPI spending at shareholders' risk, but emphasized that the affiliate transaction would be rigorously reviewed.
A. Transactions Between NSPI and its Affiliates [17] The issue of transactions between NSPI and its affiliated companies under the umbrella of Emera Inc. has been, for some time, a major area of concern to the Board. In the Board's view, a...
AI summary The document discusses concerns raised by the Board regarding transactions between NSPI and its affiliates under Emera Inc., highlighting past issues such as questionable financial benefits to affiliates, lack of transparency in salaries, and improper outsourcing. The Board has implemented and revised a Code of Conduct to protect ratepayers and ensure fair practices.
1.0 PURPOSE 1.1 The primary purpose of this Code of Conduct is to ensure that all transactions Nova Scotia Power Inc. (NSPI) enters into with affiliates are designed and carried out in a manner reasonably expected to produce demonstrable b...
AI summary The Code of Conduct aims to ensure that transactions between Nova Scotia Power Inc. and its affiliates provide demonstrable benefits to customers when compared to other available options.
2.0 STATEMENT OF PRINCIPLES - 2.1 NSPI will precede any transaction by which it acquires from or provides to an affiliate any goods, services, leases, asset transfers, or other exchanges of value, with a sound, objective, and transparent p...
AI summary NSPI must ensure affiliate transactions are justified through sound analysis and transparent processes, with documentation that demonstrates they are the best option for customers. The Board has expressed concerns over past affiliate transactions and emphasizes the need for a strong code to ensure fair and reasonable rates for customers.
Submissions - NSPI [32] As noted above, in both its April 16, 2010 letter to the Board, and the Application itself, NSPI acknowledged that the Code applied to its transaction with 324 NSL. [33] In its Closing Submission, NSPI stated that i...
AI summary NSPI acknowledges that the Code of Conduct applies to its transactions with 324 NSL but argues that it does not apply to transactions involving EUS, which is not a public utility. NSPI asserts that the UARB's jurisdiction is limited to its own activities and does not extend to non-regulated entities.
Submissions - Intervenors [35] The CA initially took the position that there was no disagreement on the application of the Code to the EUS contract.? In response to NSPl's submissions, the CA indicated in his Reply Submission that he disag...
AI summary The CA initially agreed that the Code applied to the EUS contract but later disagreed, arguing that affiliate transactions must meet Code criteria even if transferred to NSPI. Exempting the 324 NSL and EUS construction contract from the Code would undermine its purpose. NSPI's attempts to distance itself from the EUS contract during the hearing were noted by the CA and Avon.
ents later in this Decision about consulting fees paid to Emera Energy Services ("EES"), there was no additional cost incurred by using this structure. 8 Transcript, p. 129 and pp. 220-221 However, the Board considers it superficial on the...
AI summary The Board rejects the claim that using a third-party corporate structure like 324 NSL removes the transaction from Board scrutiny, noting that NSPI, EUS, and 324 NSL are all affiliated under Emera Inc.'s control. The Board finds the transaction structure contrived and justifies examining whether the 324 NSL/EUS contract complies with the Code.
2) Does the EUS construction contract comply with the Code? [48] As noted earlier, the Board has determined that it can make a finding on whether the EUS contract between two affiliates of NSPI complies with the Code. Therefore, the Board...
AI summary The Board has determined that the EUS construction contract between two affiliates of NSPI does not comply with the Code, based on an examination of the contract and its context.
[56] NSPI indicated that EUS advised: it was aware of the pricing information received under the solicitation conducted by SkyPower and the CBCL pricing summary, which were based upon the original design and layout for the project as tende...
AI summary NSPI explained that EUS was aware of pricing information from SkyPower and CBCL, but the revised estimate was not yet prepared when the contract was signed. NSPI argued that a competitive solicitation is not required for affiliate transactions and that continuing work was necessary to secure incentives and manage risks.
[62] The CA questioned the contract price paid to EUS: We can only speculate as to how the original price was obtained for the contract. It is not probable that EUS and Emera did any negotiating. It certainly was not the situation of two u...
AI summary The CA questioned the contract price paid to EUS, suggesting it was based on an engineering analysis rather than competitive bidding. The CA argued that the EUS contract did not meet the Code's requirement for being the best available option for NSPI customers. Additionally, the timing of the bonus payment to EUS was also questioned.
Findings [69] Section 2.2 of the Code requires that an affiliate transaction be "... demonstrated through sound, documented analysis to be the best available option". Other sections of the Code, for example, the fair dealing guidelines of...
AI summary The document discusses the requirements under Section 2.2 of the Code for affiliate transactions, emphasizing the need for sound, documented analysis to demonstrate that such transactions are the best available option. It also highlights that the analysis must be contemporaneous with the decision and include sufficient reasons, particularly for large transactions like the DWP.
[72] Section 7.6(e) provides: 7.6 NSPI will take the following actions to establish that each transaction with an affiliate is demonstrably the best option from among those reasonably available at the time for its customers. (e) To the ext...
AI summary Section 7.6(e) outlines requirements for NSPI to document emergency circumstances that may necessitate waiving or delaying normal steps in the data gathering, analysis, and decision process for affiliate transactions, ensuring these actions are verified by a responsible NSPI officer.
[73] Section 7.9 provides: 7.9 In the event that solicitation of third-party offers is not used for a Large Transaction, NSPI shall prepare a description of: (a) the justification for failing to use such solicitations, (b) a description of...
AI summary Section 7.9 of the Code requires NSPI to justify not using third-party solicitations for Large Transactions and to describe alternate means used. The Board found that NSPI did not meet the requirements of Section 7.6(e) for emergency circumstances, despite claims of a tight development schedule. The Board also questioned whether the EUS contract, which includes a bonus, may be subsidizing an affiliate and violating the fair dealing objective of the Code.
Submissions - NSPI [81] NSPI says that the affiliate transaction between it and 324 NSL met the requirements of the Code. The transaction, as documented by the Asset Purchase Agreement dated as of May 28, 2010, 18provided for an assignment...
AI summary NSPI asserts that its affiliate transaction with 324 NSL met the Code's requirements, as outlined in the Asset Purchase Agreement dated May 28, 2010. The transaction involved the assignment of assets related to the DWP, excluding the PPA and performance security. NSPI also received Board confirmation in April 2010 that it could proceed with the DWP before approval, at the risk of its shareholders.
[90] Avon questioned the evidence put forward by NSPI, stating: Even looking at the pricing comparators offered by NSPI ex post-facto, the evidence is slim that this is the "best option" for customers. To justify the value of the EUS contr...
AI summary Avon questioned the evidence provided by NSPI regarding the EUS contract, arguing that the pricing comparators were insufficient to prove it was the best option for customers. Avon highlighted that the bids did not account for certain cost reductions and that the affiliate had an advantage not available to other bidders. Quetta Inc. supported the project and the contract awarded to EUS.
Findings [92] In its Reply Submission, NSPI addressed the CA's statement that the EUS contract price was "... simply matching ..." the CBCL revised estimate. NSPI made it clear that the revised CBCL estimate was prepared well after the EUS...
AI summary The Board found that NSPI's EUS contract price was the best available option despite the lack of competitive solicitation and non-compliance with documentation requirements under the Code. The Board emphasized that the result was due to favorable economics and compliance with RES standards, not an endorsement of the non-compliant process.
VI SUMMARY OF FINDINGS [161] In general, the Board finds that the acquisition of the DWP by NSPI from 324 NSL is necessary, subject to a disallowance of a $1 million bonus payment to EUS due to non-compliance with the Code and inadequate e...
AI summary The Board finds that the acquisition of the DWP by NSPI from 324 NSL is necessary, despite non-compliance with the Code in certain aspects. A $1 million bonus payment to EUS is disallowed, and construction costs are reduced. The Board also accepts the economic analysis provided by NSPI and finds the transmission interconnection contract with EUS acceptable.
06132Closing Submission - NSPI
10 passages
January 14, 2010 1 2 TABLE OF CONTENTS 3 4 5 1.0 SUMMARY 2 6 2.0 APPROVAL OF THE PROJECT, AS FILED, IS APPROPRIATE 3 7 2.1. The Project is Low Cost under Reasonable Assumptions 11 8 2.2. The Affiliate Transactions Brought Value to NSPI Cus...
AI summary The document outlines a project approval request, emphasizing that the project is low cost under reasonable assumptions and that affiliate transactions provided value to NSPI customers. It includes a summary and a request for project approval.
3 By this Application, Nova Scotia Power Inc. (NSPI) seeks approval from the Utility and 4 Review Board (UARB, Board) for four capital work orders: CI 39323, Digby Wind 5 Project, CI 39626, Digby Wind Project Substation, CI 39627, Digby Wi...
AI summary Nova Scotia Power Inc. (NSPI) seeks approval for a 30 MW wind energy project, including several affiliate transactions. The project aims to meet the 2013 Renewable Energy Standard and includes the acquisition of assets from 3240383 Nova Scotia Limited and construction work under an existing contract with EUS. No evidence has been filed by parties other than NSPI.
e Project on time. 14 Emera did not have any reason to do so, other than to help NSPI and NSPI's 15 customers. This action by the NSPI affiliate provides demonstrable benefit to 16 NSPI customers. 17 18 5. 324 NSL was motivated to complete...
AI summary NSPI's affiliate, 324 NSL, completed a project on time to benefit NSPI customers. The project was economically viable due to a low PPA price, and 324 NSL retained EUS under an EPC contract to redesign and reengineer the project. Neither 324 NSL nor EUS were subject to the NSPI Code of Conduct at the time.
Date Filed: January 14, 2010 Page 8 of 22 46 45 So I think it's absolutely a value for customers. 1 THE CHAIR: I gather, though, even though you are fresh as a daisy to 2 some of these issues, that you do have an understanding of the Board...
AI summary The discussion addresses concerns raised by the Board regarding affiliate transactions and the process used in a Power Purchase Agreement (PPA) for a renewable energy project. The witness defends the PPA as the lowest-priced option and emphasizes the effort and compliance with provincial regulations.
1 Transcript, page 183, line 4 – page 190, line 22. 1 2 see these things done and I wanted to see them done well for our customers and that's why I'm here. 3 4 So do I think it's the best deal? I absolutely think it's the best deal and I 5...
AI summary The speaker affirms that the deal reached is the best possible under the circumstances and emphasizes the importance of transparency and acting in the best interests of customers. Concerns about affiliate transactions and ensuring expenditures benefit ratepayers are highlighted.
8 NSPI Undertaking U-12, filed January 7, 2011. 1 affiliates, to complete construction before the March 31, 2011 deadline, this opportunity 2 would have been lost. 3 4 1.2. The Affiliate Transactions Brought Value to NSPI Customers 5 6 NSP...
AI summary NSPI filed an undertaking regarding affiliate transactions, emphasizing that these transactions were designed to benefit customers. The Code of Conduct, approved by the UARB, requires that affiliate transactions must demonstrably provide the best option for customers. The main transaction involves the purchase of a project from 324 NSL.
9 Exhibit N-8, NSPI Revised Code of Conduct governing Affiliate Transactions, as approved by UARB order dated February 24, 2009, section 1.0.
AI summary Exhibit N-8 outlines the Revised Code of Conduct governing Affiliate Transactions, as approved by the UARB on February 24, 2009, section 1.0.
10 Exhibit N-8, NSPI Revised Code of Conduct governing Affiliate Transactions, as approved by UARB order dated February 24, 2009, section 7.6. PPA between NSPI and 324 NSL (as assignee of SkyPower Corp.) License to Use Assets and Option Ag...
AI summary The document references Exhibit N-8, the NSPI Revised Code of Conduct for Affiliate Transactions, approved by the UARB in 2009. It outlines an affiliate transaction involving a PPA between NSPI and 324 NSL, as well as a transmission line construction project. The transaction triggers Section 6.10 of the Code of Conduct, and NSPI notified the UARB of its intention to file a capital work order for the project.
rigorous review of the transaction with 324 NSL would occur at the time of the capital work order application. 11 NSPI's Application, Evidence, and Responses to IRs comprise the documented analysis conducted by NSPI in determining to acqui...
AI summary NSPI's acquisition of a renewable energy project from 324 NSL is under review, with claims that it provides the best option for customers. The assignment of an EPC contract from 324 NSL to EUS is a key transaction, and NSPI must demonstrate that this decision was in the best interest of customers. The UARB's oversight applies to affiliate transactions involving NSPI.
1 2.0 SUMMARY AND REQUEST FOR PROJECT APPROVAL 2 3 By this Application, Nova Scotia Power Inc. seeks approval from the Utility and Review 4 Board for four capital work orders: 5 6 1. CI 39323, Digby Wind Project, in the amount of $70.8 mil...
AI summary Nova Scotia Power Inc. (NSPI) seeks approval from the Utility and Review Board for four capital work orders totaling $82.8 million for the Digby Wind Project. The project is economically justified, providing lower costs and positive NPV compared to original proposals. NSPI asserts that affiliate transactions comply with the Code of Conduct and have preserved benefits for customers.
06537Board Decision
19 passages
h review and analysis, this Decision will be based on the answers to the following straightforward, commonsense questions: - 1. Is NSPl's acquisition of the DWP necessary for customers and for NSPI? - 2. Is the $82.8 million cost of the DW...
AI summary The Board has determined that NSPI's acquisition of the DWP is necessary for customers and NSPI, but the $82.8 million cost requires reduction due to non-compliance with the Code of Conduct and insufficient evidence for a $1 million bonus payment. The total cost will be further reduced by at least $2 million based on final construction costs. Despite affiliate transactions, the acquisition is considered the 'best available deal.'
II BACKGROUND [8] On April 16, 2010, NSPI filed a letter with the Board requesting that: NSPI seeks to confirm that the UARB has no objection to NSPI continuing with project construction, pending the Capital Work Order review and approval...
AI summary In 2010, NSPI requested the Board's confirmation to proceed with the Digby project construction before the Capital Work Order review. The Board responded, referencing a previous case, stating it had no objection to NSPI undertaking advance expenditures at shareholders' risk, provided the affiliate transaction with 3240384 Nova Scotia Limited would be rigorously reviewed.
A. Transactions Between NSPI and its Affiliates [17] The issue of transactions between NSPI and its affiliated companies under the umbrella of Emera Inc. has been, for some time, a major area of concern to the Board. In the Board's view, a...
AI summary The document discusses concerns raised by the Board regarding transactions between NSPI and its affiliates under Emera Inc., highlighting several questionable transactions and the development and revision of a Code of Conduct to protect ratepayers. The Code has been updated over time, with the current version approved in 2009.
1.0 PURPOSE 1.1 The primary purpose of this Code of Conduct is to ensure that all transactions Nova Scotia Power Inc. (NSPI) enters into with affiliates are designed and carried out in a manner reasonably expected to produce demonstrable b...
AI summary The Code of Conduct aims to ensure that transactions between Nova Scotia Power Inc. (NSPI) and its affiliates are structured to provide demonstrable benefits to customers compared to other available options.
2.0 STATEMENT OF PRINCIPLES - 2.1 NSPI will precede any transaction by which it acquires from or provides to an affiliate any goods, services, leases, asset transfers, or other exchanges of value, with a sound, objective, and transparent p...
AI summary NSPI must ensure that affiliate transactions are transparent, well-documented, and in the best interest of customers. The Board has expressed concerns about past affiliate transactions and emphasizes the need for a strong Code to ensure fair and reasonable rates. The Board must determine if the DWP affiliate transactions are necessary and beneficial to ratepayers.
Submissions - NSPI [32] As noted above, in both its April 16, 2010 letter to the Board, and the Application itself, NSPI acknowledged that the Code applied to its transaction with 324 NSL. [33] In its Closing Submission, NSPI stated that i...
AI summary NSPI is seeking approval for several affiliate transactions, including the acquisition of a project from 324 NSL and an affiliate transaction with EUS. NSPI argues that the Code of Conduct applies only to its transactions and not to those involving non-regulated companies like EUS and 324 NSL.
Submissions - Intervenors [35] The CA initially took the position that there was no disagreement on the application of the Code to the EUS contract.? In response to NSPl's submissions, the CA indicated in his Reply Submission that he disag...
AI summary The CA initially agreed with the application of the Code to the EUS contract but later disagreed, arguing that affiliate transactions must meet Code criteria even if transferred to NSPI. He emphasized that exempting the EUS contract from the Code would undermine its purpose. Both the CA and Avon were concerned with NSPI's attempt to distance itself from the EUS contract during the hearing.
ents later in this Decision about consulting fees paid to Emera Energy Services ("EES"), there was no additional cost incurred by using this structure. 8 Transcript, p. 129 and pp. 220-221 However, the Board considers it superficial on the...
AI summary The Board rejects the argument that using a third-party corporate structure, such as 324 NSL, removes the transaction from its scrutiny, emphasizing that NSPI, EUS, and 324 NSL are all affiliated through Emera Inc. The Board finds the transaction structure contrived and justifies examining whether the 324 NSL/EUS contract complies with the Code, citing concerns about circumventing the Code through intermediaries.
2) Does the EUS construction contract comply with the Code? [48] As noted earlier, the Board has determined that it can make a finding on whether the EUS contract between two affiliates of NSPI complies with the Code. Therefore, the Board...
AI summary The Board has determined that the EUS construction contract between two affiliates of NSPI does not comply with the Code, based on an examination of the contract and its context.
[56] NSPI indicated that EUS advised: it was aware of the pricing information received under the solicitation conducted by SkyPower and the CBCL pricing summary, which were based upon the original design and layout for the project as tende...
AI summary NSPI explained that EUS's contract with 324 NSL was based on initial project designs and that the revised cost estimate was not available at the time of contract execution. NSPI argued that a competitive solicitation was not required for the affiliate transaction and that stopping work would pose risks to project completion and incentives.
[62] The CA questioned the contract price paid to EUS: We can only speculate as to how the original price was obtained for the contract. It is not probable that EUS and Emera did any negotiating. It certainly was not the situation of two u...
AI summary The CA questioned the contract price paid to EUS, suggesting it was based on an engineering analysis rather than competitive bidding. The CA argued that the EUS contract did not meet the Code's requirement for the best available option and questioned the timing of a bonus payment to EUS.
Findings [69] Section 2.2 of the Code requires that an affiliate transaction be "... demonstrated through sound, documented analysis to be the best available option". Other sections of the Code, for example, the fair dealing guidelines of...
AI summary Section 2.2 of the Code requires that affiliate transactions be demonstrated as the best available option through sound, documented analysis. The analysis must be contemporaneous with the decision and include sufficient reasoning, as outlined in Sections 7.7 - 7.9 for large transactions like the DWP. The Code also allows for alternate requirements in certain situations.
[72] Section 7.6(e) provides: 7.6 NSPI will take the following actions to establish that each transaction with an affiliate is demonstrably the best option from among those reasonably available at the time for its customers. (e) To the ext...
AI summary Section 7.6(e) outlines the requirements for NSPI to document emergency circumstances that may necessitate waiving or delaying normal steps in the data gathering, analysis, and decision process for affiliate transactions, ensuring that such actions are justified and verified by a responsible NSPI officer.
[73] Section 7.9 provides: 7.9 In the event that solicitation of third-party offers is not used for a Large Transaction, NSPI shall prepare a description of: (a) the justification for failing to use such solicitations, (b) a description of...
AI summary Section 7.9 of the Code requires NSPI to justify not using third-party solicitations for Large Transactions and to detail the process for choosing affiliates. The Board questions whether NSPI's payment of a bonus to EUS subsidizes affiliate activities, violating fair dealing principles. The Board also notes that the bonus was not for early completion but for on-time completion, and finds that the EUS contract does not comply with the Code, though it may consider approving the capital expenditure.
Submissions - NSPI [81] NSPI says that the affiliate transaction between it and 324 NSL met the requirements of the Code. The transaction, as documented by the Asset Purchase Agreement dated as of May 28, 2010, 18provided for an assignment...
AI summary NSPI argues that its affiliate transaction with 324 NSL met the requirements of the Code, as outlined in the Asset Purchase Agreement dated May 28, 2010. NSPI was allowed to proceed with the DWP prior to Board approval, with the risk borne by its shareholders.
1. NSPI acted in the best interest of customers in taking assignment of the EUS contract. As part of its due diligence in considering an assignment of the EPC contract in April of 2010, NSPI requested that 324 NSL engage CBCL to prepare a...
AI summary NSPI argues that the EUS contract was in the best interest of customers, as it was priced below competitive tenders and met fair market value criteria. The EUS contract was re-evaluated after the project scope was updated, and NSPI asserts that the price was reasonable and compliant with the Code of Conduct.
[90] Avon questioned the evidence put forward by NSPI, stating: Even looking at the pricing comparators offered by NSPI ex post-facto, the evidence is slim that this is the "best option" for customers. To justify the value of the EUS contr...
AI summary Avon questions the evidence provided by NSPI regarding the EUS contract, arguing that the comparison between the CBCL estimate and the EUS price is not an apples-to-apples comparison and that the contract may not be the best available option due to lack of competitive bidding and preferential treatment of an affiliate.
Findings [92] In its Reply Submission, NSPI addressed the CA's statement that the EUS contract price was "... simply matching ..." the CBCL revised estimate. NSPI made it clear that the revised CBCL estimate was prepared well after the EUS...
AI summary The Board examined NSPI's compliance with the Code regarding the EUS contract price and found that while the price was the best available option due to favorable economics and ecoEnergy funding, the process used did not comply with the Code. The lack of competitive solicitation and incomplete documentation were noted as issues.
VI SUMMARY OF FINDINGS [161] In general, the Board finds that the acquisition of the DWP by NSPI from 324 NSL is necessary, subject to a disallowance of a $1 million bonus payment to EUS due to non-compliance with the Code and inadequate e...
AI summary The Board finds that the acquisition of the DWP by NSPI from 324 NSL is necessary, despite non-compliance with the Code in the construction contract between 324 NSL and EUS. The Board also approves the contract with EUS for transmission interconnection and accepts the economic analysis provided by NSPI, subject to cost reductions.