Topic:"Capital Expenditures" in M03154

POLICIES - 04 Expenditures for amounts less than the stated materiality limits should be charged to operations as they are incurred. - 05 When additional costs associated with capitalizing immaterial amounts exceed the benefits of providin...

AI summary The policies outline guidelines for handling expenditures below materiality limits, expensing costs when capitalizing immaterial amounts is not beneficial, and annual reviews of materiality limits by Corporate Accounting Services and Capital Accounting to ensure their continued relevance.

SUMMARY OF CAPITALIZATION LIMITS 01 The following table summarizes the capitalization limits by major function. These limits refer to total cost of acquisition including installation. Please refer to the Capital Expenditure Justification C...

AI summary The document provides a summary of capitalization limits by major function, referring to total acquisition costs including installation. It directs readers to the Capital Expenditure Justification Criteria for guidelines on routine capital expenditures.

Function Capitalization Level Section Reference Thermal Generation $25,000 Hydro 5,000 Gas Turbines 5,000 Transmission 5,000 Distribution 1,000 6000 Buildings 2,000 Tools 1,000 Transportation Equipment 2,000 Office Equipment 1,000 Communic...

AI summary The document outlines various capitalization levels for different functions and sections, including thermal generation, hydro, gas turbines, transmission, distribution, and others, along with references to UARB approval for specific items such as deferral of operating costs, severance programs, and assets not used and useful.

09 Cost Centre Segment The fourth segment indicates the Cost Centre . The lowest level of cost centre available (department/district) is termed the "Child" and is the only level which can accept direct charges. Summary reports to divisiona...

AI summary The text explains the structure of cost centres, distinguishing 'Child' (lowest level accepting direct charges) and 'Parent' (compiling data for reports). It emphasizes consistency in Capital Work Orders and references the Chart of Accounts for full cost centre listings.

10 Project Segment The final segment is the four-digit project identifier. The project identifier is optional for operating expenses, but can be used to track specific short-term operating projects. Sequential numbers are assigned to opera...

AI summary The text outlines rules for project identifiers in Nova Scotia Power's accounting, distinguishing between optional identifiers for operating expenses and mandatory ones for capital items. It details code structure, including function codes (e.g., S, H) and work order numbers, and notes deleted sections related to intranet postings.

The following example demonstrates an accounting flex field for an addition to property, plant and equipment at Point Tupper. Please note that activity 005 - Indirect Costs is used to record costs such as Applied Overhead1 and Allowance fo...

AI summary The text provides an example of an accounting flex field for an addition to property, plant, and equipment at Point Tupper, highlighting the use of activity 005 - Indirect Costs for recording specific construction-related expenses.

GENERAL 01 Generic accounts simply provide a higher level summary of NSPI's asset accounts than the break down furnished by the capital activities. The format conforms to the account descriptions used by the Federal Energy Regulatory Commi...

AI summary The document explains that NSPI's generic accounts provide a high-level summary of asset accounts, contrasting with detailed capital activities tracking. The format aligns with FERC's U.S. standards, and Appendix A includes a cross-reference table linking generic accounts to internal tracking activities.

Land and Land Rights - 03 Includes the cost of land owned and the rights, interests and privileges held by the Company in land owned by others. Land and land rights shall be classified within the function according to the major purpose for...

AI summary The text outlines accounting procedures for land and land rights, including cost allocation, apportionment between land and buildings, handling of deferred payments, and treatment of proceeds from land sales. It specifies when costs are charged to land accounts versus other plant accounts and how surplus land value is accounted for.

Buildings, Structures and Grounds - 04 Includes the installed cost of all permanent structures, services and improvements used to house, support, or safeguard property or persons. Also includes those items that are permanently attached to...

AI summary The text outlines accounting rules for buildings, structures, and grounds, including cost apportionment between land and buildings, demolition costs, excavation expenses, and allocation of foundation and improvement costs. It specifies how different construction and acquisition scenarios should be classified and accounted for.

R & D Activity 07 Includes eligible Scientific Research and Experimental Development, capital expenditures . Deleted: s Deleted: r Capital Contributions 08 Includes the value of cash or assets received to defray the cost of construction of...

AI summary The text defines R&D activity as including eligible scientific research and experimental development, along with capital expenditures. It also outlines capital contributions as cash or asset transfers to fund customer-facing infrastructure.

Roads, Trails and Bridges 114 Includes the cost of all permanent roads, trails and bridges required to provide access for people and equipment to buildings, dams and other facilities. Deleted: installed Deleted: used primarily in the opera...

AI summary The text specifies that costs for permanent roads, trails, and bridges required for access to facilities are included. Deleted lines reference NSPI system operations and a 2009 accounting manual, but the current focus is on infrastructure costs for access.

Reservoirs, Dams & Waterways 15 Includes the installed cost of facilities used for impounding, collecting, storage, diversion, regulation and delivery of water used primarily for generating electricity. Deleted: in place

AI summary The text defines the scope of 'Reservoirs, Dams & Waterways' as including installed costs of facilities for water impounding, storage, and regulation primarily used for electricity generation. A note indicates this section was deleted.

District Heating & Cooling 16 Includes the cost of the water piping network and heat exchangers at both power plant and client facilities. Deleted: all district heating & cooling facilities

AI summary The text specifies that capital expenditures include costs for water piping networks and heat exchangers at both power plant and client facilities. It also notes the deletion of all district heating & cooling facilities from consideration.

Poles, Towers and Fixtures 17 Includes the installed cost of all poles, towers and associated fixtures used primarily to support distribution and transmission overhead facilities and their connection to underground systems. This account in...

AI summary The account includes installed costs for poles and towers supporting distribution/transmission overhead facilities and their underground connections, excluding those used solely for street lighting. Poles serving both transmission and distribution are charged to the transmission function.

Overhead Conductor 18 Includes the installed cost of all overhead conductors and associated equipment used in the transmission and distribution of electrical energy. Please note that overhead conductor does not include the cost of conducto...

AI summary The term 'Overhead Conductor' refers to the installed cost of all overhead conductors and associated equipment used in transmission and distribution, excluding those used exclusively for street and highway lighting systems.

Line Transformers - Overhead 19 Includes the installed cost of all transformers and associated equipment used in the transformation of electrical energy in the transmission and distribution overhead system to a voltage that can be used by...

AI summary The text defines the inclusion of installed costs for overhead line transformers and associated equipment used to convert electrical energy to customer-voltage levels in transmission and distribution systems.

Station Equipment 20 Includes the installed cost of all equipment used for the purpose of changing the characteristics (voltage, etc.) of electricity in the distribution level of voltage. This account also includes the cost of buildings er...

AI summary The account includes installed costs for equipment modifying electricity characteristics (e.g., voltage) at the distribution level, as well as buildings primarily used for substation functions.

Underground Conduit 21 Includes the installed cost of all underground conduit and tunnels used to house transmission or distribution wires. Deleted: circuits Deleted: ¶ Formatted: Font: (Default) Shruti Formatted: Font: (Default) Shruti, B...

AI summary The text defines 'underground conduit' as encompassing the installed costs of all underground conduit and tunnels used for transmission or distribution wires, with a deleted reference to 'circuits' and formatting notes.

Underground Conductors 22 Includes the installed cost of all underground conductors and other equipment used in the underground system. This includes any underwater facilities as well.

AI summary The text defines the scope of 'underground conductors' to include the installed cost of all underground conductors, associated equipment, and underwater facilities within the underground system.

Line Transformers - Underground 23 Includes the installed cost of all transformers and associated equipment used in the transformation of electrical energy in the underground system to a voltage which can be used by the customer.

AI summary The text defines the inclusion of installed costs for underground transformers and associated equipment in the underground electrical system.

Meters 25 Includes the purchased cost of all meters and related equipment used to measure the electricity delivered to customers. Deleted: and associated labour

AI summary The text specifies that the cost includes purchased meters and related equipment for measuring electricity delivery to customers, with a note that associated labour costs were deleted from the original statement.

Communication Equipment 27 Includes the installed cost of all radio, telephone and microwave equipment for use within the Company.

AI summary The text refers to the inclusion of installed costs for radio, telephone, and microwave equipment within the Company, indicating capital expenditures related to communication infrastructure.

Transportation Equipment 29 Includes the installed cost of all transportation and work vehicles used for utility purposes. Formatted: Font: (Default) Shruti Formatted: Font: (Default) Shruti, Bold

AI summary The section outlines the inclusion of installed costs for transportation and work vehicles used in utility operations, emphasizing capital expenditures related to fleet infrastructure.

Shop Equipment 31 Includes the installed cost of all equipment used in repair work for general shops.

AI summary The text defines 'Shop Equipment' as encompassing the installed cost of all equipment used in repair work for general shops, indicating a categorization of expenditures related to maintenance and repair infrastructure.

Leases and Leasehold Improvements 32 Includes the installed cost of all leases and leasehold improvements.

AI summary The section discusses the inclusion of installed costs related to leases and leasehold improvements in financial considerations. It highlights the capital expenditures associated with these assets.

Computer Equipment 33 Includes the installed cost of all computer hardware and software that is used in the general operations of the Company. Deleted: equipment

AI summary The text specifies that computer hardware and software costs are included in the company's general operations. A note indicates that 'equipment' was deleted, though the core focus remains on categorizing computer-related expenses.

Laboratory Equipment 34 Includes the installed cost of all laboratory equipment for all functions of the Company.

AI summary The text refers to the inclusion of installed laboratory equipment costs for all company functions, highlighting capital expenditures related to laboratory infrastructure.

Stores Equipment 35 Includes the installed cost of all equipment used in the receiving, shipping, handling and storage of materials and supplies used in the storeroom.

AI summary The text defines 'Stores Equipment' as encompassing the installed cost of all equipment involved in receiving, shipping, handling, and storing materials and supplies within the storeroom, focusing on capital expenditures related to these operations.

Intangible Non-utility 37 Includes the installed cost of all intangible assets that are part of the Company's long-term investment to provide service to the public that is not substantiated by a physical asset as well as the installed cost...

AI summary The text defines intangible non-utility assets as long-term investments not tied to physical assets or direct electric service provision. It references a 2006 deletion and a 2009 accounting manual, highlighting the classification of such intangible costs.

GENERIC ACCOUNT ACTIVITY CODE STM (S) GAS (G) HYD (H) TRN (T) DIST (DP) GEN (P) WIND (W) Land and Land Rights Land 001 X X X X X X Land Rights 002 X X X X X X X Buildings, Structures & Grounds Buildings, Structures & Grounds 003 X X X X X...

AI summary This document provides a table listing various generic accounts related to land, buildings, equipment, and infrastructure, along with their associated activities and codes. It also includes a cross-reference to capital activities under the category '3350A'.

POLICY 02 The Company should record the cost of OM&G expenditures that do not benefit any future period as an expense in the Statement of Earnings in the period that they are incurred.1

AI summary The policy states that the Company should expense OM&G expenditures without future benefits immediately in the Statement of Earnings rather than capitalizing them.

10 Depreciation rates are filed annually with the Annual Capital Expenditures Plan. Deleted: on the NSPI intranet AMORTIZATION - CAPITAL CONTRIBUTIONS IN AID OF CONSTRUCTION - 5310

AI summary The document discusses depreciation rates being filed annually with the Annual Capital Expenditures Plan. It also references a section on amortization related to capital contributions in aid of construction.

PROCEDURES - 02 Amortization base equals the amount of the capital contribution by plant activity code.

AI summary The text defines the amortization base as the amount of the capital contribution by plant activity code, which relates to how capital expenditures are accounted for over time.

- 03 The timing of commencement of amortization is the same as the associated asset. 04 The journal entry used to record the amortization of contributed capital would be as follows: Deleted: 04 The following example will demonstrate the am...

AI summary The text discusses the timing of the commencement of amortization, aligning it with the associated asset. It also provides an example of journal entries for the amortization of capital contributions in aid of construction, referencing a capital contribution from the Federal Government for Unit #5 at Trenton.

A cash capital contribution of $12 million was received from the Federal Government for Unit #5 at Trenton. This annual amortization is calculated as follows: Capital contribution amount $ 12,000,000 Depreciation rate - Trenton plant 2.63%...

AI summary A cash capital contribution of $12 million was received from the Federal Government for Unit #5 at Trenton. The annual amortization is calculated using a depreciation rate of 2.63% at the Trenton plant, resulting in an annual charge of $315,600.

DEFINITION 01 Capital assets include identifiable assets such as property, plant and equipment or intangible assets that are held for use in the production or supply of goods and services. They are intended for use on a continuing basis an...

AI summary Capital assets are defined as identifiable assets (property, plant, equipment, or intangible) held for use in producing or supplying goods/services, not for sale in ordinary business operations. They are intended for continued use.

GENERAL - 02 An expenditure must create a benefit having a life of more than one year to be considered capital. Annual fees or maintenance costs do not create an asset; they simply maintain the existing asset base and should be expensed an...

AI summary The text outlines criteria for capitalizing expenditures, emphasizing long-term benefits, and discusses depreciation and amortization. It references guidance from the National Association of Regulatory Commissioners and FERC.

08 Expenditures should not be capitalized if it is not reasonably certain that the Company will receive a benefit from them. Formatted: Font: Not Italic PROCEDURES 09 Every expenditure must be classified as either capital or operating, and...

AI summary The document outlines procedures for classifying expenditures as either capital or operating, emphasizing that capitalization should occur only when benefits are reasonably certain. It discusses the importance of materiality in these decisions and outlines processes such as the Annual Capital Expenditure Plan and the Unknown and Unforeseen process for approving capital expenditures.

POLICY 02 A capital asset should be recorded at cost. 1

AI summary The text states that capital assets should be recorded at cost, referencing a footnote. This aligns with accounting principles for capital expenditures, ensuring accurate financial reporting of long-term assets.

COST COMPONENTS Cost components represent examples of the types of major pieces of equipment included in each capital activity. They are created through detailed consultation with our asset builders and maintainers, and conform to FERC.

AI summary The text defines cost components as major equipment examples in capital activities, developed through consultation with asset builders/maintainers and aligned with FERC standards. It emphasizes structured creation processes and regulatory compliance.

COST ELEMENTS Cost elements are examples of the minor pieces of equipment or expenses included in the capital activities.

AI summary The text defines 'cost elements' as minor pieces of equipment or expenses included in capital activities, highlighting their role in broader capital expenditure frameworks.

Cost Elements Air Conditioner Units Alarms Architects Plans Backfill Blowers Boilers Booms Braces Breakers Building Inspections Fences Fill Fire Escapes Floors Flotation Devices Flow Control Devices Framing Furnaces Gates Grading Permits P...

AI summary The document lists infrastructure and construction-related cost elements, including building components, environmental remediation, and specialized equipment. No explicit arguments, regulatory discussions, or policy positions are present in this section.

COST COMPONENTS AND ELEMENTS - 6140 Formatted: Indent: First line: 36 pt Breeching System Heaters Seals Brick Hoppers Sprayers Cleanouts Insulation Steel Concrete Ladders Supports Ducts Liners Tanks Foundations Motors Guys Painting - First...

AI summary The document outlines various cost components and elements related to fuel handling systems for coal and oil, including infrastructure, equipment, and installation details. It lists items such as bins, conveyors, pumps, and structural components for both fuel types.

Cost Elements Architect's Plans Foundations Rails Belts Gates Road Beds Chutes Hoppers Screening System Controls Magnets Switches Dust Collectors Measuring Devices Ties Elevators Motors Wiring Filters Painting - First Time

AI summary The text lists various cost elements related to infrastructure and equipment, including architectural plans, foundations, rails, belts, gates, road beds, chutes, hoppers, screening systems, controls, magnets, switches, dust collectors, measuring devices, ties, elevators, motors, wiring, filters, and painting.

Cost Elements Arresters Cooling Systems Mechanical Devices Battery Charger Electrical Devices Meters Battery Fans Piping Breakers Fencing Platforms Cables Foundations SF6 Switches Clamps Ground Rods

AI summary The text lists various cost elements related to infrastructure and equipment, including arresters, cooling systems, mechanical devices, battery chargers, meters, and other components used in electrical and utility systems.

Cost Components Wooden Poles - Treated Wooden Poles - Untreated

AI summary The document text lists 'Wooden Poles - Treated Wooden Poles - Untreated' under the 'Cost Components' heading, indicating a categorization of pole types for cost analysis.

Cost Elements Anchors Epoxy Rods Permits Backfill Excavation Poles Braces Guards Strain Insulators Brackets Guys Suspension Bolts Crossarms Insulator Pins

AI summary The text lists various cost elements related to infrastructure, including items such as anchors, epoxy rods, permits, backfill, excavation, poles, braces, guards, strain insulators, brackets, guys, suspension bolts, crossarms, and insulator pins.

Cost Components Concrete Poles

AI summary The document discusses 'Cost Components,' specifically focusing on 'Concrete Poles' as a part of infrastructure planning or capital expenditures.

Cost Elements Anchors Epoxy Rods Permits Backfill Excavation Poles Braces Guards Strain Insulators Brackets Guys Suspension Bolts Crossarms Insulator Pins

AI summary The text lists various cost elements related to infrastructure, including items such as anchors, epoxy rods, permits, backfill, excavation, poles, braces, guards, strain insulators, brackets, guys, suspension bolts, crossarms, and insulator pins.

COST COMPONENTS Cost components represent examples of the types of major pieces of equipment included in each capital activity. They are created through detailed consultation with our asset builders and maintainers, and conform to FERC.

AI summary The document outlines cost components as examples of major equipment included in capital activities, developed through consultation with asset builders and maintainers and aligned with FERC standards.

COST ELEMENTS Cost elements are examples of the minor pieces of equipment or expenses included in the capital activities.

AI summary The text defines cost elements as minor pieces of equipment or expenses included in capital activities, providing a general overview of what constitutes cost elements in the context of capital expenditures.

Cost Elements for both (001) and (002) Appraisal costs prior to closing title. Arbitrator, in the case of expropriation. Bulkheads - buried and not requiring maintenance/replacement. Clearing land for lines Condemnation proceedings includi...

AI summary The text lists various cost elements associated with property acquisition and infrastructure development, including appraisal costs, legal fees, expropriation expenses, and initial acquisition costs. It also mentions accounting policies and infrastructure components like plant cleaning systems and roadways.

Cost Elements Concrete Insulation Pumps Controls Ladders Signs Excavation Lining Steel Fencing Measuring Devices Valves Gates Meters Wiring Gravel Painting - First Time Hangers Piping Heaters Platforms

AI summary The document lists various cost elements related to infrastructure and construction, including materials and equipment such as concrete, insulation, pumps, controls, and wiring.

Cost Components Concrete Poles

AI summary The document text briefly mentions 'Concrete Poles' under the section 'Cost Components', suggesting that concrete poles may be a relevant cost factor in the regulatory proceeding.

Cost Elements Anchors Epoxy Rods Permits Backfill Excavation Poles Braces Guards Strain Insulators Brackets Guys Suspension Bolts Crossarms Insulator Pins

AI summary The text lists various cost elements related to infrastructure, including items such as anchors, epoxy rods, permits, backfill, excavation, poles, braces, guards, strain insulators, brackets, guys, suspension bolts, crossarms, and insulator pins.

Cost Elements Adapters Excavation Painting - First Time Backfill Filters Permits Bolts Foundations Piping Brackets Gravel Protective Equipment Cabinets Ground Rods Racks Clamps Inspections Signs Concrete Ladders Tanks Duct Systems Motors

AI summary The text lists various cost elements related to infrastructure and construction, including excavation, painting, permits, and other materials and services.

Non-Utility Property (081) Cost Components Land Other Intangibles Other Royalties, etc. Cost Elements Legal Fees Surveying Other Fees Coal Pier (082) Cost Components Buildings Conveyor System Hoppers Concrete E-crane Pier Control Cost Elem...

AI summary The text lists cost components and elements related to Non-Utility Property (081) and Coal Pier (082), including land, legal fees, surveying, buildings, conveyor systems, and various equipment and control components.

WORK ORDER PROCESS Deleted: ¶ 02 The following steps portray the capital asset cycle at NSPI. a. Prepare budget item and enter into Power Plant (PP) as a Capital Item (CI); Deleted: Capital Management System b. Review and revise the CI ite...

AI summary The document outlines the work order process for capital asset management at NSPI, detailing steps from budget preparation to asset depreciation, including approval processes and cost controls.

n. Retire item through retirement capital work order. Deleted: . Deleted: CAPITAL EXPENDITURES - LAND - 6210

AI summary The document text includes a table with a deleted entry and a heading for 'CAPITAL EXPENDITURES - LAND - 6210', indicating a section related to capital expenditures for land.

Deleted: 08 Please refer to Section 6000 for an explanation of the capitalization criteria and Section ... [4] Formatted Page 1: [1] Deleted ag986 11/17/2009 4:07:00 PM 04 Software development projects with a cost less than the amount pres...

AI summary The text discusses the expensing of software development projects with costs below a specified threshold, directing readers to Section 1560A for details on capitalization criteria.

TELECOMMUNICATIONS EQUIPMENT 07 Page 1: [3] Deleted ag986 11/17/2009 4:08:00 PM that are not included in a capital work order may be budgeted and expensed using operating accounts Page 1: [4] Deleted ag986 11/17/2009 4:03:00 PM 08 Please r...

AI summary The text discusses the budgeting and expensing of telecommunications equipment not included in a capital work order, directing readers to specific sections for capitalization criteria and cost descriptions.

CAPITAL CONTRIBUTIONS IN AID OF CONSTRUCTION - 6220

AI summary The document discusses capital contributions in aid of construction, focusing on the regulatory and financial aspects related to infrastructure development in Nova Scotia.

DEFINITION - 01 Capital contributions in aid of construction include the value of cash, other assets and/or services received to defray the construction costs of capital assets. These contributions are generally received from two sources:...

AI summary Capital contributions in aid of construction refer to financial or in-kind support received to help cover the costs of building capital assets, typically from customers or government entities.

PROCEDURES - 07 The contributions required from customers are generally determined in accordance with internal operations guidelines and procedures. Contributions may take the form of cash or other assets or services. - 08 When a contribut...

AI summary The text outlines procedures for recording customer contributions, which may be in cash or other assets, and their accounting treatment. It describes journal entries for when contributions are received and when they are transferred to plant in service. References to deleted content and a CICA standard are also noted.

APPLICATION OF ADMINISTRATIVE AND VEHICLE OVERHEAD (SELF - CONSTRUCTED ASSETS) - 6230

AI summary This document discusses the application of administrative and vehicle overhead for self-constructed assets, likely involving cost allocation and financial considerations for infrastructure projects in Nova Scotia.

GENERAL - 01 Overhead expenses are integral costs associated with the construction of capital assets. Generally accepted accounting principles state that the cost of a capital asset not only includes direct construction or development cost...

AI summary Overhead expenses are essential in capital asset construction and must be allocated to projects. The Public Utilities Board and UARB have approved the use of direct labour costs as a method for allocating overhead expenses to capital projects.

POLICY 04 The Company should apply "Capital-related Overhead Expenses" to capital projects based on the direct labour costs charged to those projects

AI summary The document states that the Company should allocate 'Capital-related Overhead Expenses' to capital projects based on the direct labour costs associated with those projects.

IDENTIFICATION OF DIVISIONS 05 The first step in the application of overhead costs to capital projects is the disaggregation of NSPI's Annual Capital Expenditure Plan (ACE Plan) into several broad areas of responsibility with similar proje...

AI summary The document outlines the initial step in applying overhead costs to capital projects, which involves dividing NSPI's Annual Capital Expenditure Plan (ACE Plan) into three divisions: Customer Operations, Power Production, and Shared Services. Shared Services includes Information Technology.

DETERMINATION OF ELIGIBLE OVERHEAD EXPENSES 06 The next step is the identification of operating expenses that will benefit construction or development activities. A separate determination is made for each division. The process relies on bu...

AI summary The text discusses the process of identifying operating expenses that benefit construction or development activities, with a focus on budgeted expenses. It references the Corporate Controller's Division and an accounting policy manual dated December 31, 2009.

08 Power Production Division Eligible Overhead Expenses for Power Production include all costs incurred by the Division's head office cost centres as well as the costs included in the administration cost centres for all operational generat...

AI summary Eligible Overhead Expenses for the Power Production Division include costs from head office and administrative cost centres, with a separate allocation for head office rent added to eligible expenses.

10 HEAD OFFICE RENT Head Office rent is allocated to the three operating divisions based on the square footage occupied by each division. F o r a d et ai l e d di s c u s si o n of t h e g e n e r al l e d g e r a c c o u nt s t r u c t u...

AI summary Head Office rent is allocated to operating divisions based on square footage. A detailed discussion of the general ledger account structure is referenced in Section 3100. The document also contains deleted content related to capital-related overhead expenses and accounting policies as of December 31, 2009.

11 Once the Eligible Overhead Expenses have been determined, the overhead expenses related to the Deleted: 0 Company's capital activities must be calculated. This calculation involves prorating the eligible overhead expenses determined abo...

AI summary The document outlines the process for calculating and applying overhead expenses related to capital activities, including prorating eligible overhead expenses based on capital labour to total labour, allocating expenses to divisions, and reviewing the overhead application rate annually for reasonableness.

GENERAL - 01 Overhead expenses are integral costs associated with the construction of capital assets. Generally accepted accounting principles state that the cost of a capital asset not only includes direct construction or development cost...

AI summary Overhead expenses are essential in capital asset construction and must be allocated to capital projects. These costs include both direct and indirect expenses, with the latter being allocated based on labour costs as per the Public Utilities Board's ruling.

POLICY 05 The Company should apply "Capital-related Overhead Expenses" to externally contracted capital projects based on the contract costs charged to those projects.

AI summary The Company is advised to allocate 'Capital-related Overhead Expenses' to externally contracted capital projects based on the contract costs associated with those projects.

IDENTIFICATION OF DIVISIONS 06 The first step in the application of overhead costs to capital projects is the disaggregation of NSPI's Annual Capital Expenditure Plan (ACE Plan) into several broad areas of responsibility with similar proje...

AI summary The document discusses the process of allocating overhead costs to capital projects by dividing NSPI's Annual Capital Expenditure Plan into three divisions: Customer Operations, Power Production, and Shared Services. It references past approvals by the Public Utilities Board and UARB for using direct labour costs as a basis for overhead allocation.

DETERMINATION OF ELIGIBLE OVERHEAD EXPENSES 07 The next step is the identification of operating expenses that will benefit construction or development activities. A separate determination is made for each division. The process relies on bu...

AI summary The document outlines the process for identifying operating expenses that benefit construction or development activities, with a separate determination made for each division and reliance on budgeted figures to determine the overhead application rate before the fiscal year begins.

DETERMINATION OF CAPITAL-RELATED OVERHEAD EXPENSES 11 Once the Eligible Overhead Expenses have been determined, the overhead expenses related to the Company's capital activities must be calculated. This calculation involves prorating the r...

AI summary The document outlines the process for calculating capital-related overhead expenses by prorating eligible overhead expenses based on contractor labour to total labour. An example is provided where 10% of eligible expenses are allocated to capital-related overhead expenses if contractor labour constitutes 10% of total labour.

CALCULATION OF OVERHEAD APPLICATION RATE 13 Once the Capital-related Overhead Expenses have been determined, the overhead application rate can be calculated. The application rate is simply the quotient, expressed as a percentage, of the Ca...

AI summary The overhead application rate is calculated by dividing Capital-related Overhead Expenses by total contract costs, expressed as a percentage. This rate is calculated separately for each division based on the provided example.

APPLICATION OF OVERHEAD 15 The overhead charged to a particular project is determined by multiplying the contract costs charged to the project by the appropriate overhead application rate related to the appropriate division. The charge is...

AI summary The overhead charged to a project is calculated by multiplying the contract costs by the appropriate overhead application rate for the division. The charge is recorded in a Capital Work Order and credited to general ledger account 095 - Construction Overhead, which is part of Operating, Maintenance and General Expenses.

GENERAL - 01 The Company provides for the cost-of-capital invested in construction work in progress by including an allowance for funds used during construction ("AFUDC") as an addition to the cost of property constructed using a weighted...

AI summary The Company uses AFUDC to account for financing costs during the construction of capital assets, ensuring equitable recovery through depreciation over the asset's service life. This aligns with CICA Handbook guidance for regulated utilities.

POLICY - 04 Allowance for funds used during construction should be capitalized at the effective cost-of-capital rate, compounded semi-annually, except in the following circumstances: - a. Projects that will be under construction for less t...

AI summary The text discusses the capitalization of Allowance for Funds Used During Construction (AFUDC) at the effective cost-of-capital rate, compounded semi-annually, with exceptions for short-duration projects, projects delayed for over a year due to extraordinary circumstances, and projects where capitalization would exceed economic value or future benefits.

05 Criteria for Application AFUDC is applied to all capital work orders with the following exceptions: 1 CI C A H a n d b o o k , 3 0 6 1. 2 3 .

AI summary The document outlines the application of AFUDC to all capital work orders, with specific exceptions. It references the CICA Handbook for guidance on this matter.

ALLOWANCE FOR FUNDS USED DURING CONSTRUCTION - 6240 - a. work orders with a construction period less than two months ( e.g. routine work orders); - b. work orders used to purchase assets that are used immediately upon delivery ( e.g. offic...

AI summary The document outlines specific categories of work orders that are excluded from the Allowance for Funds Used During Construction (AFUDC). These include short-term work orders, immediate-use asset purchases, land purchases, fully-funded work orders, deferred work orders, and retirement work orders.

06 Basis for Application The application base for AFUDC includes the cumulative total of all direct and indirect charges to work orders, but excludes all AFUDC related to spending subsequent to January 1 or July 1, whichever is the latest....

AI summary The application base for AFUDC is calculated using cumulative direct and indirect charges to work orders, excluding AFUDC related to spending after January 1 or July 1, whichever is later, leading to semi-annual compounding.

07 Timing of Application AFUDC application begins in the month in which a work order receives charges and continues until the month the work order becomes operational plant. On most work orders, AFUDC is applied at the full rate to cumulat...

AI summary The timing of the AFUDC application is tied to the month a work order receives charges and continues until the work order becomes operational plant. For major capital work orders, the actual start and operational dates are considered when applying AFUDC.

08 Accounting Entry . Work order D387 will be used to demonstrate the general ledger entries required to record AFUDC. If the annual AFUDC rate was 10.2%, it must first be divided by 12 to arrive at the monthly rate. The result of this cal...

AI summary This section explains how to calculate and record the Allowance for Funds Used During Construction (AFUDC) using a work order. The example uses a 10.2% annual AFUDC rate applied to a $99,500 base, resulting in a monthly AFUDC of $845.75, which is recorded as a debit to CWIP and a credit to Interest Capitalized.

09 Calculation of AFUDC Rate The rate used to capitalize AFUDC is the Company's weighted average cost of capital before tax . The rate is calculated annually, in advance, by dividing the forecasted annual interest expense, preferred divide...

AI summary The AFUDC rate is calculated using the Company's weighted average cost of capital before tax, determined annually by dividing forecasted interest expense, preferred dividends, and net earnings by the forecasted average debt and equity.

POLICY 01 The cost and accumulated depreciation of capital assets transferred from one function to another within NSPI should be removed from the existing function and recorded by the acquiring function.

AI summary The document states that when capital assets are transferred between functions within NSPI, their cost and accumulated depreciation should be removed from the original function and recorded by the new acquiring function.

PROCEDURE - 02 When a capital asset is transferred from one location to another within the Company, the following accounting procedures are performed: - a. original installation costs are retired; - b. costs of removal are charged to accum...

AI summary The document outlines the accounting procedures for transferring capital assets within the Company, including retiring original installation costs, charging removal costs to accumulated depreciation, transferring original cost and accumulated depreciation, and adding installation costs to the original cost.

REDUNDANT ASSETS - 6340

AI summary The document titled 'REDUNDANT ASSETS - 6340' appears to be related to the identification and management of redundant assets, likely within the context of a regulatory proceeding in Nova Scotia.

ASSETS - NOT USED AND USEFUL - 6350 14 Assets not currently used, but expected to be used in providing service in the future will provide value to customers at a future date. Accordingly, the cost of the asset is to be matched to the futur...

AI summary This section discusses the treatment of assets not currently in use but expected to be used in the future. It outlines how the costs of these assets should be matched with future periods when they provide value to customers, and how excess costs may be written off or deferred with UARB approval. It also covers depreciation, capital costs, and maintenance expenses during the out-of-service period.

LONG LIVED ASSETS TO BE DISPOSED OF BY SALE – 6360

AI summary The document discusses the disposal of long-lived assets through sale, referencing Nova Scotia Power Inc. and the Utility and Review Board. It includes an image but no further details on the assets or the sale process.

RETIREMENT AND DISPOSAL OF CAPITAL ASSETS - 6420

AI summary The document discusses the retirement and disposal of capital assets, referencing the Utility and Review Board (UARB) and Nova Scotia Power Inc. (NSPI), with known acronyms including AFUDC and CICA.

DEFINITIONS 01 Cost Formatted: Font: Not Bold Cost is the main component of most retirement work orders and represents the amount by which capital assets in service and related accumulated depreciation accounts must be reduced for the dele...

AI summary The text defines key terms related to asset retirement, including cost, asset retirement obligations (AROs), removal costs, salvage value, net salvage value, and retirement work orders. These terms are relevant for accounting and financial reporting in the context of retiring capital assets.

- 15 The following journal entries are required to record the equipment retirement and proceeds of disposal: DR CR 2-097-R72-xxx-xxxx (Original Cost) 2-200-R72-xxx-0000 (PP&E) 85,000 85,000 To record the original cost to be retired. DR 1-3...

AI summary The text outlines journal entries required for the retirement and disposal of equipment, including recording original costs, proceeds from sales, and accumulated depreciation. These entries are part of the process for closing a retirement work order after final costing.

Retirement of Land - 18 When land is disposed of, retirement accounts within a work order are used to remove its cost from the capital asset records. An example will demonstrate the journal entries required to retire land. Assume that a pi...

AI summary The document explains the process of retiring land from capital asset records when it is disposed of, using retirement accounts within a work order. An example is provided where land with an original cost of $5,000 is sold for $50,000, with $10,000 allocated for site cleanup costs.

POLICY 04 The Company should invest excess cash balances in short-term investment instruments so that interest income is maximized.

AI summary The document suggests that the Company should invest excess cash balances in short-term investment instruments to maximize interest income.

PROCEDURES - 05 The Corporate Treasurer or their designate is responsible for reviewing the Company's cash position on a daily basis and determining whether or not there will be a cash surplus. Should a surplus be projected, the following...

AI summary The Corporate Treasurer or their designate is responsible for reviewing the company's cash position daily and deciding whether to invest surplus cash. Factors considered include the amount of surplus, projected cash needs, and prevailing interest rates. Treasury staff then solicit bids from at least two money market dealers to secure the most competitive rate.

Materials - 04 Materials are accounted for using a computerized perpetual inventory system. Purchases are recorded at cost and issues are charged to capital or operating accounts at average cost. - 05 Physical counts are performed on a rot...

AI summary The materials management process involves a computerized perpetual inventory system, with purchases recorded at cost and issues charged to capital or operating accounts at average cost. Annual physical counts are conducted, and adjustments are expensed. Storerooms are charged monthly interest based on an annual rate tied to the Company's average short-term borrowing cost.

DEFINITIONS - 03 Derivative instruments designed to mitigate the risk of the Company's exposure to changes in market prices of, for example, natural gas, oil, coal & other commodities, interest rates, and foreign currency exchange rates, w...

AI summary The text defines key financial and accounting terms related to derivative instruments, hedging, and fair market value. It outlines what constitutes a derivative instrument, how hedging relationships are established, and the principles of hedge accounting.

PREFERRED DIVIDENDS - 7320

AI summary The document discusses preferred dividends under the matter number 7320, likely in the context of regulatory proceedings involving Nova Scotia Power Inc. and related financial considerations.

POLICY 05 Matching notes are combined with long-term debt issued by the Company since privatization and reported net of sinking funds and long-term debt payable in one year, as long-term debt on the balance sheet of its financial statement...

AI summary The text discusses how the Company reports long-term debt, including matching notes and commercial paper, in its financial statements. It notes that debt is reported net of sinking funds and includes details on maturities, weighted average coupons, and cash requirements for retiring debt.

LONG-TERM DEBT AND MATCHING NOTES - 8100 - 18 The Company will amortize the defeasance costs referred to in (i) and (iii) above over the remaining life of the Matching Notes. The Company will amortize new issue costs referred to in (ii) ab...

AI summary The Company will amortize defeasance and new issue costs over the remaining life of the Matching Notes and has the right to sell overvalued defeasance assets, provided they are replaced with qualifying assets.

TRANSITIONAL PROVISIONS - 34 This policy is effective January 1, 2011 and should be applied retroactively with restatement of prior periods except as outlined below. - 35 Any item of property, plant and equipment, construction work-in-prog...

AI summary The transitional provisions outline how the new policy should be applied retroactively from January 1, 2011, with specific guidance on handling prior period adjustments, foreign exchange rates, and the treatment of transitional adjustments to the balance sheet without restating net earnings.

SUMMARY OF CAPITALIZATION LIMITS 01 The following table summarizes the capitalization limits by major function. These limits refer to total cost of acquisition including installation. Please refer to the Capital Expenditure Justification C...

AI summary The text provides a summary of capitalization limits by major function, noting that items under these limits are expensed. It references the Capital Expenditure Justification Criteria submitted to the UARB in 1995 and revised in 1997.

Deleted: Section Function Capitalization Level NSPI Accounting Policy and Procedures Manual Reference Thermal Generation $25,000 Hydro 5,000 Gas Turbines 5,000 Transmission 5,000 Distribution 1,000 6000 Buildings 2,000 Tools 1,000 Transpor...

AI summary The table outlines various functions with their respective capitalization levels and references to NSPI's accounting policy and procedures manual. It includes items such as thermal generation, transmission, distribution, and software development, along with UARB approvals for certain expenditures.

12 Example of a Capital Item Accounting Flex Field An example of a building accounting flex field at the Lingan Generating Station is as follows: Company Account Activity Cost Centre Project 2 - 200 - 003 - 301 - S000 Company 2 Oracle Fina...

AI summary The text provides examples of accounting flex fields used in capital item accounting at Nova Scotia Power Inc. (NSPI), including entries for property, plant and equipment, accumulated depreciation, and construction work-in-progress items at various locations such as the Lingan Generating Station and Point Tupper.

Land and Land Rights - 03 Includes the cost of land owned and the rights, interests and privileges held by the Company in land owned by others. Land and land rights shall be classified within the function according to the major purpose for...

AI summary This section outlines the accounting treatment for land and land rights, including the classification, cost apportionment, and handling of special assessments, land acquisitions, and disposal proceeds. Specific rules are provided for charging costs and credits to the appropriate accounts.

Buildings, Structures and Grounds - 04 Includes the installed cost of all permanent structures, services and improvements used to house, support, or safeguard property or persons. Also includes those items that are permanently attached to...

AI summary The text outlines accounting guidelines for the installation and classification of buildings, structures, and grounds, including cost apportionment between land and buildings, handling of demolition and excavation costs, and the allocation of expenses and revenues related to construction projects.

Miscellaneous Equipment 05 Includes the installed cost of all miscellaneous items that cannot be attributed to any other specific property unit.

AI summary The section discusses the inclusion of installed costs for miscellaneous equipment that cannot be attributed to any other specific property unit.

Indirect Costs 06 Includes administrative/financial costs of construction (allowance for funds used during construction, administrative overheads, inspections, traffic control, pole stacking, etc.) plus all costs associated with the design...

AI summary The text defines indirect costs as including administrative and financial construction costs, such as overheads, inspections, and project management, as well as design and survey-related expenses.

Capital Contributions 07 Includes the value of cash or assets received to defray the cost of construction of an asset for customer use. This can take the form of cash payments or asset title transferred to the Company.

AI summary The text defines capital contributions as the value of cash or assets received to cover the cost of constructing an asset for customer use, which may involve cash payments or the transfer of asset titles to the company.

09 Included in this activity is the present value of the future cost of site restoration associated with the Deleted: 10 generating facilities. Prime Movers & Generators 10 Includes the installed cost of the steam, gas, hydraulic or wind t...

AI summary The text outlines the categorization of capital expenditures related to generating facilities, including prime movers, boiler plant equipment, electrical plant, and infrastructure such as roads, trails, and bridges. It specifies the types of equipment and their purposes within the electrical generation and distribution system.

GENERAL 01 The construction work in progress ("CWIP") accounts contain all work orders relating to assets that are under construction, but not placed in service. These accounts also include retirements in progress. The work order is the ma...

AI summary The CWIP accounts track construction work orders for assets under construction and retirements in progress. Work orders are central to data control, processing, and the budget process.

WORK ORDER PROCESS Deleted: ¶ 02 The following steps portray the capital asset cycle at Nova Scotia Power Inc. ("NSPI"). a. Prepare budget item and enter into Power Plant1 ("PP") as a Capital Item ("CI"); Deleted: Capital Management System...

AI summary The document outlines the work order process at Nova Scotia Power Inc. (NSPI), detailing the steps involved in the capital asset cycle, including budget preparation, approval processes, and activation of capital items. Key entities involved include NSPI and the Nova Scotia Utility and Review Board (UARB).

k. Set up the capital work order in CWIP; Deleted: i l. Summarize and control charges; Deleted: j m. Change status of work order from CWIP to Operational ("OPS") when asset goes in service and is being used to generate revenue; Deleted: k...

AI summary The text outlines procedures for managing capital expenditures, specifically relating to land, including setting up capital work orders in CWIP, controlling charges, changing work order status, finalizing costs, depreciation, and retiring items through capital work orders.

POLICY 02 The cost of land must be accounted for separately from other capital assets due to its unique life characteristics.

AI summary The text emphasizes that the cost of land should be accounted for separately from other capital assets because of its distinct life characteristics.

PROCEDURES - 03 The following are costs which must be considered in determining the total value of a land purchase: - a. Purchase price; - b. Appraisal fees; - c. Survey costs; - d. Legal fees; - e. Transfer taxes; - f. Purchasing agent's...

AI summary The document outlines the costs to be considered when determining the total value of a land purchase, including purchase price, appraisal fees, legal fees, and environmental assessment costs. It also mentions that land is acquired through a capital work order, similar to other capital assets, and references Section 6000 for guidance on capital versus operational expenditures.

CAPITAL EXPENDITURES - COMPUTER HARDWARE, SOFTWARE AND TELECOMMUNICATIONS EQUIPMENT - 6215

AI summary The document heading indicates a section related to capital expenditures for computer hardware, software, and telecommunications equipment under category 6215. The content is not visible due to an image placeholder, so no further details are available.

POLICY 01 Purchases of computer hardware and software, and telecommunications equipment as well as software development projects with a cost in excess of the amount prescribed in NSPI Accounting Policy and Procedures Manual 1560A should be...

AI summary The document outlines policies for capitalizing purchases of computer hardware, software, and telecommunications equipment, as well as software development projects exceeding a specified cost threshold. It also details how to account for costs associated with software development and maintenance agreements.

MAINTENANCE AND LICENSING AGREEMENTS - 05 Maintenance or licensing agreements which extend more than one year should be recorded as prepaid expenses and charged to operations on a straight-line basis over the period covered by the agreemen...

AI summary The text outlines accounting guidelines for maintenance and licensing agreements, specifying that long-term agreements should be recorded as prepaid expenses and amortized over their period, while software maintenance labour should be expensed as incurred.

TELECOMMUNICATIONS EQUIPMENT 07 Small purchases of telecommunications equipment that are not included in a capital work order may be budgeted and expensed using operating accounts Page 1: [2] Deleted AI141 7/4/2010 10:54:00 PM Please refer...

AI summary The text outlines guidelines for budgeting and expensing small telecommunications equipment purchases not included in capital work orders, directing readers to specific sections for capitalization criteria and cost inclusion in capital expenditures. It also discusses the inclusion of costs related to large software development projects, including third-party and internal resources, data conversion, and training.

PROPERTY, PLANT AND EQUIPMENT

AI summary The section discusses property, plant, and equipment (PPE) under accounting standards, focusing on capital expenditures, depreciation, and related financial reporting practices.

PURCHASE PRICE DISCREPANCY - 6250

AI summary The document discusses a purchase price discrepancy related to a Nova Scotia Power Inc. (NSPI) transaction, likely involving accounting standards and regulatory oversight. It includes references to US GAAP and Nova Scotia Utility and Review Board (UARB) processes, suggesting a regulatory review of financial practices.

POLICY - O2 Purchase price discrepancies should be recorded as assets. - Purchase price discrepancies are not included in rate base. Purchase price discrepancies are amortized. Deleted: Section 1520 states Deleted: p Deleted: Section 5320...

AI summary The text discusses the treatment of purchase price discrepancies, stating they should be recorded as assets and are amortized, not included in the rate base. References are made to NSPI's Accounting Policy and Procedures Manuals for further details.

GENERAL - 01 There may be times when the amount of cash on deposit in Nova Scotia Power Inc.'s ("NSPI's") bank accounts exceeds the amount determined necessary for daily operations. These surpluses usually arise on those days during which...

AI summary NSPI may have excess cash in its bank accounts, which it invests in short-term investments to maximize interest income rather than letting the funds sit idle. This occurs when short-term borrowings are not due for repayment and when long-term debt or equity proceeds are received but not yet invested.

PROCEDURES - 05 The Treasurer or their designate is responsible for reviewing the Company's cash position on a daily basis and determining whether or not there will be a cash surplus. Should a surplus be projected, the following factors ar...

AI summary The procedures outline the process for managing cash surplus by the Treasurer or their designate, including evaluating the surplus amount, future cash needs, and prevailing interest rates. Treasury staff solicits bids from money market dealers to secure competitive investment rates, and interest income is credited accordingly.

DEFINITIONS - Receivables are claims held against others for money, goods, or services. They are further classified as trade receivables and non-trade receivables. Trade receivables are amounts owed by customers for goods and services rend...

AI summary The document defines receivables, including trade and non-trade receivables, and explains the allowance for doubtful accounts. NSPI subclassifies non-trade receivables into business, employee, and miscellaneous categories. Receivables are classified as financial instruments for accounting purposes.

- a. The front office should ensure the hedging activity is in compliance with the appropriate risk management policy; - b. The front office should document the specific risk exposure being hedged in accordance with its risk management obj...

AI summary The text outlines procedures for managing and accounting for hedging activities, including documentation requirements, fair value recognition, foreign currency translation, and amortization of gains and losses on derivative instruments used for various hedging purposes.

TRANSITIONAL PROVISIONS Deleted: 25 34 This policy is effective January 1, 2011 and should be applied retroactively with restatement of prior periods except as outlined below. Deleted: Middle Office Staff will be responsible for providing...

AI summary This section outlines transitional provisions for a policy effective January 1, 2011. It specifies that prior periods should be restated except for certain adjustments, including mark-to-market adjustments and foreign exchange rate changes. Transitional adjustments are to be deferred and recognized over time, with no restatement of net earnings prior to 2011.

COMMON DIVIDENDS - 7120

AI summary The document discusses the topic of common dividends related to Nova Scotia Power Inc. (NSPI) and its affiliated entities, including Nova Scotia Power Corporation (NSPC) and Nova Scotia Power Finance Corporation (NSPFC). It includes financial information and accounting standards relevant to dividend calculations and reporting.

PROCEDURES - 02 Goods or services received but not yet invoiced or entered into Oracle are accrued monthly. - 03 Accounts payable and accrued liabilities include fuel, materials or services received, payroll and payroll deductions, employe...

AI summary The document outlines procedures for accruing expenses, including goods and services received but not yet invoiced or entered into Oracle, and details the components of accounts payable and accrued liabilities such as fuel, materials, payroll, and other payables. Certain items like fuel and oil swaps have been deleted.

MATERIALITY LIMITS - Nova Scotia Power Inc. ("NSPI") sets materiality levels by major financial statement areas to facilitate the processing of large volumes of transactions. Procedures for implementing the materiality policy for these are...

AI summary Nova Scotia Power Inc. establishes materiality levels for major financial statement areas and outlines capitalization limits in its accounting manual, specifically in Section 1560A.

POLICIES - 04 Expenditures for amounts less than the stated capitalization limits should be charged to operations as they are incurred. - When additional costs associated with capitalizing immaterial amounts exceed the benefits of providin...

AI summary The text outlines accounting policies for capitalization limits and expensing expenditures. It specifies that amounts below capitalization thresholds should be expensed as incurred, and that if capitalizing immaterial amounts incurs excessive costs, all costs should be expensed.

AMORTIZATION - CAPITAL CONTRIBUTIONS IN AID OF CONSTRUCTION - 5310

AI summary The document pertains to amortization and capital contributions in aid of construction (matter 5310), involving Nova Scotia Power Inc. (NSPI) and the Utility and Review Board (UARB). The content is presented as an image, with no textual details provided.

PROCEDURES - The amortization base is equal to the amount of the capital contribution received for the specific asset group. - The timing of commencement of amortization is the same as the associated asset. - O4 Please refer to NSPI's Acco...

AI summary The text outlines the procedures for amortizing capital contributions received for specific asset groups, referencing NSPI's Accounting Policy and Procedures Manual Section 6220. It provides an example of a capital contribution from the Federal Government for Unit #5 at Trenton and describes the journal entry for amortizing contributed capital.

Deleted: December 31, 2009 Deleted: August 10, 2006 Page 1: [1] Deleted AI141 9/12/2010 3:34:00 PM 04 The following example will demonstrate the amortization of capital contributions in aid of construction:

AI summary The text discusses the amortization of capital contributions in aid of construction, providing an example to illustrate the process.

A cash capital contribution of $12 million was received from the Federal Government for Unit #5 at Trenton. This annual amortization is calculated as follows: Capital contribution amount $ 12,000,000 Depreciation rate - Trenton plant 2.63%...

AI summary A cash capital contribution of $12 million was received from the Federal Government for Unit #5 at Trenton. The annual amortization charge for this contribution is calculated using a depreciation rate of 2.63%, resulting in an annual charge of $315,600.

CAPITALIZATION OF COST - 6000

AI summary The document heading references a section on 'Capitalization of Cost' (6000) and includes an image placeholder. No substantive text is provided in the chunk, limiting analysis to the heading and known acronyms.

DEFINITION O1 Capital assets include identifiable assets such as property, plant and equipment or intangible assets that are held for use in the production or supply of goods and services. They are intended for use on a continuing basis an...

AI summary Capital assets are defined as property, plant, equipment, or intangible assets held for use in producing or supplying goods/services, not for sale in the ordinary course of business.

GENERAL - O2 An expenditure must create a benefit having a life of more than one year to be considered capital. Annual fees or maintenance costs do not create an asset; they simply maintain the existing asset base and should be expensed an...

AI summary The text outlines criteria for capitalizing expenditures, requiring long-term benefits beyond one year. Annual maintenance costs are expensed, while capital expenditures (e.g., extending asset life, increasing capacity) are capitalized and depreciated. Guidance references Nova Scotia Power Inc.'s Capital Expenditure Justification Criteria and U.S. regulatory bodies.

POLICIES 07 Expenditures meeting the criteria described in Paragraphs 02, 03 and 06 create a benefit that will be realized by the Company beyond the current year. Accordingly, they should be capitalized.

AI summary The document states that expenditures meeting specific criteria from paragraphs 02, 03, and 06 should be capitalized as they provide benefits to the Company beyond the current year.

PROCEDURES - Every expenditure must be classified as either capital or operating, and should be budgeted and accounted for accordingly. Operating costs are expensed in the year incurred, against the revenue earned in that period. The deter...

AI summary The document outlines procedures for classifying expenditures as capital or operating, emphasizing materiality considerations and adherence to the Annual Capital Expenditure Plan (ACE Plan). Capital expenditures require work order approval, while operating costs are expensed immediately. NSPI's materiality guidelines in its accounting manual dictate capitalization thresholds.

ASSETS CAPITALIZATION OF COST - 6000 The following decision tree will assist in determining whether an expenditure is capital or operating: Deleted: 2 Deleted: 3

AI summary The document introduces a decision tree to classify expenditures as capital or operating, aiding in asset capitalization under US GAAP, with involvement from NSPI and UARB. It's part of regulatory proceedings related to cost considerations.

POLICY 02 A capital asset should be recorded at cost.1

AI summary The text states that capital assets should be recorded at cost, reflecting a fundamental accounting principle for asset valuation in regulatory proceedings.

PROCEDURES - The cost of a capital asset includes all expenditures necessary to place the asset in service. Therefore, cost not only includes the purchase price, but also other acquisition costs such as brokers' commissions, installation c...

AI summary The text defines capital asset costs as including all expenditures to place an asset in service, such as purchase price, installation, legal fees, and carrying costs like AFUDC. It specifies that capitalization of carrying costs stops when an asset is substantially complete and ready for use, referencing NSPI's accounting policies for guidance.

COST COMPONENTS Cost components represent examples of the types of major pieces of equipment included in each capital activity. They are created through detailed consultation with our asset builders and maintainers, and conform to Federal...

AI summary The document defines cost components as major equipment examples in capital activities, developed through consultation with asset builders/maintainers and aligned with FERC standards.

COST ELEMENTS Cost elements are examples of the minor pieces of equipment or expenses included in the capital activities.

AI summary The text defines 'cost elements' as minor equipment or expenses included in capital activities, providing context for understanding components of capital expenditures within regulatory proceedings.

COST COMPONENTS AND ELEMENTS - 6140 Cost Elements Arresters Cooling Systems Mechanical Devices Electrical Devices Battery Charger Meters Battery Fans Piping Breakers Fencing Platforms Cables Foundations SF6 Switches Clamps Ground Rods Dele...

AI summary The document outlines detailed cost components and elements for hydroelectric infrastructure, including mechanical and electrical devices, systems, and parts such as turbines, generators, cooling systems, and associated hardware. It provides a technical breakdown of infrastructure costs without explicit regulatory or policy discussion.

Cost Elements Aprons Elevating Devices Bridges Excavation Concrete Fill Control Equipment Foundation Culverts Motors Valves Discharge Channels Pipe Racks Slope Protection Steel Tainter Gates

AI summary The text lists infrastructure components and equipment (e.g., Tainter Gates, concrete fill, control equipment) under the 'Cost Elements' heading, likely representing capital expenditures or project cost categories. No further context or discussion is provided.

Cost Components Wind Turbine Wind Turbine Aux. Piping PROPERTY, PLANT AND EQUIPMENT

AI summary The document section titled 'Cost Components' includes technical terms such as 'Wind Turbine,' 'Piping,' and 'PROPERTY, PLANT AND EQUIPMENT,' suggesting a focus on infrastructure and asset categorization within a regulatory context. An image reference is included, though no detailed discussion or analysis is provided.

PROPERTY, PLANT AND EQUIPMENT CAPITAL CONTRIBUTIONS IN AID OF CONSTRUCTION - 6220

AI summary The document discusses property, plant, and equipment capital contributions in aid of construction, specifically under the category 6220. It includes a reference to a picture on page 56, but no additional details are provided in the text.

DEFINITION - O1 Capital contributions in aid of construction include the value of cash, other assets and/or services received to defray the construction costs of capital assets. These contributions are generally received from two sources:...

AI summary Capital contributions in aid of construction refer to financial or in-kind support provided to offset the costs of constructing capital assets. These contributions may be sourced from customers or government entities at various levels.

PROCEDURES - 07 The contributions required from customers are generally determined in accordance with internal operations guidelines and procedures. Contributions may take the form of cash or other assets or services. - When a contribution...

AI summary The procedures outlined describe how customer contributions are recorded and managed, including the forms of contributions and the accounting entries required when contributions are received and when projects are closed to plant in service. References are made to internal guidelines and the Accounting Policy & Procedure Manual.

GENERAL - The cost-of-capital invested in construction work in progress is included in an allowance for funds used during construction 1 ("AFUDC") as an addition to the cost of property constructed using a weighted average cost-of-capital....

AI summary The document discusses the inclusion of the cost-of-capital in the allowance for funds used during construction (AFUDC) for capital assets. This cost is capitalized and recovered over time through depreciation, ensuring equitable recovery from customers.

POLICY - O4 Allowance for funds used during construction should be capitalized at the effective cost-of-capital rate, compounded semi-annually, except in the following circumstances: - a. Projects that will be under construction for less t...

AI summary The policy outlines the conditions under which the Allowance for Funds Used During Construction (AFUDC) should be capitalized at the effective cost-of-capital rate, with exceptions for short-duration projects, those delayed by extraordinary circumstances, and projects where capitalization would exceed economic value or future benefits.

05 Criteria for Application AFUDC is applied to all capital work orders with the following exceptions: - a. work orders with a construction period less than two months (e.g. routine work orders); - b. work orders used to purchase assets th...

AI summary The document outlines the criteria for applying AFUDC (Allowance for Funds Used During Construction) to capital work orders, with specific exceptions such as short construction periods, immediate in-service assets, land purchases, fully customer-funded projects, deferred work orders, and retirement work orders. It also references the CICA Handbook and regulatory requirements for capitalizing AFUDC in rate-of-return regulated utilities.

Deleted: ¶ The cost of an item of property, plant and equipment that is acquired, constructed, or developed over time includes carrying costs directly attributable to the acquisition, construction, or development activity such as interest...

AI summary The text discusses the cost of property, plant, and equipment, including carrying costs and interest costs when capitalized, and mentions the inclusion of directly attributable allowance for funds used during construction for rate-regulated assets.

ALLOWANCE FOR FUNDS USED DURING CONSTRUCTION - 6240

AI summary The document discusses the Allowance for Funds Used During Construction (AFUDC), which is a financial accounting concept used to calculate the cost of capital during the construction phase of a project. It involves considerations related to the weighted average cost of capital (WACC) and is relevant to utility companies like Nova Scotia Power Inc. (NSPI) and regulatory bodies such as the Nova Scotia Utility and Review Board (UARB).

07 Timing of Application AFUDC application begins in the month in which a work order receives charges and continues until the month the work order becomes operational plant. On most work orders, AFUDC is applied at the full rate to cumulat...

AI summary The application of AFUDC begins when a work order receives charges and continues until the work order becomes operational. For most work orders, AFUDC is applied at the full rate to cumulative charges each month, while major capital work orders consider actual start and operational dates.

08 Calculation of AFUDC Rate The rate used to capitalize AFUDC is the Company's weighted average cost of capital before tax . The rate is calculated annually, in advance, by dividing the forecasted annual interest expense, preferred divide...

AI summary The AFUDC rate is calculated using the Company's weighted average cost of capital before tax, determined annually by dividing forecasted interest expense, preferred dividends, and net earnings by forecasted average debt and equity. The annual rate is then divided by twelve to obtain the monthly rate.

Deleted Deleted: the application base for an individual capital work order compounding interest (January and July) Deleted: (assume the following applies to Work Order D387) Deleted: :¶ Cumulative to date charges $100,000¶ Less: ¶ Cumulati...

AI summary This text discusses a deleted application base for an individual capital work order compounding interest in January and July, with a subtotal of $96,000 after subtracting $4,000 in cumulative interest. The text also references Work Order D387 and mentions interest calculations.

RETIREMENT AND DISPOSAL OF CAPITAL ASSETS - 6420

AI summary The document discusses the retirement and disposal of capital assets, including relevant accounting standards and financial considerations. It references the Allowance for Funds Used During Construction (AFUDC) and the Financial Accounting Standards Board (FASB).

03 Removal Costs Removal costs refer to the charges associated with removing a retired asset from its in-service location. These costs include but are not limited to labour, materials, overhead and vehicle expenses.

AI summary Removal costs are the expenses incurred when retiring an asset, including labor, materials, overhead, and vehicle costs.

06 Retirement Work Order Retirement costs can be recorded in a retirement work order or in a new capital work order. Retirement work orders are used to collect all retirement costs and salvage values associated with a retirement project. T...

AI summary The document discusses the process for recording retirement costs in a retirement work order, which is used to collect all retirement costs and salvage values associated with a retirement project. Retirement work orders follow the same approval process as new capital work orders, and retirement, salvage, and original cost amounts are captured under retirement accounts.

PROCEDURES 69 For retirements of property, plant and equipment other than land ,the original cost plus any costs of removal less salvage proceeds is charged to accumulated depreciation, with no immediate gain or loss recognized. Deleted: a...

AI summary The text outlines procedures for retiring property, plant, and equipment, including the accounting treatment for removal costs, salvage proceeds, and the use of retirement work orders. It specifies that no immediate gain or loss is recognized and refers to NSPI's Accounting Policy & Procedures Manual for further details.

To record proceeds from sale of land. DR 2-098-R01-xxx-xxxx (Salvage) 50,000 CR 2-066-R01-xxx-xxxx (Other Goods & Services) 10,000 CR 2-097-R01-xxx-xxxx (Original Cost) 5,000 CR 1-195-000-000-0000(Gain / Lost on Asset Sales 35,000 GAIN OR...

AI summary This document records the financial transaction involving the sale of land, with a gain of $35,000. The proceeds are distributed across various accounts, including salvage, other goods and services, original cost, and the gain on asset sales.

NEW BUSINESS COSTS - 6940

AI summary The document discusses new business costs, likely related to capital expenditures and financial accounting standards. It includes references to Allowance for Funds Used During Construction (AFUDC) and the Financial Accounting Standards Board (FASB).

PROCEDURES All new business costs should be charged to an operating project. An Operating Project Approval Form can be obtained from Corporate Accounting Services ("CAS"). CAS will assign a new project number to collect costs associated wi...

AI summary The document outlines procedures for handling new business costs, specifying that they should be charged to an operating project and deferred only after viability is confirmed and authorized by the Controller of Nova Scotia Power Inc. (NSPI). Deferred costs are excluded from the regulated rate base and should be amortized over up to five years.

POLICIES - Pension obligations and obligations associated with non-pension post-retirement benefits such as health benefits to retirees and retirement awards, are actuarially determined using the projected benefit method prorated on servic...

AI summary The text discusses the accounting policies related to pension obligations and post-retirement benefits for Nova Scotia Power Inc. It outlines how these obligations are actuarially determined, the amortization of adjustments, and the recognition of plan surpluses and deficits on the balance sheet.

DEPRECIATION AND AMORTIZATION EXPENSE - 5300 - The remaining life is forecasted through the use of mortality statistics that determine the best fit lowa Curve which gives the expected retirement characteristics. This technique is applied t...

AI summary The document discusses the forecasting of remaining life for production plant assets using mortality statistics and engineering studies, and the annual filing of depreciation and amortization rates with the UARB as part of the Annual Capital Expenditures Plan.

03 Debt Issue Costs The issue of long-term debt is usually an involved process in which the Company may retain the services of brokers, lawyers and auditors. Since the cost of using these services can be significant and provide future bene...

AI summary The text discusses the accounting treatment of long-term debt issuance costs under US GAAP, including the deferral and amortization of costs such as broker fees, legal expenses, and audit costs over the life of the debt instrument. Other costs are expensed immediately in account 084 bank charges.

06 Long-term Debt - Interest Expense Long-term debt interest expense includes interest on Nova Scotia Power Inc. ("NSPI") debentures and medium term notes. Interest expense is accrued monthly based on a 30-day months whether interest payme...

AI summary The text discusses long-term debt interest expense for Nova Scotia Power Inc., including the accrual of interest on debentures and medium-term notes, with monthly accruals based on a 30-day month regardless of payment frequency.

08 Short-term Interest Short-term interest includes all interest, commissions, stamping fees, overdraft charges associated with the issuance of commercial paper, banker's acceptances, hedge settlements, and prime loans These costs are expe...

AI summary Short-term interest encompasses various financial costs such as interest, commissions, and fees related to commercial paper and other short-term financing instruments. These costs are expensed or amortized monthly based on the number of days of associated debt.

TAX ON LARGE CORPORATIONS The Company is subject to a provincial capital tax ("PCT") at prescribed rates applied to taxable capital.

AI summary The Company is subject to a provincial capital tax applied at prescribed rates to taxable capital.

GENERAL - Overhead expenses are integral costs associated with the construction of capital assets. As per NSPI's Accounting Policy & Procedure Manual Section 6100 Cost, the cost of a capital asset not only includes direct construction or d...

AI summary Overhead expenses are considered integral to the construction of capital assets and must be allocated to capital projects. NSPI's accounting policy includes overhead costs in capital asset costs, and the UARB has approved the use of direct labour costs as a basis for allocating these expenses.

POLICY O4 The Company should apply "Capital-related Overhead Expenses" to capital projects based on the direct labour costs charged to those projects

AI summary The document states that the Company should apply 'Capital-related Overhead Expenses' to capital projects based on the direct labour costs associated with those projects.

IDENTIFICATION OF DIVISIONS The first step in the application of overhead costs to capital projects is the disaggregation of Nova Scotia Power Inc.'s ("NSPI's") Annual Capital Expenditure Plan ("ACE Plan") into several broad areas of respo...

AI summary The document outlines the identification of divisions for the purpose of allocating overhead costs to capital projects. Nova Scotia Power Inc. has divided its operations into three main areas: Customer Operations, Power Production, and Shared Services, with Shared Services including Information Technology.

DETERMINATION OF ELIGIBLE OVERHEAD EXPENSES The next step is the identification of operating expenses that will benefit construction or development activities. A separate determination is made for each division. The process relies on budge...

AI summary The document outlines the process for identifying eligible overhead expenses that benefit construction or development activities, emphasizing the use of budgeted expense figures to determine overhead application rates before the fiscal year begins.

APPLICATION OF ADMINISTRATIVE AND VEHICLE OVERHEAD (SELF - CONSTRUCTED ASSETS) - 6230

AI summary The document discusses the application of administrative and vehicle overhead for self-constructed assets, specifically referencing Nova Scotia Power Inc. (NSPI) and the Nova Scotia Utility and Review Board (UARB). It includes references to accounting standards and regulatory processes.

DETERMINATION OF CAPITAL-RELATED OVERHEAD EXPENSES - Once the Eligible Overhead Expenses have been determined, the overhead expenses related to the Company's capital activities must be calculated. This calculation involves prorating the el...

AI summary The document outlines the process for determining capital-related overhead expenses by prorating eligible overhead expenses based on capital labour to total labour for administrative and vehicle overheads. It also notes that some capital-related expenses are recorded outside of divisional cost centres and should be allocated based on capital labour costs.

CALCULATION OF OVERHEAD APPLICATION RATE Once the Capital-related Overhead Expenses have been determined, the overhead application rate can be calculated. The application rate is simply the quotient, expressed as a percentage, of the Capit...

AI summary The overhead application rate is calculated by dividing capital-related overhead expenses by capital labour costs, expressed as a percentage. This calculation is performed separately for each division after determining the capital-related overhead expenses.

APPLICATION OF OVERHEAD The overhead charged to a particular project is determined by multiplying the labour costs charged to the project by the appropriate overhead application rate. The charge is debited to a Capital Work Order while the...

AI summary The document discusses the application of overhead to projects, explaining that overhead is calculated by multiplying labour costs by the appropriate overhead rate. The charge is recorded in specific general ledger accounts, such as account 095 - Construction Overhead or account 092 – Vehicle Overhead.

APPLICATION OF ADMINISTRATIVE OVERHEAD (CONTRACTED ASSETS) - 6235

AI summary The document discusses the application of administrative overhead for contracted assets, likely involving financial and regulatory considerations related to Nova Scotia Power Inc. and the Nova Scotia Utility and Review Board.

GENERAL - Overhead expenses are integral costs associated with the construction of capital assets. As per NSPI's Accounting Policy & Procedure Manual Section 6100 Cost, the cost of a capital asset not only includes direct construction or d...

AI summary The text discusses the treatment of overhead expenses in capital asset construction, noting that these costs are real and substantial but not directly attributable to specific projects. NSPI's accounting policy outlines how these costs are allocated to capital projects, based on labour costs for externally contracted projects.

POLICY The Company should apply "Capital-related Overhead Expenses" to externally contracted capital projects based on the contract costs charged to those projects.

AI summary The Company is advised to apply 'Capital-related Overhead Expenses' to externally contracted capital projects based on the contract costs associated with those projects.

IDENTIFICATION OF DIVISIONS The first step in the application of overhead costs to capital projects is the disaggregation of Nova Scotia Power Inc's ("NSPI's") Annual Capital Expenditure Plan ("ACE Plan") into several broad areas of respon...

AI summary The document outlines the process of dividing Nova Scotia Power Inc.'s Annual Capital Expenditure Plan into three divisions: Customer Operations, Power Production, and Shared Services, with the latter including Information Technology, to better allocate overhead costs to capital projects.

DETERMINATION OF ELIGIBLE OVERHEAD EXPENSES O7 The next step is the identification of operating expenses that will benefit construction or development activities. A separate determination is made for each division. The process relies on bu...

AI summary The document discusses the determination of eligible overhead expenses, focusing on the allocation of operating expenses to construction or development activities. It references past approvals by the Public Utilities Board and the UARB for using direct labour costs to allocate overhead expenses to capital projects.

09 Power Production Division Eligible Overhead Expenses for Power Production include all costs incurred by the Division's head office cost centres as well as the costs included in the administration cost centres for all operational generat...

AI summary Eligible Overhead Expenses for Power Production include costs from the Division's head office and administrative cost centres for all operational generating stations.

10 Shared Services Division Eligible Overhead Expenses and rates are calculated for each Shared Services Division deemed to have capital related labour and expenses. These eligible expenses include, but are not limited to, office supplies,...

AI summary The Shared Services Division calculates eligible overhead expenses and rates for divisions with capital-related labour and expenses, including office supplies, training, rent, and materials.

DETERMINATION OF CAPITAL-RELATED OVERHEAD EXPENSES - Once the Eligible Overhead Expenses have been determined, the overhead expenses related to the Company's capital activities must be calculated. This calculation involves prorating the re...

AI summary The document outlines the process for determining capital-related overhead expenses, which involves prorating eligible overhead expenses based on contractor labour and adjusting for self-constructed overhead costs to avoid double application. This ensures accurate allocation of overhead expenses to capital activities.

CALCULATION OF OVERHEAD APPLICATION RATE Once the Capital-related Overhead Expenses have been determined, the overhead application rate can be calculated. The application rate is simply the quotient, expressed as a percentage, of the Capit...

AI summary This section explains the calculation of the overhead application rate, which is determined by dividing Capital-related Overhead Expenses by contract costs and expressing the result as a percentage.

APPLICATION OF OVERHEAD The overhead charged to a particular project is determined by multiplying the contract costs charged to the project by the appropriate overhead application rate. The charge is debited to a Capital Work Order while t...

AI summary The overhead charged to a project is calculated by multiplying contract costs by the appropriate overhead application rate. The overhead is debited to a Capital Work Order and credited to Operating, Maintenance and General Expenses. An example calculation is provided, though it has been deleted from the text.

ASSETS - NOT USED AND USEFUL - 6350 Assets not currently used, but expected to be used in providing service in the future will provide value to customers at a future date. Accordingly, the cost of the asset is to be matched to the future p...

AI summary The document discusses accounting treatment for assets not currently used but expected to be used in the future. It outlines how costs associated with these assets should be matched with future periods, how excess costs may be written off or deferred, and how depreciation and maintenance costs are handled during the out-of-service period.

PROCEDURES Proceeds from the issue of preferred shares are recorded in general ledger account 770 - Preferred Shares. Deleted: should Deleted: 03 Deleted: The UARB, in a March 1993 decision, has stated preferred equity should comprise 8% t...

AI summary The text discusses the accounting treatment of proceeds from preferred shares, noting that they are recorded in general ledger account 770 - Preferred Shares. It references a 1993 UARB decision regarding the appropriate percentage of preferred equity in the total capital structure.

POLICY - O1 Long-term debt issued by the Company is reported net of long-term debt payable in one year, as long-term debt on the balance sheet of its financial statements. Detail of the long-term debt issued by the Company are reported in...

AI summary The text discusses the accounting treatment of long-term debt issued by the Company, including commercial paper and debentures, and mentions the deferring of debt defeasance costs by the Company with the approval of the Nova Scotia Utility and Review Board. It also references the reorganization and privatization of Nova Scotia Power Corporation in 1992.

MATCHING NOTES - 11 Matching Notes will remain on the books of the Company until such time as it makes payment of the principal amount of Matching Notes that mature or are redeemable prior to December 31, 1997, to NSPFC. NSPFC, upon receip...

AI summary The document outlines the accounting and management procedures for Matching Notes held by the Company, including their handling upon maturity, defeasance, and the role of NSPFC in repaying obligations. The process involves transferring funds, releasing assets, and ensuring proper accounting treatment.

Page 1: [6] Deleted AI141 9/15/2010 1:53:00 PM - 17 Depending on interest rates prevailing at the time of defeasance of the Matching Notes, the Company may incur costs to effect such defeasance including, but not limited to, (i) the differ...

AI summary The text discusses the potential costs incurred by the Company during the defeasance of Matching Notes, including the difference between the cost of acquiring Defeasance Assets and the principal amount of the notes, issuance costs for new debt, and transaction costs. It also outlines the amortization of these costs and the Company's right to sell and replace Defeasance Assets under certain conditions.

2) Re: Generic accounts - 3350 Under Policy 4(J) (i), the account is to be charged with AFUDC and the same amount appears under Policy 6 for indirect costs. Is this a double recording of AFUDC for the same construction project? If not, ple...

AI summary The text addresses a question about whether AFUDC is double recorded under Policy 4(J) (i) and Policy 6 for the same construction project. It clarifies that there is no double recording, as indirect costs including AFUDC are collected in activity code 005 during construction and later allocated to appropriate activities, including 003, once the project is in service.

3) Re: Generics accounts - 3350 Under Policy 7, are all R&D activities expensed or is it broken out between operating and capital, in which case capital is not written off in the year incurred? Is this in accordance with the tax policy? Pl...

AI summary The document discusses the treatment of R&D activities under Policy 3350, clarifying whether they are expensed or capitalized. It also explains that investment tax credits (ITC) are recorded in the year earned, regardless of whether they relate to capital or operating expenditures.

5) Re: Capitalization of Cost - 6000 In procedure 09, the wording "realize" seems to be a bit unusual. Exactly what is meant by this phrase? It is still used in the document converted to US GAAP as part ofsubmission 1. Paragraph 09 under N...

AI summary The document discusses the capitalization of costs, including the meaning of 'realize' in procedure 09, the limits for construction work in progress, and the need for more rigorous wording regarding capital expenditures for computer hardware, software, and telecommunications equipment. NSPI references updated policies and submissions to address these issues.

9) Re: Pertaining to Earnings -7200 How come there is no entry to retained earnings for the dividends on preferred shares? Submission 2 which includes this policy does not clarify. Under Canadian GAAP, NSPI's preferred shares are not consi...

AI summary The document discusses accounting treatment of preferred shares under Canadian and US GAAP, and a correction to a policy regarding asset retirement obligations. Nova Scotia Power Inc. clarifies that preferred shares are treated as debt under Canadian GAAP and as mezzanine equity under US GAAP. A typographical error in a policy is corrected, changing 'Asst' to 'Asset'.

GENERAL The construction work in progress ("CWIP") accounts contain all work orders relating to assets that are under construction, but not placed in service. These accounts also include retirements in progress. The work order is the major...

AI summary The CWIP accounts track work orders for assets under construction and retirements in progress. Work orders are central to data control and the budget process.

WORK ORDER PROCESS - 02 The following steps portray the capital asset cycle at Nova Scotia Power Inc. ("NSPI"). - a. Prepare budget item and enter into Power Plant 1 ("PP") as a Capital Item ("CI"); - Review and revise the CI item (if nece...

AI summary This section outlines the work order process at Nova Scotia Power Inc. (NSPI), detailing steps for preparing and approving capital items, including budgeting, internal approvals, and regulatory oversight by the Utility and Review Board (UARB).

PROPERTY, PLANT AND EQUIPMENT CONSTRUCTION WORK IN PROGRESS - 6200 - k. Set up the capital work order in CWIP; - Summarize and control charges; - m. Change status of work order from CWIP to Operational ("OPS") when asset goes in service an...

AI summary The text outlines procedures for managing capital work orders in CWIP, including transitioning work orders to operational status, final cost approval, and depreciation of PPE. It also mentions the requirement for an ATO when project spending exceeds specified thresholds.

PROPERTY, PLANT AND EQUIPMENT RETIREMENT AND DISPOSAL OF CAPITAL ASSETS - 6420

AI summary The document discusses the retirement and disposal of capital assets related to property, plant, and equipment, including accounting standards and authorization processes.

DR 2-098-R01-xxx-xxxx (Salvage) 50,000 CR 2-066-R01-xxx-xxxx (Other Goods & Services) 10,000 CR 2-097-R01-xxx-xxxx (Original Cost) 5,000 CR 1-195-000-000-0000(Gain / Lost on Asset Sales 35,000

AI summary The document text presents a table with various entries related to financial matters, including salvage, other goods and services, original cost, and gain or loss on asset sales, with associated figures and references.

The following was noted: - .. A minor change in management judgment and assumptions could materially impact the amounts capitalized. - .. Changes in judgment or assumption and a resulting increase or decrease in costs capitalized is not ne...

AI summary The text highlights that minor changes in management judgment and assumptions could significantly affect capitalized amounts, and that variations in these judgments do not necessarily reflect greater or lesser accuracy.

MATERIALITY LIMITS - 02 Nova Scotia Power Inc. ("NSPI") sets materiality levels by major financial statement areas to facilitate the processing of large volumes of transactions. Procedures for implementing the materiality policy for these...

AI summary Nova Scotia Power Inc. (NSPI) establishes materiality levels for financial statement areas to manage transaction processing. Capitalization limits are outlined in NSPI's Accounting Policy and Procedures Manual Section 1560A.

POLICIES - 04 Expenditures for amounts less than the stated capitalization limits should be charged to operations as they are incurred. - 05 When additional costs associated with capitalizing immaterial amounts exceed the benefits of provi...

AI summary The policies outline that expenditures below specified capitalization limits should be charged to operations as incurred, and that expensing all costs may be appropriate if the benefits of providing detailed information do not outweigh the additional costs.

CAPITALIZATION LIMITS -1560A

AI summary The document discusses capitalization limits under the heading 'CAPITALIZATION LIMITS -1560A', likely involving accounting standards and regulatory considerations related to capital expenditures and return on equity.

SUMMARY OF CAPITALIZATION LIMITS 01 The following table summarizes the capitalization limits by major function. These limits refer to total cost of acquisition including installation. Please refer to the Capital Expenditure Justification C...

AI summary The text outlines capitalization limits by major function, referring to total acquisition costs including installation. It directs readers to the Capital Expenditure Justification Criteria, submitted to the Nova Scotia Utility and Review Board in 1995 and revised in 1997, for guidelines on capital expenditures. Items under these limits are expensed.

GENERAL INFORMATION COST ALLOCATION POLICY - 1570 - 35 Regulated refers to services or products that are subject to price regulation by regulatory authorities. - 36 Non-Regulated refers to services or products that are not subject to price...

AI summary This section defines key terms related to cost allocation policy, distinguishing between regulated and non-regulated services and explaining total capitalization as a financial metric.

POLICY - 02 The statement of cash flows shall report the cash effects during a period of an entity's operations, its investing transactions, and its financing transactions. 2 - 03 Nova Scotia Power Inc. ("NSPI") applies the indirect method...

AI summary The document outlines the requirements for the statement of cash flows under Nova Scotia Power Inc.'s accounting practices, including the use of the indirect method and disclosure of specific cash flow items as per FASB ASC 230.

POLICIES - 05 Pension obligations and obligations associated with non-pension post-retirement benefits such as health benefits to retirees and retirement awards, are actuarially determined using the projected benefit method prorated on ser...

AI summary The text outlines Nova Scotia Power Inc.'s policies for actuarially determining pension obligations, handling adjustments, calculating pension fund asset values, and accounting for surpluses and deficits. It also mentions the adoption of US accounting standards for employee future benefits.

FINANCIAL REPORTING SYSTEM ACCOUNT STRUCTURE - 3100

AI summary The document discusses the financial reporting system's account structure under category 3100, which likely pertains to financial reporting standards and practices. It references accounting principles and entities involved in regulatory proceedings in Nova Scotia.

09 Project Segment The final segment is the four-digit project identifier. The project identifier is optional for operating expenses, but can be used to track specific short-term operating projects. Sequential numbers are assigned to opera...

AI summary The final segment of the project identifier is a four-digit code used to track operating and capital projects. Operating expenses may optionally use the identifier, while capital items require it. The first character indicates the function, and the last three characters represent a capital work order number.

Land and Land Rights - 03 Includes the cost of land owned and the rights, interests and privileges held by the Company in land owned by others. Land and land rights shall be classified within the function according to the major purpose for...

AI summary The text outlines the accounting treatment for land and land rights, including how costs are apportioned, when expenses are charged to specific accounts, and how proceeds from the sale of land or its components are credited. It emphasizes proper classification and accounting procedures for land-related transactions.

Buildings, Structures and Grounds - 04 Includes the installed cost of all permanent structures, services and improvements used to house, support, or safeguard property or persons. Also includes those items that are permanently attached to...

AI summary The document outlines the accounting treatment for buildings, structures, and grounds, specifying how costs are apportioned, charged, and credited. It includes guidelines for land and building cost allocation, demolition, foundation charges, excavation, and salvage value.

Miscellaneous Equipment 05 Includes the installed cost of all miscellaneous items that cannot be attributed to any other specific property unit.

AI summary The section discusses the inclusion of installed costs for miscellaneous equipment not attributable to specific property units.

Indirect Costs 06 Includes administrative/financial costs of construction (allowance for funds used during construction, administrative overheads, inspections, traffic control, pole stacking, etc.) plus all costs associated with the design...

AI summary The text defines indirect costs as including administrative and financial construction costs, such as overheads, inspections, and project management, as well as design and survey costs associated with infrastructure projects.

Capital Contributions 07 Includes the value of cash or assets received to defray the cost of construction of an asset for customer use. This can take the form of cash payments or asset title transferred to the Company.

AI summary Capital contributions refer to the value of cash or assets received to cover the cost of constructing an asset for customer use, which may include cash payments or the transfer of asset titles to the company.

Boiler Plant Equipment - 11 Includes the installed cost of the following major equipment used for the production of steam to be used primarily for generating electrical energy: - a. Furnaces - b. Boilers - c. Fuel Preparing Equipment - d....

AI summary The text outlines the major equipment included in the installed cost for boiler plant operations, primarily used for steam production in electrical energy generation. The equipment listed includes furnaces, boilers, fuel preparing equipment, fuel and ash handling equipment, and steam and feedwater piping.

Roads, Trails and Bridges 13 Includes the cost of all permanent roads, trails and bridges required to provide access for people and equipment to the Company's buildings, dams and other facilities.

AI summary This section outlines the inclusion of costs related to permanent roads, trails, and bridges necessary for access to the Company's facilities, such as buildings and dams.

Reservoirs, Dams &Waterways 14 Includes the installed cost of facilities used for impounding, collecting, storage, diversion, regulation and delivery of water used primarily for generating electricity.

AI summary The text refers to the inclusion of the installed cost of facilities related to water management for electricity generation, such as reservoirs, dams, and waterways.

Poles, Towers and Fixtures 16 Includes the installed cost of all poles, towers and associated fixtures used primarily to support distribution and transmission overhead facilities and their connection to underground systems. This account in...

AI summary This section outlines the accounting treatment for poles, towers, and fixtures used in distribution and transmission systems, specifying that these costs are included in the account, while excluding poles solely for street and highway lighting. Joint-use poles are to be charged to the transmission function.

Line Transformers - Overhead 18 Includes the installed cost of all transformers and associated equipment used in the transformation of electrical energy in the transmission and distribution overhead system to a voltage that can be used by...

AI summary This section outlines the inclusion of the installed cost of all transformers and associated equipment in the overhead transmission and distribution system, which are used to transform electrical energy to a voltage suitable for customer use.

Station Equipment 19 Includes the installed cost of all equipment used for the purpose of changing the characteristics (voltage, etc.) of electricity in the distribution level of voltage. This account also includes the cost of buildings er...

AI summary This section describes the 'Station Equipment' account, which includes the installed cost of equipment used to change the characteristics of electricity in the distribution level and the cost of buildings primarily used for substation functions.

Line Transformers - Underground 22 Includes the installed cost of all transformers and associated equipment used in the transformation of electrical energy in the underground system to a voltage which can be used by the customer.

AI summary This section describes the inclusion of the installed cost of underground line transformers and associated equipment used to transform electrical energy to a usable voltage for customers.

Laboratory Equipment 33 Includes the installed cost of all laboratory equipment for all functions of the Company.

AI summary The text mentions that the installed cost of all laboratory equipment for all functions of the Company is included in the calculation.

Mining Equipment 35 Includes the value of all mining assets owned by NSPI.

AI summary The text mentions that the value of all mining assets owned by Nova Scotia Power Inc. (NSPI) is included in the calculation.

AMORTIZATION - CAPITAL CONTRIBUTIONS IN AID OF CONSTRUCTION - 5310

AI summary This section of the document discusses the amortization of capital contributions in aid of construction, likely in the context of regulatory proceedings involving Nova Scotia Power and related entities. It may involve accounting standards, capital expenditures, and regulatory considerations.

POLICY 01 Capital contributions in aid of construction towards the acquisition of fixed assets should be amortized to income using the same depreciation rates as the assets to which they relate. - 02 The amortization base is equal to the a...

AI summary The text outlines the policy for amortizing capital contributions toward fixed assets, specifying that they should be amortized using the same depreciation rates as the related assets, with the amortization base equal to the contribution amount and timing aligned with the asset.

03 Debt Issue Costs The issue of long-term debt is usually an involved process in which the Company may retain the services of brokers, lawyers and auditors. Since the cost of using these services can be significant and provide future bene...

AI summary The document discusses how long-term debt issuance costs, including those from brokers, lawyers, and auditors, are treated under US GAAP. These costs are deferred and amortized over the life of the debt, while premiums, discounts, and commissions are also deferred. Other costs are expensed in account 084 bank charges.

06 Long-term Debt - Interest Expense Long-term debt interest expense includes interest on Nova Scotia Power Inc. ("NSPI") debentures and medium term notes. Interest expense is accrued monthly based on a 30-day months whether interest payme...

AI summary This section discusses the accounting treatment of long-term debt interest expense for Nova Scotia Power Inc., including accrual methods and payment procedures.

07 Amortization of Long-term Debt Issue Costs The Company defers costs associated with the issuance of long-term debt including commissions, discounts/premiums and legal and audit fees, if significant. These costs are amortized monthly usi...

AI summary The Company defers significant costs related to the issuance of long-term debt, such as commissions, discounts/premiums, and legal and audit fees. These costs are amortized monthly using the effective interest rate method over the life of the related debt.

08 Short-term Interest Short-term interest includes all interest, commissions, stamping fees, overdraft charges associated with the issuance of commercial paper, banker's acceptances, hedge settlements, and prime loans These costs are expe...

AI summary Short-term interest encompasses various financial costs related to debt instruments such as commercial paper and banker's acceptances, which are expensed or amortized monthly based on the number of days of the associated debt.

09 Other Financing Charges The Company expenses related banking costs in the month in which they occur. Stand by fees and letters of credit fees are expensed monthly. Credit facility fees are expensed over the period to which they relate.

AI summary The Company expenses banking costs, including standby fees, letters of credit fees, and credit facility fees, in the month they occur or over the relevant period.

INCOME TAXES - 5900 - 10 A monthly income tax provision is recorded by multiplying the Company's effective combined federal and provincial income tax rate forecasted for the year (calculated without inclusion of the forecasted FAM adjustme...

AI summary The document outlines the methodology for recording income tax provisions, including the calculation of monthly income tax provisions, taxable capital estimates, and the treatment of Part VI.1 tax expenses. It also describes the use of capital cost allowance and cumulative eligible capital to minimize taxable income.

CAPITALIZATION OF COST - 6000 DEFINITION 01 Capital assets include identifiable assets such as property, plant and equipment or intangible assets that are held for use in the production or supply of goods and services. They are intended fo...

AI summary The document defines capital assets as identifiable assets, such as property, plant, and equipment, held for use in the production or supply of goods and services and not intended for sale in the ordinary course of business.

GENERAL - 02 An expenditure must create a benefit having a life of more than one year to be considered capital. Annual fees or maintenance costs do not create an asset; they simply maintain the existing asset base and should be expensed an...

AI summary The text outlines criteria for capitalizing expenditures, stating that only those providing benefits beyond one year qualify as capital. It details factors such as extending asset life, increasing capacity, improving production quality, and reducing operating costs. Guidance is provided by Nova Scotia Power Inc.'s Capital Expenditure Justification Criteria and regulatory bodies like the Federal Energy Regulatory Commission.

POLICIES 07 Expenditures meeting the criteria described in Paragraphs 02, 03 and 06 create a benefit that will be realized by the Company beyond the current year. Accordingly, they should be capitalized. - 08 Every expenditure must be clas...

AI summary This section outlines the criteria for classifying expenditures as capital or operating, emphasizing that capital expenditures should be capitalized if they provide benefits beyond the current year. It also references the Annual Capital Expenditure Plan (ACE Plan) and the work order process for capitalizing costs.

DEFINITION 01 Cost is the amount of consideration (cash or other assets) given up to acquire, construct, develop, or better a capital asset and includes all costs directly attributable to the acquisition, construction, development or bette...

AI summary The document defines 'cost' as the total consideration given up to acquire, construct, or improve a capital asset, including all directly attributable expenses necessary for its intended use.

COST COMPONENTS AND ELEMENTS - 6140

AI summary The document provides an overview of cost components and elements related to utility operations, including accounting standards, capital expenditures, and regulatory considerations. It outlines various financial and operational aspects that are relevant to regulatory proceedings.

COST COMPONENTS Cost components represent examples of the types of major pieces of equipment included in each capital activity. They are created through detailed consultation with our asset builders and maintainers, and conform to Federal...

AI summary The document explains that cost components are examples of major equipment included in capital activities, developed through consultation with asset builders and maintainers and aligned with FERC standards.

Cost Components Airport (Heliport) Bridges Buildings- Superstructure Canals Dams Docks & Wharves Drainage & Sewer Sys. Excavation Fencing Fire, Escape& Protection Foundation HVAC Landscaping Light & Power System Plant Cleaning System Plumb...

AI summary The text lists various infrastructure components, including buildings, roads, utilities, and systems, likely related to cost categorization or capital expenditures in a regulatory context.

Miscellaneous Equipment (004) Cost Components Barge, Boat, etc. Comm. Equipment Laboratory Equipment Miscellaneous Equipment Tools Cost Elements Public Address System Measuring Device Glassware Welders Lathes Capital Contributions (006) Co...

AI summary The document outlines cost components and elements related to miscellaneous equipment and capital contributions, including items such as public address systems, measuring devices, glassware, welders, lathes, cash, and assets. These are categorized under cost components and cost elements sections.

Environmental Equipment (007) Cost Components Fish Ladders Measuring Devices Storage Devices Cost Elements Concrete Controls Enclosures Foundations Holding Tanks Meters Pumps Turbogenerator Installation (010) - Steam Cost Components Conden...

AI summary The text lists cost components and elements related to environmental equipment and turbogenerator installation, including items such as fish ladders, measuring devices, concrete, controls, and various systems and components for steam turbogenerators.

Boiler (013) Cost Components Boiler Fuel Burning Equipment Insulation Package Boiler Piping & Headers Reheater Soot Blower System Superheater Cost Elements Baffles Blowdown System Burners Desuperheater Drums Enclosures Grates Motors Water...

AI summary The text outlines various cost components and elements related to different systems in a power generation facility, including boilers, circulating water systems, wastewater systems, and feedwater systems. It lists equipment and infrastructure associated with each system.

Cost Components Air Heater Duct System Fans Fly Ash Collection System Precipitators Scrubbers Heaters Stacks Cost Elements Breeching System Brick Cleanouts Concrete Ducts Foundations Guys Hoppers Insulation Ladders Liners Motors Painting -...

AI summary The text lists various cost components related to infrastructure and fuel handling systems, including air heater duct system fans, fly ash collection systems, heaters, stacks, and other elements such as breeching systems, ducts, foundations, and fuel handling for coal.

Cost Elements Cable Connectors Conduit Terminal Blocks Wiring

AI summary The text lists several cost elements related to electrical infrastructure, including cable connectors, conduit, terminal blocks, and wiring.

COST COMPONENTS AND ELEMENTS· 6140 Feedlines Guys Motor Generator Set Foundations Radio Transmitters and Receivers Telecom Building Cost Elements Monitoring Equipment Structures Supports Telecommunication Systems (061) Cost Components Netw...

AI summary The document outlines various cost components and elements related to infrastructure and telecommunication systems, including feedlines, motor generator sets, radio transmitters, and fiber optics. It categorizes costs into components and elements for different systems such as telecommunication systems and mobile radio infrastructure.

GENERAL 01 The construction work in progress ("CWlp") accounts contain all work orders relating to assets that are under construction, but not placed in service. These accounts also include retirements in progress. The work order is the ma...

AI summary The construction work in progress accounts track all work orders for assets under construction and retirements in progress. These accounts are crucial for data control, processing, and linking back to the budget process.

WORK ORDER PROCESS - 02 The following steps portray the capital asset cycle at Nova Scotia Power Inc. (UNSPI"). - a. Prepare budget item and enter into Power Plant 1 ("PP") as a Capital Item ("CI"); - b. Review and revise the CI item (if n...

AI summary This document outlines the work order process for capital asset projects at Nova Scotia Power Inc. (NSPI). It details the steps for preparing, approving, and activating capital items within the Power Plant system, including the involvement of the Investment Review Team (IRT) and the Nova Scotia Utility and Review Board (UARB).

CONSTRUCTION WORK IN PROGRESS - 6200 - k. Set up the capital work order in CWIP; - I. Summarize and control charges; - m. Change status of work order from CWIP to Operational ("OPS") when asset goes in service and is being used to generate...

AI summary The document outlines procedures for managing construction work in progress (CWIP), including setting up capital work orders, controlling charges, changing work order status, final cost approval, depreciation, and retirement of assets. These steps ensure proper accounting and regulatory compliance.

CAPITAL EXPENDITURES - LAND - 6210

AI summary The document discusses capital expenditures related to land under the category 6210, though the content is not fully visible due to an image reference. The context includes Nova Scotia Power and related financial and regulatory entities.

POLICY 02 The cost of land must be accounted for separately from other capital assets due to its unique life characteristics. - 03 The following are costs which must be considered in determining the total value of a land purchase: - a. Pur...

AI summary The document outlines the specific costs associated with land purchases and emphasizes the need to account for land separately from other capital assets due to its unique life characteristics. These costs include purchase price, appraisal fees, legal fees, and environmental assessment costs, among others.

CAPITAL EXPENDITURES - COMPUTER HARDWARE, SOFTWARE AND TELECOMMUNICATIONS EQUIPMENT - 6215

AI summary The document is a section of a regulatory proceeding discussing capital expenditures related to computer hardware, software, and telecommunications equipment under the category 6215. It includes a reference to a page with an image, which may contain specific details about the expenditures.

POLICY - 01 Purchases of computer hardware and software, and telecommunications equipment as well as software development projects with a cost in excess of the amount prescribed in NSPI Accounting Policy and Procedures Manual 1560A should...

AI summary The policy outlines the capitalization criteria for purchases of computer hardware, software, and telecommunications equipment, as well as software development projects exceeding prescribed amounts in NSPI's accounting manuals. It also details the types of costs included in large software projects.

CAPITAL CONTRIBUTIONS IN AID OF CONSTRUCTION - 6220

AI summary The document discusses capital contributions in aid of construction, focusing on financial and regulatory considerations related to infrastructure projects in Nova Scotia. Key themes include accounting standards, capital expenditures, and regulatory oversight.

DEFINITION - 01 Capital contributions in aid of construction include the value of cash, other assets and/or services received to defray the construction costs of capital assets. These contributions are generally received from two sources:...

AI summary Capital contributions in aid of construction refer to funds, assets, or services received from customers or governments to help cover the costs of building capital assets. These contributions are intended to support infrastructure development.

GENERAL - 02 The Company has an obligation to provide electric service to the consuming public in the most cost effective manner. This obligation is discharged when a customer group receiving special services pays for the cost of those ser...

AI summary The Company is obligated to provide electric service in the most cost-effective manner, ensuring that special services are paid for by the customer group receiving them. Policies in the Rate and Regulations Manual dictate maximum service extension distances, and costs exceeding these provisions require customer capital contributions, with factors like location, future development, and public safety considered.

POLICIES - 05 Contributions in aid of construction should be offset against the property, plant or equipment to which they relate so that the net amount is depreciated and included in rate base. - 06 If a relationship to a specific asset c...

AI summary The text outlines policies for accounting for contributions in aid of construction, specifying that they should be offset against related assets and depreciated, or against 'Assets in Service' if no specific asset is identified. It also mentions that contributions from customers are determined internally and documented with details such as the date, contributor name, and work order reference.

GENERAL - 01 Overhead expenses are integral costs associated with the construction of capital assets. As per NSPl's Accounting Policy & Procedures Manual Section 6100 - Cost, the cost of a capital asset not only includes direct constructio...

AI summary Overhead expenses are essential in capital asset construction and must be allocated to capital projects. The Nova Scotia Utility and Review Board has historically approved the allocation of overhead costs based on direct labour costs, as established in a 1982 ruling by the Public Utilities Board.

IDENTIFICATION OF DIVISIONS 05 The first step in the application of overhead costs to capital projects is the disaggregation of Nova Scotia Power Inc.'s (HNSPl's") Annual Capital Expenditure Plan ("ACE Plan") into several broad areas of re...

AI summary The document outlines the initial step in applying overhead costs to capital projects by disaggregating Nova Scotia Power Inc.'s Annual Capital Expenditure Plan into three divisions: Customer Operations, Power Production, and Shared Services, which includes Information Technology.

APPLICATION OF ADMINISTRATIVE AND VEHICLE OVERHEAD (SELF - CONSTRUCTEp ASSETS) - 6230 expense figures since the overhead application rate for a particular fiscal year must be determined before the year commences.

AI summary The document discusses the determination of overhead application rates for administrative and vehicle expenses in fiscal years, emphasizing that these rates must be established before the year begins to ensure accurate expense figures.

08 Power Production Division Eligible Overhead Expenses for Power Production include all costs incurred by the Division's head office cost centres as well as the costs included in the administration cost centres for all operational generat...

AI summary Eligible overhead expenses for the Power Production Division include costs from head office and administrative cost centres for operational generating stations, with a separate allocation of head office expenses added to the Division's eligible expenses.

09 Shared Services Division Eligible Overhead Expenses and rates are calculated for each Shared Services Division, deemed to have capital related labour and expenses. These eligible expenses include, but are not limited to, office supplies...

AI summary Eligible overhead expenses for the Shared Services Division include office supplies, training, rent, and materials, with a separate allocation of head office expenses added to these eligible expenses.

DETERMINATION OF CAPITAL-RELATED OVERHEAD EXPENSES 11 Once the Eligible Overhead Expenses have been determined, the overhead expenses related to the Company's capital activities must be calculated. This calculation involves prorating the e...

AI summary The document outlines the process for determining capital-related overhead expenses after identifying eligible overhead expenses, requiring proration of these expenses related to the company's capital activities.

APPLICATION OF ADMINISTRATIVE AND VEHICLE OVERHEAD (SELF - CONSTRUCTED ASSETS) - 6230 - overhead expenses determined above based on capital labour to total labour for both administrative and vehicle overheads. - 12 Some capital-related exp...

AI summary The document discusses the allocation of overhead expenses, particularly administrative and vehicle overheads, based on capital labour to total labour. It emphasizes that capital-related expenses should be included in overhead expenses charged to capital projects and allocated based on capital labour costs.

CALCULATION OF OVERHEAD APPLICATION RATE 13 Once the Capital-related Overhead Expenses have been determined, the overhead application rate can be calculated. The application rate is simply the quotient, expressed as a percentage, of the Ca...

AI summary The overhead application rate is calculated by dividing capital-related overhead expenses by capital labour costs, expressed as a percentage. This calculation is performed separately for each division after determining the capital-related overhead expenses.

APPLICATION OF OVERHEAD 15 The overhead charged to a particular project is determined by multiplying the labour costs charged to the project by the appropriate overhead application rate. The charge is debited to a Capital Work Order while...

AI summary The overhead applied to a project is calculated by multiplying labor costs by the appropriate overhead application rate, with the charge recorded in Capital Work Orders and credited to Operating, Maintenance and General Expenses.

APPLICATION OF ADMINISTRATIVE OVERHEAD (CONTRACTED ASSETS) - 6235

AI summary The document discusses the application of administrative overhead for contracted assets, focusing on accounting and financial considerations related to Nova Scotia Power Inc. and other relevant entities. It includes references to accounting standards and financial mechanisms.

GENERAL - 01 Overhead expenses are integral costs associated with the construction of capital assets. As per NSPl's Accounting Policy & Procedures Manual Section 6100 - Cost, the cost of a capital asset not only includes direct constructio...

AI summary Overhead expenses are considered integral to the construction of capital assets and must be allocated to capital projects. NSPl's accounting policy outlines that overhead costs are based on labour costs for internally managed projects and contracted costs for externally managed projects, as per the Public Utilities Board's ruling.

POLICY 04 The Company should apply "Capital-related Overhead Expenses" to externally contracted capital projects based on the contract costs charged to those projects.

AI summary The Company is advised to apply 'Capital-related Overhead Expenses' to externally contracted capital projects based on the contract costs associated with those projects.

IDENTIFICATION OF DIVISIONS 05 The first step in the application of overhead costs to capital projects is the disaggregation of Nova Scotia Power Inc's ("NSPI's") Annual Capital Expenditure Plan (IIACE Plan") into several broad areas of re...

AI summary The document outlines the initial step in applying overhead costs to capital projects by dividing Nova Scotia Power Inc.'s Annual Capital Expenditure Plan into three divisions: Customer Operations, Power Production, and Shared Services, which includes Information Technology.

DETERMINATION OF CAPITAL-RELATED OVERHEAD EXPENSES - 10 Once the Eligible Overhead Expenses have been determined, the overhead expenses related to the Company's capital activities must be calculated. This calculation involves prorating the...

AI summary The document outlines the process for determining capital-related overhead expenses, including prorating eligible overhead expenses based on contractor labour and adjusting for self-constructed overhead costs to avoid double application.

CALCULATION OF OVERHEAD APPLICATION RATE 12 Once the Capital-related Overhead Expenses have been determined, the overhead application rate can be calculated. The application rate is simply the quotient, expressed as a percentage, of the Ca...

AI summary The overhead application rate is calculated as the percentage of Capital-related Overhead Expenses divided by contract costs. A reference is made to NSPI's Accounting Policy and Procedures Manual for further details on the general ledger account structure.

APPLICATION OF OVERHEAD 14 The overhead charged to a particular project is determined by multiplying the contract costs charged to the project by the appropriate overhead application rate. The charge is debited to a Capital Work Order whil...

AI summary The overhead charged to a project is calculated by multiplying the contract costs by the appropriate overhead application rate, with the charge recorded as a debit to a Capital Work Order and a credit to Operating, Maintenance and General Expenses.

ALLOWANCE FOR FUNDS USED DURING CONSTRUCTION - 6240

AI summary The document discusses the Allowance for Funds Used During Construction (AFUDC), focusing on its application in Nova Scotia Power's capital projects. It includes considerations related to accounting standards and regulatory oversight.

05 Criteria for Application AFUDC is applied to all capital work orders with the following exceptions: - a. work orders with a construction period less than two months (e.g. routine work orders); - b. work orders used to purchase assets th...

AI summary The document outlines the exceptions to the application of AFUDC, which is applied to all capital work orders except for specific cases such as short construction periods, immediate in-service assets, land purchases, fully funded projects, deferred work orders, and retirement work orders.

ALLOWANCE FOR FUNDS USED DURING CONSTRUCTION .. 6240

AI summary The document discusses the Allowance for Funds Used During Construction (AFUDC), which is a financial accounting method used to calculate the cost of capital during the construction of power plants and other capital projects. It involves considerations such as Return on Equity (ROE), Weighted Average Cost of Capital (WACC), and regulatory oversight by the Nova Scotia Utility and Review Board (UARB).

06 Basis for Application The application base for AFUDC includes the cumulative total of all direct and indirect charges to work orders, but excludes all AFUDC related to spending subsequent to January 1 or July 1, whichever is the latest....

AI summary The basis for the application of AFUDC includes all direct and indirect charges to work orders, excluding those related to spending after January 1 or July 1, whichever is later, leading to semi-annual compounding of AFUDC.

07 Timing of Application AFUDC application begins in the month in which a work order receives charges and continues until the month the work order becomes operational plant. On most work orders, AFUDC is applied at the full rate to cumulat...

AI summary The AFUDC application period starts when a work order receives charges and ends when the work order becomes operational. For most work orders, AFUDC is applied at the full rate monthly, while major capital work orders consider the actual start and operational dates.

08 Calculation of AFUDC Rate The rate used to capitalize AFUDC is the Company's weighted average cost ofcapital before tax. The rate is calculated annually, in advance, by dividing the forecasted annual interest expense, preferred dividend...

AI summary The AFUDC rate is calculated using the Company's weighted average cost of capital before tax, determined annually by dividing forecasted interest expense, preferred dividends, and net earnings by forecasted average debt and equity. The annual rate is then divided by twelve to obtain the monthly rate.

ASSETS - NOT USED AND USEFUL - 6350 - 16 No cost of capital (neither return nor interest) is to be capitalized on the existing cost base during the out of service period. Any related cost of capital is to be recovered from customers and ex...

AI summary The document outlines rules for handling costs associated with assets that are out of service, specifying that no cost of capital should be capitalized during this period and that maintenance and mothballing costs should be expensed or deferred with UARB approval.

LONG LIVED ASSETS TO BE DISPOSED OF BY SALE - 6360

AI summary The document discusses the disposal of long-lived assets through sale, likely involving Nova Scotia Power Inc. and related entities, under regulatory oversight by the Nova Scotia Utility and Review Board.

RETIREMENT AND DISPOSAL OF CAPITAL ASSETS - 6420

AI summary The document discusses the retirement and disposal of capital assets, focusing on accounting practices and regulatory considerations. It includes references to Nova Scotia Power Inc. (NSPI) and Nova Scotia Utility and Review Board (UARB), and mentions relevant accounting standards such as US-GAAP and C-GAAP.

RETIREMENT AND DISPOSAL OF CAPITAL ASSETS - 6420 13 When a work order has received final cost approval, an entry is made for the final disposition of charges to capital assets in service and accumulated depreciation.

AI summary The document outlines the process for final disposition of charges to capital assets in service and accumulated depreciation after a work order has received final cost approval.

GAIN OR LOSS ON DISPOSITION OF CAPITAL ASSETS - 6440

AI summary The document discusses the gain or loss on the disposition of capital assets, referencing accounting standards and procedures for asset valuation and reporting.

CURRENT ASSETS

AI summary The section 'CURRENT ASSETS' introduces the topic of current assets, which are short-term assets expected to be converted into cash within a year. This section likely includes details on liquidity, working capital, and asset management strategies.

Materials - 04 Materials are accounted for using a computerized perpetual inventory system. Purchases are recorded at cost and issues are charged to capital or operating accounts at average cost. - 05 Physical counts are performed on a rot...

AI summary The document outlines the accounting practices for materials, including the use of a perpetual inventory system, cost-based recording of purchases, average cost allocation for issues, periodic physical counts, and monthly interest charges on inventory to cover carrying costs.

CURRENT ASSETS

AI summary The section 'CURRENT ASSETS' introduces the topic of current assets, which are short-term assets expected to be converted into cash within a year. This section likely includes details on liquidity, working capital, and asset management strategies.

DEFERRED CHARGES

AI summary The section discusses deferred charges, which are accounting treatments for costs that are recognized in one period but paid in a later period. These charges are often related to capital expenditures and long-term liabilities, and their treatment can impact financial statements and regulatory proceedings.

DEFINITION - 01 Start-up costs include all expenses incurred by Nova Scotia Power Inc. ("NSPI") for the development of business opportunities outside the Company's normal sphere of regulated generation and delivery of electricity. Start-up...

AI summary The document defines start-up costs as expenses incurred by Nova Scotia Power Inc. for developing business opportunities outside its regulated electricity generation and delivery. These costs are governed by FASB ASC 720-15-20, with additional guidance provided in NSPl's Accounting Policy and Procedures Manual.

POLICIES - 03 All start-up costs associated with the development of new business should be expensed. - 04 All NSPI employees who perform work on non-regulated activities should charge an overhead application rate as per NSPI's Accounting P...

AI summary The policies outlined include expensing all start-up costs for new business development and requiring NSPI employees working on non-regulated activities to apply an overhead rate as specified in the Accounting Policy and Procedures Manual.

PROCEDURES 05 All new business costs should be charged to an operating project. An Operating Project Approval Form can be obtained from Corporate Accounting Services ("CAS"). CAS will assign a new project number to collect costs associated...

AI summary The document outlines procedures for charging new business costs to an operating project, requiring the use of an Operating Project Approval Form obtained from Corporate Accounting Services, which assigns a new project number for cost collection.

DEFERRED CHARGES

AI summary The section discusses deferred charges, which are accounting treatments for costs that are recognized in one period but paid in a later period. These charges are often related to capital expenditures and long-term liabilities, and their treatment can impact financial statements and regulatory proceedings.

DEFERRED CHARGES

AI summary The section discusses deferred charges, which are accounting treatments for costs that are recognized in one period but paid in a later period. These charges are often related to capital expenditures and long-term liabilities, and their treatment can impact financial statements and regulatory proceedings.

ACCOUNTING FOR FINANCIAL INSTRUMENTS AND HEDGES - 6960 POWia

AI summary The document discusses the accounting for financial instruments and hedges under Nova Scotia Power Inc. (NSPI), referencing the Nova Scotia Utility and Review Board (UARB) and accounting standards such as US-GAAP and C-GAAP. It includes terms like Fuel Adjustment Mechanism (FAM), Return on Equity (ROE), and Weighted Average Cost of Capital (WACC).

POLICY 03 Common equity, defined as common shares and retained earnings, should be used to maintain an overall capital structure that is within the range(s) approved by the Nova Scotia Utility and Review Board ("UARB"). - 04 The UARB defin...

AI summary The document outlines the use of common equity, including common shares and retained earnings, to maintain a capital structure within the range approved by the Nova Scotia Utility and Review Board. The UARB sets the maximum common equity percentage, and share capital issuance is recorded in general ledger account 750.

POLICY 02 Preferred shares could be issued in series to maintain an overall capital structure that is within the ranges approved by the Nova Scotia Utility and Review Board ("UARB").

AI summary The text discusses the potential issuance of preferred shares in series to maintain a capital structure within the ranges approved by the Nova Scotia Utility and Review Board.

ACCRUED INTEREST ON LONG-TERM DEBT - 8120

AI summary The document heading indicates a focus on accrued interest on long-term debt, likely related to financial accounting and regulatory considerations for Nova Scotia Power Inc. and its subsidiaries.

POLICY 01 Interest on long-term debt should be accrued on a 30-day month basis using the principal outstanding and prevailing rate for each debt instrument.

AI summary The text discusses the accrual of interest on long-term debt, specifying that it should be calculated on a 30-day month basis using the principal outstanding and prevailing rate for each debt instrument.

POLICIES - Pension obligations and obligations associated with non-pension post-retirement benefits such as health benefits to retirees and retirement awards, are actuarially determined using the projected benefit method prorated on servic...

AI summary The document outlines how Nova Scotia Power Inc. (NSPI) calculates and accounts for pension obligations and post-retirement benefits, including actuarial assumptions, amortization methods, and the recognition of plan surpluses and deficits on the balance sheet.

PROCEDURES - 11 Actuarial valuations are performed annually for all plans. - Pension expense, as determined in the annual actuarial valuation, is charged to both operating departments and corporate adjustments. - 13 Pension funding for pre...

AI summary The document outlines procedures for pension plan management, including annual actuarial valuations, funding based on these valuations, investment of pension assets by fund managers, and the handling of administrative expenses and contributions for both defined benefit and defined contribution pension plans.

DEPRECIATION AND AMORTIZATION EXPENSE - 5300 - The remaining life is forecasted through the use of mortality statistics that determine the best fit lowa Curve which gives the expected retirement characteristics. This technique is applied t...

AI summary The document discusses depreciation and amortization expense, including the use of mortality statistics and the lowa Curve to forecast asset lifespans, and the annual filing of depreciation rates with the UARB as part of the Capital Expenditures Plan.

03 Debt Issue Costs The issue of long-term debt is usually an involved process in which the Company may retain the services of brokers, lawyers and auditors. Since the cost of using these services can be significant and provide future bene...

AI summary The document discusses the treatment of long-term debt issuance costs under US GAAP, explaining that such costs are deferred and amortized over the life of the debt instrument. It also references the NSPI Accounting Policy and Procedures Manual for further details.

06 Long-term Debt - Interest Expense Long-term debt interest expense includes interest on Nova Scotia Power Inc. ("NSPI") debentures and medium term notes. Interest expense is accrued monthly based on a 30-day months whether interest payme...

AI summary This section discusses the interest expense related to NSPI's long-term debt, including debentures and medium-term notes. Interest is accrued monthly on a 30-day basis regardless of the payment frequency, and actual payments are recorded in the accrued interest account.

07 Amortization of Long-term Debt Issue Costs The Company defers costs associated with the issuance of long-term debt including commissions, discounts/premiums and legal and audit fees, if significant. These costs are amortized monthly usi...

AI summary The Company defers significant costs associated with the issuance of long-term debt, such as commissions, discounts/premiums, and legal and audit fees. These costs are amortized monthly using the effective interest rate method over the life of the related debt.

09 Other Financing Charges The Company expenses related banking costs in the month in which they occur. Stand by fees and letters of credit fees are expensed monthly. Credit facility fees are expensed over the period to which they relate.

AI summary The Company expenses banking costs, including stand by fees, letters of credit fees, and credit facility fees, in the month they occur or over the relevant period.

TAX ON LARGE CORPORATIONS The Company is subject to a provincial capital tax ("PCT") at prescribed rates applied to taxable capital.

AI summary The Company is subject to a provincial capital tax applied at prescribed rates to taxable capital.

GENERAL - Overhead expenses are integral costs associated with the construction of capital assets. As per NSPI's Accounting Policy & Procedure Manual Section 6100 Cost, the cost of a capital asset not only includes direct construction or d...

AI summary Overhead expenses are considered integral to the construction of capital assets, and their allocation to specific projects is necessary despite their inability to be directly tied to individual expenditures. The Nova Scotia Utility and Review Board has historically approved the allocation of overhead costs based on direct labour costs, as established in a 1982 ruling by the Public Utilities Board.

POLICY O4 The Company should apply "Capital-related Overhead Expenses" to capital projects based on the direct labour costs charged to those projects

AI summary The Company is advised to apply 'Capital-related Overhead Expenses' to capital projects based on direct labour costs associated with those projects.

IDENTIFICATION OF DIVISIONS The first step in the application of overhead costs to capital projects is the disaggregation of Nova Scotia Power Inc.'s ("NSPI's") Annual Capital Expenditure Plan ("ACE Plan") into several broad areas of respo...

AI summary The document discusses the identification of divisions within Nova Scotia Power Inc.'s Annual Capital Expenditure Plan (ACE Plan), which is divided into Customer Operations, Power Production, and Shared Services. Shared Services includes Information Technology.

APPLICATION OF ADMINISTRATIVE AND VEHICLE OVERHEAD (SELF - CONSTRUCTED ASSETS) - 6230

AI summary The document discusses the application of administrative and vehicle overhead for self-constructed assets, likely involving cost allocation and accounting practices. It includes references to Nova Scotia Power Inc. and the Nova Scotia Utility and Review Board.

DETERMINATION OF ELIGIBLE OVERHEAD EXPENSES The next step is the identification of operating expenses that will benefit construction or development activities. A separate determination is made for each division. The process relies on budge...

AI summary The document outlines the process for identifying eligible overhead expenses that benefit construction or development activities, with a focus on using budgeted expense figures to determine overhead application rates before the fiscal year begins.

APPLICATION OF ADMINISTRATIVE AND VEHICLE OVERHEAD (SELF - CONSTRUCTED ASSETS) - 6230

AI summary The document discusses the application of administrative and vehicle overhead related to self-constructed assets, with a focus on accounting principles and regulatory considerations.

DETERMINATION OF CAPITAL-RELATED OVERHEAD EXPENSES - Once the Eligible Overhead Expenses have been determined, the overhead expenses related to the Company's capital activities must be calculated. This calculation involves prorating the el...

AI summary The document outlines the process for determining capital-related overhead expenses, emphasizing the proration of eligible overhead expenses based on capital labour to total labour for administrative and vehicle overheads, and the inclusion of certain expenses in the divisions' overhead based on capital labour costs.

CALCULATION OF OVERHEAD APPLICATION RATE Once the Capital-related Overhead Expenses have been determined, the overhead application rate can be calculated. The application rate is simply the quotient, expressed as a percentage, of the Capit...

AI summary The overhead application rate is calculated by dividing Capital-related Overhead Expenses by capital labour costs, expressed as a percentage. This calculation is performed separately for each division after determining the Capital-related Overhead Expenses.

APPLICATION OF OVERHEAD The overhead charged to a particular project is determined by multiplying the labour costs charged to the project by the appropriate overhead application rate. The charge is debited to a Capital Work Order while the...

AI summary The overhead charged to a project is calculated by multiplying labour costs by the appropriate overhead application rate. The charge is recorded in a Capital Work Order with a credit to Operating, Maintenance and General Expenses. The text references accounting principles and specific general ledger accounts.

GENERAL - Overhead expenses are integral costs associated with the construction of capital assets. As per NSPI's Accounting Policy & Procedure Manual Section 6100 Cost, the cost of a capital asset not only includes direct construction or d...

AI summary The text discusses the inclusion of overhead expenses in the cost of capital assets, explaining that these costs are real and substantial but not directly tied to specific projects. Overhead costs are allocated to capital projects, and the method used aligns with the Public Utilities Board's ruling as outlined in NSPI's Accounting Policy and Procedures Manual.

POLICY The Company should apply "Capital-related Overhead Expenses" to externally contracted capital projects based on the contract costs charged to those projects.

AI summary The Company is advised to apply 'Capital-related Overhead Expenses' to externally contracted capital projects based on the contract costs associated with those projects.

IDENTIFICATION OF DIVISIONS The first step in the application of overhead costs to capital projects is the disaggregation of Nova Scotia Power Inc's ("NSPI's") Annual Capital Expenditure Plan ("ACE Plan") into several broad areas of respon...

AI summary The document discusses the identification of divisions within Nova Scotia Power Inc. (NSPI) for the purpose of allocating overhead costs to capital projects. The divisions identified are Customer Operations, Power Production, and Shared Services, which includes Information Technology.

DETERMINATION OF ELIGIBLE OVERHEAD EXPENSES O7 The next step is the identification of operating expenses that will benefit construction or development activities. A separate determination is made for each division. The process relies on bu...

AI summary The document discusses the determination of eligible overhead expenses, focusing on the allocation of operating expenses benefiting construction or development activities. It references past approvals by the Public Utilities Board and UARB for using direct labour costs to allocate overhead expenses to capital projects.

10 Shared Services Division Eligible Overhead Expenses and rates are calculated for each Shared Services Division deemed to have capital related labour and expenses. These eligible expenses include, but are not limited to, office supplies,...

AI summary The Shared Services Division calculates eligible overhead expenses and rates for divisions with capital-related labour and expenses, including office supplies, training, rent, and membership dues.

DETERMINATION OF CAPITAL-RELATED OVERHEAD EXPENSES - Once the Eligible Overhead Expenses have been determined, the overhead expenses related to the Company's capital activities must be calculated. This calculation involves prorating the re...

AI summary The document outlines the process for determining capital-related overhead expenses by prorating eligible overhead expenses based on contractor labour relative to total labour. It also explains how self-constructed overhead costs are avoided through a specific calculation method.

APPLICATION OF ADMINISTRATIVE OVERHEAD (CONTRACTED ASSETS) - 6235

AI summary The document discusses the application of administrative overhead related to contracted assets, likely involving Nova Scotia Power Inc. and the Nova Scotia Utility and Review Board. It includes references to accounting principles and regulatory processes.

CALCULATION OF OVERHEAD APPLICATION RATE Once the Capital-related Overhead Expenses have been determined, the overhead application rate can be calculated. The application rate is simply the quotient, expressed as a percentage, of the Capit...

AI summary The overhead application rate is calculated by dividing Capital-related Overhead Expenses by contract costs, expressed as a percentage. This calculation is essential for determining how overhead costs are applied to specific projects or contracts.

APPLICATION OF OVERHEAD The overhead charged to a particular project is determined by multiplying the contract costs charged to the project by the appropriate overhead application rate. The charge is debited to a Capital Work Order while t...

AI summary The overhead charged to a project is determined by multiplying the contract costs by the appropriate overhead application rate. The overhead is debited to a Capital Work Order and credited to Operating, Maintenance and General Expenses. Specific examples and calculations are deleted from the text.

ASSET RETIREMENTOBLIGATIONS (ARO) - 6320

AI summary The document discusses Asset Retirement Obligations (ARO) under the Nova Scotia Power Inc. (NSPI) context, focusing on accounting standards and regulatory considerations related to long-term liabilities for asset retirement.

ASSETS - NOT USED AND USEFUL - 6350 Assets not currently used, but expected to be used in providing service in the future will provide value to customers at a future date. Accordingly, the cost of the asset is to be matched to the future p...

AI summary The document discusses the accounting treatment of assets not currently used but expected to be used in the future. It outlines that the cost of such assets should be matched to future periods when they provide value. Excess costs may be written off or deferred with UARB approval, and depreciation is deferred until the asset is returned to service. Maintenance costs during the out-of-service period are expensed as incurred, with some exceptions for significant costs that may be deferred.

Page 2: [1] Deleted ag986 11/17/2009 4:29:00 PM Asset Group Level of Detail Steam and Gas Turbine Production Plant Total by individual generating station Hydro Production Plant Total by individual hydro system Mass Property (Transmission,...

AI summary The document outlines the categorization of asset groups and their levels of detail, including Steam and Gas Turbine Production Plant, Hydro Production Plant, and Mass Property. It also mentions 'Deferred Charges,' indicating a focus on accounting and financial practices.

MATCHING NOTES - 11 Matching Notes will remain on the books of the Company until such time as it makes payment of the principal amount of Matching Notes that mature or are redeemable prior to December 31, 1997, to NSPFC. NSPFC, upon receip...

AI summary The document outlines the accounting and procedural handling of Matching Notes by the Company and NSPFC. It details how Matching Notes are managed, including their conversion to contingent liabilities upon defeasance, the process for transferring funds upon maturity or redemption, and the release of sinking fund assets. The Company remains responsible for any deficiencies in defeasance assets.

Page 1: [6] Deleted AI141 9/15/2010 1:53:00 PM - 17 Depending on interest rates prevailing at the time of defeasance of the Matching Notes, the Company may incur costs to effect such defeasance including, but not limited to, (i) the differ...

AI summary The document outlines the potential costs incurred by the Company during the defeasance of Matching Notes, including the difference between the cost of acquiring Defeasance Assets and the principal amount of the notes, as well as fees and transaction costs. It also describes how these costs will be amortized and the Company's right to sell and replace Defeasance Assets.

r 22, 2010. Please confirm if the Board's summary of the process and proposed approvals are correct. In addition, the Board has the following questions about the May 14 and September 15 submissions: - 1. Re: Cost Allocation Policy 1570 In...

AI summary The Board is seeking clarification on several accounting policy and procedure issues related to Nova Scotia Power Inc., including cost allocation, generic account usage, R&D expensing, fuel and power purchase accounting, capitalization of costs, and construction work in progress tolerances.

National Instrument 52-107 The Canadian Securities Administrators' securities regulation entitled National Instrument 52-107 Acceptable Accounting Principles and Auditing Standards ("NI 52- 1 07"), which has been adopted by the Nova Scotia...

AI summary National Instrument 52-107 allows NSPI to prepare financial statements under US GAAP if it is an SEC issuer. NSPI became an SEC issuer after filing a registration statement under the U.S. Securities Act in July of this year.

Tel: (416) 865-0200 Fax: (416) 865-0887 www.bdo.ca BDO Canada LLP Royal Bank Plaza, South Tower 200 Bay Street. 33rd Floor PO Box 32 Toronto, ON M5J 2J8 Canada December 9th, 2010 Nancy McNeil Regulatory Affairs Officer/Clerk Nova Scotia Ut...

AI summary BDO Canada LLP confirms that the proposed changes to Nova Scotia Power Inc.'s Accounting Policies and Procedures Manual do not appear unreasonable or provide an unfair advantage. The report highlights differences between US GAAP and Canadian GAAP, particularly regarding termination costs, employee benefits, and investment tax credits. BDO recommends monitoring the first US GAAP statements for transitional changes.

The following table summarizes the proposed changes to NSPI's Accounting Manual within Submission 1 by section: SECTION COMMENTS 1000: Introduction Reference from Canadian GAAP to US GAAP in paragraph 06 is the only change in this section...

AI summary The document outlines proposed changes to NSPI's Accounting Manual in Submission 1, primarily driven by the transition to US GAAP. The changes include updates to references, definitions, and policies in several sections, with specific impacts noted for financial instruments and hedges.

II BACKGROUND [4] On May 14, 2010, NSPI submitted amendments to the Manual, which reflect NSPl's current accounting policies and procedures, for Board approval. Updated language was incorporated to reflect changes in processes and other de...

AI summary NSPI submitted amendments to its accounting manual in 2010, reflecting a shift to US GAAP for external financial reporting starting in 2011. This decision was influenced by uncertainty around the adoption of IFRS under C-GAAP and was approved by Emera's Board of Directors. KPMG and Grant Thornton were involved in the transition process.

The following was noted: - .. A minor change in management judgment and assumptions could materially impact the amounts capitalized. - .. Changes in judgment or assumption and a resulting increase or decrease in costs capitalized is not ne...

AI summary The text highlights that minor changes in management judgment and assumptions could significantly affect capitalized amounts, and that variations in these judgments do not necessarily indicate greater or lesser accuracy.

MATERIALITY LIMITS - 02 Nova Scotia Power Inc. ("NSPI") sets materiality levels by major financial statement areas to facilitate the processing of large volumes of transactions. Procedures for implementing the materiality policy for these...

AI summary Nova Scotia Power Inc. (NSPI) establishes materiality levels for major financial statement areas to handle large transaction volumes efficiently. Capitalization limits are outlined in NSPI's Accounting Policy and Procedures Manual, Section 1560A.

POLICIES - 04 Expenditures for amounts less than the stated capitalization limits should be charged to operations as they are incurred. - 05 When additional costs associated with capitalizing immaterial amounts exceed the benefits of provi...

AI summary The policies outline that expenditures below specified capitalization limits should be charged to operations as incurred, and that expensing all costs may be appropriate if the benefits of providing detailed information do not outweigh the additional costs.

CAPITALIZATION LIMITS - 1560A

AI summary The document discusses capitalization limits under the heading 'CAPITALIZATION LIMITS - 1560A', though the content is not fully visible due to the image reference. It likely involves regulatory considerations related to capital expenditures and financial accounting standards.

SUMMARY OF CAPITALIZATION LIMITS 01 The following table summarizes the capitalization limits by major function. These limits refer to total cost of acquisition including installation. Please refer to the Capital Expenditure Justification C...

AI summary The text outlines capitalization limits by major function, stating that items under these limits are expensed. It references the Capital Expenditure Justification Criteria submitted to the Nova Scotia Utility and Review Board in 1995 and revised in 1997.

Function Capitalization Level NSPI Accounting Policy and Procedures Manual Reference Thermal Generation $25,000 Hydro 5,000 Gas Turbines 5,000 Transmission 5,000 Distribution 1,000 6000 Buildings 2,000 Tools 1,000 Transportation Equipment...

AI summary The document outlines various capitalization levels for different assets and functions within Nova Scotia Power Inc. (NSPI), including thermal generation, transmission, distribution, and software development, along with references to the UARB approval process for certain expenditures and asset management.

COST ALLOCATION POLICY – 1570 - 35 Regulated refers to services or products that are subject to price regulation by regulatory authorities. - 36 Non-Regulated refers to services or products that are not subject to price regulation by regul...

AI summary The document defines key terms related to cost allocation policy, including 'Regulated,' 'Non-Regulated,' and 'Total Capitalization.' These definitions are essential for understanding how costs are allocated between regulated and non-regulated services and products.

STATEMENT OF CASH FLOW - 2100

AI summary The document presents the Statement of Cash Flow - 2100, which outlines the cash inflows and outflows for a specific period. It includes details related to operating, investing, and financing activities, as well as changes in cash and cash equivalents.

POLICY - 02 The statement of cash flows shall report the cash effects during a period of an entity's operations, its investing transactions, and its financing transactions.2 - 03 Nova Scotia Power Inc. ("NSPI") applies the indirect method...

AI summary The document outlines the requirements for the statement of cash flows under Nova Scotia Power Inc.'s accounting practices, specifying the use of the indirect method and adherence to FASB ASC 230 guidelines. It lists the mandatory disclosures, including cash from operations, discontinued operations, and debt-related transactions.

FORMAT - 06 Cash flows from operating activities generally involve producing and delivering goods and providing services. Cash flows from operating activities are generally the cash effects of transactions and other events that enter into...

AI summary The text outlines the classification of cash flows into operating, financing, and investing activities, detailing the types of transactions associated with each category. It also mentions the disclosure requirements for interest and income taxes paid, as well as the treatment of discontinued operations and extraordinary items.

POLICIES - 05 Pension obligations and obligations associated with non-pension post-retirement benefits such as health benefits to retirees and retirement awards, are actuarially determined using the projected benefit method prorated on ser...

AI summary The text outlines the accounting and actuarial methods used by Nova Scotia Power Inc. for pension obligations and post-retirement benefits. It describes how obligations are determined, adjusted, and amortized, as well as the recognition of plan surpluses and deficits on financial statements.

09 Project Segment The final segment is the four-digit project identifier. The project identifier is optional for operating expenses, but can be used to track specific short-term operating projects. Sequential numbers are assigned to opera...

AI summary The final segment of the project identifier is a four-digit code used to track operating and capital projects. Operating expenses can use it optionally, while capital items require it. The first character denotes the function, and the last three characters represent a capital work order number.

GENERAL 01 Generic accounts simply provide a higher level summary of Nova Scotia Power Inc.'s ("NSPI's or the Company's") asset accounts than the break down furnished by the capital and intangible activities. The format conforms to the acc...

AI summary The document explains that generic accounts provide a high-level summary of NSPI's asset accounts, following FERC standards. A cross-reference table in NSPI's Accounting Policy and Procedures Manual 3350A maps these accounts to internal tracking activities for the UARB.

Land and Land Rights - 03 Includes the cost of land owned and the rights, interests and privileges held by the Company in land owned by others. Land and land rights shall be classified within the function according to the major purpose for...

AI summary The text outlines accounting guidelines for land and land rights, including how costs are apportioned, when charges are applied to land accounts, and how proceeds from land sales are credited. It includes specific rules for special assessments, land acquisitions, building removal, and salvage value.

Buildings, Structures and Grounds - 04 Includes the installed cost of all permanent structures, services and improvements used to house, support, or safeguard property or persons. Also includes those items that are permanently attached to...

AI summary The text outlines the accounting treatment for buildings, structures, and grounds, including apportionment of costs between land and buildings, charging of removal and salvage costs, and how various construction-related expenses are accounted for. It provides detailed guidelines for categorizing and recording these costs.

Miscellaneous Equipment 05 Includes the installed cost of all miscellaneous items that cannot be attributed to any other specific property unit.

AI summary The section outlines that the installed cost of miscellaneous items, which cannot be attributed to any other specific property unit, is included in the calculation.

Indirect Costs 06 Includes administrative/financial costs of construction (allowance for funds used during construction, administrative overheads, inspections, traffic control, pole stacking, etc.) plus all costs associated with the design...

AI summary The text defines indirect costs as including administrative and financial construction costs, such as allowances for funds used during construction, overheads, inspections, and project management expenses, along with design and survey costs.

Capital Contributions 07 Includes the value of cash or assets received to defray the cost of construction of an asset for customer use. This can take the form of cash payments or asset title transferred to the Company.

AI summary Capital contributions refer to the value of cash or assets received to cover the cost of constructing an asset for customer use, which can be in the form of cash payments or asset title transferred to the company.

Boiler Plant Equipment - 11 Includes the installed cost of the following major equipment used for the production of steam to be used primarily for generating electrical energy: - a. Furnaces - b. Boilers - c. Fuel Preparing Equipment - d....

AI summary The text outlines the major equipment included in the installed cost for a boiler plant, which is used primarily for generating electrical energy. The equipment listed includes furnaces, boilers, fuel preparing equipment, fuel and ash handling equipment, and steam and feedwater piping.

Roads, Trails and Bridges 13 Includes the cost of all permanent roads, trails and bridges required to provide access for people and equipment to the Company's buildings, dams and other facilities.

AI summary The text discusses the inclusion of the cost of permanent roads, trails, and bridges required for access to the Company's buildings, dams, and other facilities.

Poles, Towers and Fixtures 16 Includes the installed cost of all poles, towers and associated fixtures used primarily to support distribution and transmission overhead facilities and their connection to underground systems. This account in...

AI summary This section discusses the accounting for poles, towers, and fixtures used in distribution and transmission systems, specifying that costs are included if they support overhead facilities and their connection to underground systems, but excludes poles used solely for street and highway lighting.

Line Transformers - Overhead 18 Includes the installed cost of all transformers and associated equipment used in the transformation of electrical energy in the transmission and distribution overhead system to a voltage that can be used by...

AI summary The text defines the scope of 'Line Transformers - Overhead' as including the installed cost of all transformers and associated equipment used in the transformation of electrical energy in the transmission and distribution overhead system to a voltage suitable for customer use.

Station Equipment 19 Includes the installed cost of all equipment used for the purpose of changing the characteristics (voltage, etc.) of electricity in the distribution level of voltage. This account also includes the cost of buildings er...

AI summary This section describes the 'Station Equipment' account, which includes the installed cost of equipment used to modify the characteristics of electricity at the distribution level, as well as the cost of buildings primarily used for substation functions.

Line Transformers - Underground 22 Includes the installed cost of all transformers and associated equipment used in the transformation of electrical energy in the underground system to a voltage which can be used by the customer.

AI summary The text defines the inclusion of the installed cost of all transformers and associated equipment used in the underground system for voltage transformation for customer use.

Street Lighting 23 Includes the installed cost of all equipment used entirely for the unmetered street and highway lighting systems.

AI summary The text refers to the inclusion of the installed cost of all equipment used entirely for unmetered street and highway lighting systems.

Communication Equipment 26 Includes the installed cost of all radio, telephone and microwave equipment for use within the Company.

AI summary The text specifies that communication equipment includes the installed cost of radio, telephone, and microwave equipment used within the Company.

Leases and Leasehold Improvements 31 Includes the installed cost of all leases and leasehold improvements.

AI summary The text refers to the inclusion of the installed cost of all leases and leasehold improvements in a regulatory proceeding document from Nova Scotia.

GENERIC ACCOUNT ACTIVITY CODE STM (S) GAS (G) HYD (H) TRN (T) DIST (DP) GEN (P) WIND (W) Land and Land Rights Land 001 X X X X X X Land Rights 002 X X X X X X X Buildings, Structures & Grounds Buildings, Structures & Grounds 003 X X X X X...

AI summary The document presents a table outlining various generic accounts and their associated activities, codes, and classifications across different sectors such as land, buildings, equipment, and infrastructure. It includes details on classifications for financial reporting purposes.

DEPRECIATION AND AMORTIZATION EXPENSE - 5300 - 09 The remaining life is forecasted through the use of mortality statistics that determine the best fit Iowa Curve which gives the expected retirement characteristics. This technique is applie...

AI summary The document discusses the forecasting of remaining life for production plant assets using mortality statistics and the Iowa Curve technique, as well as the annual filing of depreciation and amortization rates with the UARB as part of the Annual Capital Expenditures Plan.

03 Debt Issue Costs The issue of long-term debt is usually an involved process in which the Company may retain the services of brokers, lawyers and auditors. Since the cost of using these services can be significant and provide future bene...

AI summary The text explains that under US GAAP, costs associated with issuing long-term debt, such as those for brokers, lawyers, and auditors, must be deferred and amortized over the life of the debt. Premiums, discounts, and commissions are deferred, while other costs are expensed in account 084 bank charges.

06 Long-term Debt - Interest Expense Long-term debt interest expense includes interest on Nova Scotia Power Inc. ("NSPI") debentures and medium term notes. Interest expense is accrued monthly based on a 30-day months whether interest payme...

AI summary This section discusses the accounting treatment of long-term debt interest expense for Nova Scotia Power Inc. (NSPI), including the accrual of interest monthly based on a 30-day month, regardless of the payment schedule.

07 Amortization of Long-term Debt Issue Costs The Company defers costs associated with the issuance of long-term debt including commissions, discounts/premiums and legal and audit fees, if significant. These costs are amortized monthly usi...

AI summary The Company defers significant costs related to the issuance of long-term debt, such as commissions and legal fees, and amortizes them monthly using the effective interest rate method over the life of the debt.

08 Short-term Interest Short-term interest includes all interest, commissions, stamping fees, overdraft charges associated with the issuance of commercial paper, banker's acceptances, hedge settlements, and prime loans These costs are expe...

AI summary Short-term interest refers to interest and related costs incurred from financing activities such as commercial paper, banker's acceptances, and prime loans. These costs are expensed or amortized monthly based on the number of days of the associated debt.

DEFINITION 01 Capital assets include identifiable assets such as property, plant and equipment or intangible assets that are held for use in the production or supply of goods and services. They are intended for use on a continuing basis an...

AI summary Capital assets are defined as identifiable assets, such as property, plant, and equipment or intangible assets, held for use in the production or supply of goods and services and not intended for sale in the ordinary course of business.

GENERAL - 02 An expenditure must create a benefit having a life of more than one year to be considered capital. Annual fees or maintenance costs do not create an asset; they simply maintain the existing asset base and should be expensed an...

AI summary The text defines capital expenditures as those that create long-term benefits and are not expensed immediately but capitalized as assets. It outlines criteria for capitalizing expenditures, such as extending asset life, increasing capacity, or reducing operating costs. Capital expenditures are accounted for through depreciation and amortization over their useful life.

POLICIES 07 Expenditures meeting the criteria described in Paragraphs 02, 03 and 06 create a benefit that will be realized by the Company beyond the current year. Accordingly, they should be capitalized. - 08 Every expenditure must be clas...

AI summary This section outlines the policies for classifying expenditures as capital or operating, emphasizing that capital expenditures are those that provide benefits beyond the current year and should be capitalized. It also mentions the use of materiality policies and references specific accounting procedures and manuals for guidance.

POLICY 02 A capital asset should be recorded at cost.1 - 03 The cost of a capital asset includes all expenditures necessary to place the asset in service. Therefore, cost not only includes the purchase price, but also other acquisition cos...

AI summary The document outlines the accounting treatment for capital assets, stating that they should be recorded at cost, which includes purchase price and all other expenditures necessary to place the asset in service. This includes items such as installation costs, legal fees, and carrying costs during construction, which are calculated using an allowance for funds used during construction (AFUDC).

COST COMPONENTS AND ELEMENTS - 6140

AI summary The document outlines the cost components and elements related to utility operations, focusing on financial accounting standards, regulatory considerations, and cost recovery mechanisms. It includes discussions on capital expenditures, depreciation, and return on equity.

COST COMPONENTS Cost components represent examples of the types of major pieces of equipment included in each capital activity. They are created through detailed consultation with our asset builders and maintainers, and conform to Federal...

AI summary The document outlines cost components as major pieces of equipment included in capital activities, developed through consultation with asset builders and maintainers and aligned with FERC standards.

COST ELEMENTS Cost elements are examples of the minor pieces of equipment or expenses included in the capital activities.

AI summary The section discusses cost elements as minor pieces of equipment or expenses included in capital activities, providing an overview of the components involved in capital expenditures.

Cost Elements for both (001) and (002) Appraisal costs prior to closing title Arbitrator, in the case of expropriation Bulkheads - buried and not requiring maintenance/replacement Clearing land for lines Condemnation proceedings including...

AI summary The document outlines various cost elements associated with the acquisition and development of assets, including appraisal costs, legal fees, expropriation expenses, and other related expenditures. These costs are relevant for both (001) and (002), indicating their significance in the regulatory proceeding.

Cost Components Airport (Heliport) Bridges Buildings– Superstructure Excavation Fencing Fire, Escape& Protection Plant Cleaning System Plumbing System Roads & Sidewalks Canals Foundation Roof Dams Docks & Wharves Drainage & Sewer Sys. HVAC...

AI summary The text lists various infrastructure components, including buildings, roads, water systems, and electrical systems, likely related to cost categorization or capital expenditures in a regulatory context.

Miscellaneous Equipment (004) Cost Components Barge, Boat, etc. Laboratory Equipment Tools Comm. Equipment Miscellaneous Equipment Cost Elements Public Address System Glassware Lathes Measuring Device Welders Capital Contributions (006) Co...

AI summary The document outlines various cost components and elements related to different equipment and installations, including miscellaneous equipment, capital contributions, environmental equipment, and turbogenerator installation. It lists items such as public address systems, fish ladders, and condensing and cooling water systems, along with their associated costs.

Circulating Water System (014) Cost Components Tanks Clarifier Demineralizer Polishers Cost Elements Controls Meters Wiring Foundations Valves

AI summary The text outlines the cost components of a Circulating Water System, listing elements such as tanks, clarifier, demineralizer, polishers, controls, meters, wiring, foundations, and valves. It provides a brief overview of the infrastructure and associated costs.

Land Drainage (029) Cost Components Aboiteau Pump Cost Elements Electrical Equipment Foundations Excavation Gas Turbine Engines (030) Cost Components Combustion Equipment Foundation Starting System Engine Generator Fire Ext. Equipment Stac...

AI summary The text lists various infrastructure components and cost elements related to different energy and utility projects, including aboiteau pumps, gas turbine engines, wind generating installations, and district heating and cooling systems. It provides a breakdown of cost elements such as foundations, excavation, and electrical components.

Cost Components Cabinets Isolation Transformers Conduit Junction Boxes Fibre Optic Cable Systems Lightning Protectors High Voltage Protection Panels Cost Elements Cable Connectors Wiring

AI summary The text lists various components and cost elements related to electrical infrastructure, including cabinets, isolation transformers, conduit junction boxes, fibre optic cable systems, and high voltage protection panels. It also mentions wiring and cable connectors as part of the cost elements.

Cost Elements Belts Hoppers Controls Measuring devices Filters Motors Foundations Wiring

AI summary The text lists various components related to cost elements, including equipment and infrastructure such as belts, hoppers, controls, measuring devices, filters, motors, foundations, and wiring. These items are likely part of a larger discussion on capital expenditures or operational costs.

WORK ORDER PROCESS - 02 The following steps portray the capital asset cycle at Nova Scotia Power Inc. ("NSPI"). - a. Prepare budget item and enter into Power Plant 1 ("PP") as a Capital Item ("CI"); - b. Review and revise the CI item (if n...

AI summary This section outlines the work order process at Nova Scotia Power Inc. (NSPI), detailing the steps for preparing and approving capital items, including budgeting, review by the Investment Review Team (IRT), and regulatory approval by the Nova Scotia Utility and Review Board (UARB).

CONSTRUCTION WORK IN PROGRESS - 6200 - k. Set up the capital work order in CWIP; - l. Summarize and control charges; - m. Change status of work order from CWIP to Operational ("OPS") when asset goes in service and is being used to generate...

AI summary The document outlines procedures for managing construction work in progress (CWIP), including setting up capital work orders, controlling charges, transitioning assets to operational status, finalizing costs, and depreciating or retiring assets once projects are complete.

POLICY 02 The cost of land must be accounted for separately from other capital assets due to its unique life characteristics. - 03 The following are costs which must be considered in determining the total value of a land purchase: - a. Pur...

AI summary The document outlines the need to account for land costs separately from other capital assets, listing various costs associated with land purchases, including purchase price, appraisal fees, legal fees, and environmental assessments. Land acquisition is handled through capital work orders, similar to other capital assets.

POLICY - 01 Purchases of computer hardware and software, and telecommunications equipment as well as software development projects with a cost in excess of the amount prescribed in NSPI Accounting Policy and Procedures Manual 1560A should...

AI summary The document outlines capitalization criteria for purchases of computer hardware, software, and telecommunications equipment by NSPI, emphasizing that costs exceeding those in Accounting Policy and Procedures Manual 1560A should be capitalized. It also details costs associated with large software development projects.

CAPITAL CONTRIBUTIONS IN AID OF CONSTRUCTION - 6220

AI summary The document discusses capital contributions in aid of construction, focusing on financial mechanisms and accounting standards related to infrastructure projects. It includes references to regulatory bodies and financial terms relevant to energy and utility sectors.

DEFINITION - 01 Capital contributions in aid of construction include the value of cash, other assets and/or services received to defray the construction costs of capital assets. These contributions are generally received from two sources:...

AI summary Capital contributions in aid of construction refer to financial or in-kind support received from customers or government entities to cover the costs of building capital assets.

GENERAL - 02 The Company has an obligation to provide electric service to the consuming public in the most cost effective manner. This obligation is discharged when a customer group receiving special services pays for the cost of those ser...

AI summary The Company is obligated to provide electric service in the most cost-effective manner, ensuring no customer group subsidizes another. Policies in the Rate and Regulations Manual govern the maximum distances for service extension, with special considerations for costs exceeding these limits, including customer capital contributions and factors like location, safety, and return on investment.

POLICIES - 05 Contributions in aid of construction should be offset against the property, plant or equipment to which they relate so that the net amount is depreciated and included in rate base. - 06 If a relationship to a specific asset c...

AI summary The text outlines policies for handling contributions in aid of construction, specifying that they should be offset against related property, plant, or equipment and amortized appropriately. If no specific asset is identified, they should be offset against 'Assets in Service' by function and amortized at the composite rate of the relevant asset class.

GENERAL - 01 Overhead expenses are integral costs associated with the construction of capital assets. As per NSPI's Accounting Policy & Procedures Manual Section 6100 – Cost, the cost of a capital asset not only includes direct constructio...

AI summary Overhead expenses are essential in the construction of capital assets and must be allocated to capital projects. The Nova Scotia Utility and Review Board has historically approved the allocation of overhead costs based on direct labour costs, as established in a 1982 ruling by the Public Utilities Board.

POLICY 04 The Company should apply "Capital-related Overhead Expenses" to capital projects based on the direct labour costs charged to those projects

AI summary The document states that the Company should apply 'Capital-related Overhead Expenses' to capital projects based on the direct labour costs charged to those projects.

IDENTIFICATION OF DIVISIONS 05 The first step in the application of overhead costs to capital projects is the disaggregation of Nova Scotia Power Inc.'s ("NSPI's") Annual Capital Expenditure Plan ("ACE Plan") into several broad areas of re...

AI summary The first step in applying overhead costs to capital projects involves disaggregating NSPI's Annual Capital Expenditure Plan into three divisions: Customer Operations, Power Production, and Shared Services. Shared Services includes Information Technology.

DETERMINATION OF ELIGIBLE OVERHEAD EXPENSES 06 The next step is the identification of operating expenses that will benefit construction or development activities. A separate determination is made for each division. The process relies on bu...

AI summary The document outlines the process for identifying operating expenses that benefit construction or development activities, with a separate determination made for each division based on budgeted information.

APPLICATION OF ADMINISTRATIVE AND VEHICLE OVERHEAD (SELF - CONSTRUCTED ASSETS) - 6230 expense figures since the overhead application rate for a particular fiscal year must be determined before the year commences.

AI summary The document discusses the necessity of determining the overhead application rate for a fiscal year before the year begins, ensuring accurate expense figures for administrative and vehicle overhead related to self-constructed assets.

DETERMINATION OF CAPITAL-RELATED OVERHEAD EXPENSES 11 Once the Eligible Overhead Expenses have been determined, the overhead expenses related to the Company's capital activities must be calculated. This calculation involves prorating the e...

AI summary The document discusses the determination of capital-related overhead expenses, emphasizing the need to calculate these expenses after identifying eligible overhead expenses. It refers to Nova Scotia Power Inc.'s accounting policy manual for a detailed discussion of the general ledger account structure.

CALCULATION OF OVERHEAD APPLICATION RATE 13 Once the Capital-related Overhead Expenses have been determined, the overhead application rate can be calculated. The application rate is simply the quotient, expressed as a percentage, of the Ca...

AI summary The overhead application rate is calculated by dividing capital-related overhead expenses by capital labour costs, expressed as a percentage. This calculation is performed separately for each division after determining the capital-related overhead expenses.

APPLICATION OF OVERHEAD 15 The overhead charged to a particular project is determined by multiplying the labour costs charged to the project by the appropriate overhead application rate. The charge is debited to a Capital Work Order while...

AI summary The overhead charged to a project is determined by multiplying labour costs by the appropriate overhead application rate, with the charge debited to a Capital Work Order and credited to Operating, Maintenance and General Expenses.

APPLICATION OF ADMINISTRATIVE OVERHEAD (CONTRACTED ASSETS) - 6235

AI summary The document pertains to the application of administrative overhead for contracted assets, likely involving financial and regulatory considerations related to Nova Scotia Power Inc. and the Nova Scotia Utility and Review Board.

08 Power Production Division Eligible Overhead Expenses for Power Production include all costs incurred by the Division's head office cost centres as well as the costs included in the administration cost centres for all operational generat...

AI summary The Power Production Division's eligible overhead expenses include costs from head office cost centres and administration cost centres for all operational generating stations.

09 Shared Services Division Eligible Overhead Expenses and rates are calculated for each Shared Services Division deemed to have capital related labour and expenses. These eligible expenses include, but are not limited to, office supplies,...

AI summary The Shared Services Division calculates eligible overhead expenses and rates for divisions with capital-related labour and expenses, including office supplies, training, rent, and materials.

DETERMINATION OF CAPITAL-RELATED OVERHEAD EXPENSES - 10 Once the Eligible Overhead Expenses have been determined, the overhead expenses related to the Company's capital activities must be calculated. This calculation involves prorating the...

AI summary The text outlines the process for determining capital-related overhead expenses, including prorating eligible overhead expenses based on contractor labour and avoiding double application of self-constructed overhead costs.

ALLOWANCE FOR FUNDS USED DURING CONSTRUCTION - 6240

AI summary The document discusses the Allowance for Funds Used During Construction (AFUDC), a financial mechanism used in the construction of power plants. It outlines the calculation and application of AFUDC, which is influenced by factors such as the Weighted Average Cost of Capital (WACC) and the Return on Equity (ROE).

GENERAL - 01 The cost-of-capital invested in construction work in progress is included in an allowance for funds used during construction 1 ("AFUDC") as an addition to the cost of property constructed using a weighted average cost-of-capit...

AI summary The text discusses the inclusion of the cost-of-capital in construction work in progress through the allowance for funds used during construction (AFUDC). This cost is added to the asset's value and recovered over time through depreciation and future revenues, ensuring equitable recovery of financing costs.

POLICY - 04 Allowance for funds used during construction should be capitalized at the effective cost-of-capital rate, compounded semi-annually, except in the following circumstances: - a. Projects that will be under construction for less t...

AI summary The text discusses the capitalization of the Allowance for Funds Used During Construction (AFUDC) at the effective cost-of-capital rate, compounded semi-annually, with exceptions for projects under short construction timelines, those delayed by extraordinary circumstances, and those where capitalization would exceed economic value or future benefits.

05 Criteria for Application AFUDC is applied to all capital work orders with the following exceptions: - a. work orders with a construction period less than two months ( e.g. routine work orders); - b. work orders used to purchase assets t...

AI summary AFUDC is applied to all capital work orders except for specific exceptions such as routine work, immediate in-service assets, land purchases, fully customer-funded projects, deferred work, and retirement work orders.

06 Basis for Application The application base for AFUDC includes the cumulative total of all direct and indirect charges to work orders, but excludes all AFUDC related to spending subsequent to January 1 or July 1, whichever is the latest....

AI summary The application base for AFUDC includes cumulative direct and indirect charges to work orders, excluding AFUDC related to spending after January 1 or July 1, whichever is later. This exclusion leads to semi-annual compounding of AFUDC.

07 Timing of Application AFUDC application begins in the month in which a work order receives charges and continues until the month the work order becomes operational plant. On most work orders, AFUDC is applied at the full rate to cumulat...

AI summary The application of AFUDC begins when a work order receives charges and continues until it becomes operational. For most work orders, AFUDC is applied at the full rate to cumulative charges each month, while major capital work orders consider the actual start and operational dates.

08 Calculation of AFUDC Rate The rate used to capitalize AFUDC is the Company's weighted average cost of capital before tax . The rate is calculated annually, in advance, by dividing the forecasted annual interest expense, preferred divide...

AI summary The AFUDC rate is calculated using the Company's weighted average cost of capital before tax, determined annually by dividing forecasted interest expense, preferred dividends, and net earnings by average debt and equity. The annual rate is then divided by twelve to obtain the monthly rate.

ASSET RETIREMENTOBLIGATIONS (ARO) - 6320

AI summary The document discusses Asset Retirement Obligations (ARO) under the Nova Scotia Utility and Review Board (UARB). It includes references to accounting standards and regulatory frameworks applicable to Nova Scotia Power Inc. (NSPI) and Nova Scotia Power Corporation (NSPC).

NOT USED BUT USEFUL FOR FUTURE USE - 12 Assets meeting the following criteria are included in this category: - a. they do not currently provide service to the consuming public; and - b. they are expected to be used and useful in providing...

AI summary The text outlines accounting treatment for assets not currently in service but expected to be used in the future. It discusses depreciation deferral, cost recovery, and the handling of excess costs and mothballing expenses, with reference to regulatory approval by the UARB.

RETIREMENT AND DISPOSAL OF CAPITAL ASSETS - 6420

AI summary The document discusses the retirement and disposal of capital assets, focusing on accounting standards, asset management, and financial considerations related to capital expenditures and asset retirement obligations.

02 Asset Retirement Obligations ("AROs") An asset retirement obligation is an obligation associated with the retirement of a tangible long-lived asset. 1 These costs include but are not limited to labour, materials, overhead and vehicle ex...

AI summary An asset retirement obligation (ARO) refers to the costs associated with retiring a tangible long-lived asset, including labour, materials, overhead, and vehicle expenses.

03 Removal Costs Removal costs refer to the charges associated with removing a retired asset from its in-service location. These costs include but are not limited to labour, materials, overhead and vehicle expenses.

AI summary Removal costs are the expenses incurred when retiring an asset, including labour, materials, overhead, and vehicle expenses.

06 Retirement Work Order Retirement costs can be recorded in a retirement work order or in a new capital work order. Retirement work orders are used to collect all retirement costs and salvage values associated with a retirement project. T...

AI summary Retirement work orders are used to record retirement costs and salvage values for retirement projects, following the same approval process as new capital work orders. These accounts capture retirement, salvage, and original cost amounts within new capital work orders.

PROPERTY, PLANT AND EQUIPMENT RETIREMENT AND DISPOSAL OF CAPITAL ASSETS - 6420 13 When a work order has received final cost approval, an entry is made for the final disposition of charges to capital assets in service and accumulated deprec...

AI summary This section describes the process for final disposition of charges to capital assets in service and accumulated depreciation after a work order has received final cost approval.

GAIN OR LOSS ON DISPOSITION OF CAPITAL ASSETS - 6440

AI summary The document focuses on the gain or loss on the disposition of capital assets, likely involving financial accounting and asset management practices relevant to utility companies in Nova Scotia.

PROCEDURES 03 Please refer to NSPI's Accounting Policy & Procedures Manual Section 6420 for the procedures to record the retirement of capital assets.

AI summary The document refers to NSPI's Accounting Policy & Procedures Manual Section 6420 for procedures on recording the retirement of capital assets.

Materials - 04 Materials are accounted for using a computerized perpetual inventory system. Purchases are recorded at cost and issues are charged to capital or operating accounts at average cost. - 05 Physical counts are performed on a rot...

AI summary Materials are accounted for using a perpetual inventory system with purchases recorded at cost and issues charged to capital or operating accounts. Physical counts are conducted periodically, and adjustments are expensed. Storerooms are charged monthly interest based on the company's average short-term borrowing cost.

NEW BUSINESS COSTS - 6940

AI summary The document discusses new business costs related to Nova Scotia Power Inc. (NSPI) and includes references to financial and regulatory processes. It involves topics such as return on equity, fuel adjustment mechanisms, and capital expenditures.

DEFINITION - 01 Start-up costs include all expenses incurred by Nova Scotia Power Inc. ("NSPI") for the development of business opportunities outside the Company's normal sphere of regulated generation and delivery of electricity. Start-up...

AI summary The document defines start-up costs for Nova Scotia Power Inc. (NSPI) as expenses incurred for developing business opportunities outside its normal regulated activities. It references FASB ASC 720-15-20 and 720-15-55 for guidance on accounting for such costs and other expenses.

POLICIES - 03 All start-up costs associated with the development of new business should be expensed. - 04 All NSPI employees who perform work on non-regulated activities should charge an overhead application rate as per NSPI's Accounting P...

AI summary The document outlines two policies: expensing start-up costs for new business development and requiring NSPI employees to apply an overhead rate for non-regulated activities as per the Accounting Policy and Procedures Manual.

PROCEDURES 05 All new business costs should be charged to an operating project. An Operating Project Approval Form can be obtained from Corporate Accounting Services ("CAS"). CAS will assign a new project number to collect costs associated...

AI summary The document outlines procedures for charging new business costs to an operating project, requiring the use of an Operating Project Approval Form obtained from Corporate Accounting Services, which assigns a new project number for cost collection.

DEFERRED CHARGES

AI summary The section discusses deferred charges, which are financial obligations that have been recognized but not yet paid. These charges are typically related to long-term assets and liabilities, and their treatment is governed by accounting standards and regulatory requirements.

DEFERRED CHARGES

AI summary The section discusses deferred charges, which are financial obligations that have been recognized but not yet paid. These charges are typically related to long-term assets and liabilities, and their treatment is governed by accounting standards and regulatory requirements.

TRANSITIONAL PROVISIONS - 34 This policy is effective January 1, 2011 and should be applied retroactively with restatement of prior periods except as outlined below. - 35 Any item of property, plant and equipment, construction work-in-prog...

AI summary This section outlines transitional provisions for applying the new policy retroactively from January 1, 2011, with specific guidance on handling prior period items, foreign exchange rate adjustments, and transitional adjustments related to derivatives and regulatory assets.

POLICY 03 Common equity, defined as common shares and retained earnings, should be used to maintain an overall capital structure that is within the range(s) approved by the Nova Scotia Utility and Review Board ("UARB"). - 04 The UARB defin...

AI summary The document outlines the use of common equity in maintaining the approved capital structure as defined by the Nova Scotia Utility and Review Board. Common shares and retained earnings are emphasized, with specific reference to the recording of share capital transactions in general ledger account 750.

LONG-TERM DEBT - 8100

AI summary The document section 'LONG-TERM DEBT - 8100' appears to be a regulatory proceeding chunk related to long-term debt, potentially involving Nova Scotia Power Inc. and other entities, though the specific content is not visible due to the image link.

ACCRUED INTEREST ON LONG-TERM DEBT - 8120

AI summary The document discusses the accrued interest on long-term debt, focusing on financial accounting and regulatory considerations related to Nova Scotia Power Inc. and Nova Scotia Power Corporation.

ACCOUNTS PAYABLE AND ACCRUED CHARGES - 8220

AI summary The document discusses accounts payable and accrued charges related to Nova Scotia Power Inc. and other entities, highlighting financial obligations and accounting standards relevant to the regulatory proceeding.

RECEIVED FEB 0 4 2011 February 4, 2011 Ms. Nancy McNeil Regulatory Affairs Officer/Clerk Nova Scotia Utility and Review Board 1601 Lower Water Street, 3 rd Floor Halifax, NS B3J 3P6 Nova Scotia Utility and Review Board Dear Ms. McNeil: Re:...

AI summary The document discusses the Nova Scotia Power Inc. (NSPI) submission of corrected accounting policy sections (5300 and 6200) in response to the Nova Scotia Utility and Review Board's (UARB) concerns regarding capital project approval tolerances and final cost approvals. NSPI confirms the corrected versions of the policies and explains that overspending on projects under $1 million will be reported quarterly, while larger projects require final cost approval.

DEPRECIATION AND AMORTIZATION EXPENSE - 5300 - 09 The remaining life is forecasted through the use of mortality statistics that determine the best fit Iowa Cwvewhich gives the expected retirement characteristics. This technique is applied...

AI summary The document discusses the forecasting of remaining life for production plant assets using mortality statistics and engineering studies, and notes that depreciation and amortization rates are filed annually with the Annual Capital Expenditures Plan to the UARB.

WORK ORDER PROCESS - 02 The following steps portray the capital asset cycle at Nova Scotia Power Inc. ("NSPI"). - a. Prepare budget item and enter into Power Plant 1 ("PP") as a Capital Item ("CI"); - b. Review and revise the CI item (if n...

AI summary The document outlines the work order process at Nova Scotia Power Inc. (NSPI), detailing steps from budget preparation to approval by the Nova Scotia Utility and Review Board (UARB), including different approval thresholds based on project cost.

CONSTRUCTION WORK IN PROGRESS - 6200 - k. Set up the capital work order in CWIP; - I. Summarize and control charges; - m. Change status of work order from CWIP to Operational ("OPS") when asset goes in service and is being used to generate...

AI summary The document outlines procedures for managing construction work in progress (CWIP), including setting up capital work orders, transitioning assets to operational status, final cost approval, and depreciation of property plant and equipment (PPE). It also mentions the need for UARB approval and authorization to overspend for large projects.

CAPITALIZATION LIMITS -1560A

AI summary The document discusses capitalization limits under the heading 'CAPITALIZATION LIMITS -1560A', though the content is not fully visible due to an image reference.

SUMMARY OF CAPITALIZATION LIMITS 01 The following table summarizes the capitalization limits by major function. These limits refer to total cost of acquisition including installation. Please refer to the Capital Expenditure Justification C...

AI summary The document provides a summary of capitalization limits by major function, including total acquisition costs. It references the Capital Expenditure Justification Criteria, submitted to the UARB in 1995 and revised in 1997, which outlines guidelines for capital expenditures, with items under the limits being expensed.

POLICY - 02 The statement of cash flows shall report the cash effects during a period of an entity's operations, its investing transactions, and its financing transactions. 2 - 03 Nova Scotia Power Inc. ("NSPI") applies the indirect method...

AI summary The text outlines the requirements for the statement of cash flows under Nova Scotia Power Inc. (NSPI), including the use of the indirect method and specific disclosures required in the financial statements.

STATEMENT OF CASH FLOW - 2100 - g. the payment of dividends on common shares; and - h. cash and cash equivalents.

AI summary This section of the Statement of Cash Flow outlines items related to the payment of dividends on common shares and the reporting of cash and cash equivalents.

POLICIES - 05 Pension obligations and obligations associated with non-pension post-retirement benefits such as health benefits to retirees and retirement awards, are actuarially determined using the projected benefit method prorated on ser...

AI summary The text outlines the accounting policies related to pension obligations and post-retirement benefits for Nova Scotia Power Inc. It discusses how these obligations are actuarially determined, adjustments are amortized, and how pension fund assets are valued. It also mentions the adoption of US accounting standards and the recognition of plan surpluses and deficits.

ACCOUNT STRUCTURE - 3100

AI summary This section discusses the account structure related to Nova Scotia Power Inc. (NSPI) and includes references to accounting standards and systems used for financial reporting.

09 Project Segment The final segment is the four-digit project identifier. The project identifier is optional for operating expenses, but can be used to track specific short-term operating projects. Sequential numbers are assigned to opera...

AI summary The final segment of the project identifier is a four-digit code used to track operating and capital projects. Operating projects may use an optional identifier, while capital items require a mandatory code with the first character indicating the function and the last three characters representing a capital work order number.

Land and Land Rights - 03 Includes the cost of land owned and the rights, interests and privileges held by the Company in land owned by others. Land and land rights shall be classified within the function according to the major purpose for...

AI summary The text outlines accounting guidelines for land and land rights, including how costs are apportioned, when charges are applied to land accounts, and how proceeds from land sales are handled. Key points include deferred payments, appraisal of land and buildings, and the treatment of surplus land.

Buildings, Structures and Grounds - 04 Includes the installed cost of all permanent structures, services and improvements used to house, support, or safeguard property or persons. Also includes those items that are permanently attached to...

AI summary The document outlines the accounting treatment for buildings, structures, and grounds, including cost apportionment, demolition, grading, and excavation. It specifies how costs should be allocated between land and buildings, and under which accounts various expenses and revenues should be recorded.

Miscellaneous Equipment 05 Includes the installed cost of all miscellaneous items that cannot be attributed to any other specific property unit.

AI summary The section outlines the inclusion of installed costs for miscellaneous equipment that cannot be attributed to specific property units.

Indirect Costs 06 Includes administrative/financial costs of construction (allowance for funds used during construction, administrative overheads, inspections, traffic control, pole stacking, etc.) plus all costs associated with the design...

AI summary The text defines indirect costs as including administrative and financial costs related to construction, such as administrative overheads, inspections, and project management, as well as costs associated with design, commissioning, and surveying.

Capital Contributions 07 Includes the value of cash or assets received to defray the cost of construction of an asset for customer use. This can take the form of cash payments or asset title transferred to the Company.

AI summary Capital contributions refer to the value of cash or assets received to cover the cost of constructing an asset for customer use, which can be in the form of cash payments or asset title transferred to the company.

Boiler Plant Equipment - 11 Includes the installed cost of the following major equipment used for the production of steam to be used primarily for generating electrical energy: - a. Furnaces - b. Boilers - c. Fuel Preparing Equipment - d....

AI summary The text outlines the major equipment included in the installed cost for boiler plant equipment used in steam production for electrical energy generation, listing furnaces, boilers, fuel preparing equipment, fuel and ash handling equipment, and steam and feedwater piping.

Roads, Trails and Bridges 13 Includes the cost of all permanent roads, trails and bridges required to provide access for people and equipment to the Company's buildings, dams and other facilities.

AI summary The document discusses the inclusion of costs related to permanent roads, trails, and bridges necessary for access to the Company's buildings, dams, and other facilities.

Poles, Towers and Fixtures 16 Includes the installed cost of all poles, towers and associated fixtures used primarily to support distribution and transmission overhead facilities and their connection to underground systems. This account in...

AI summary The 'Poles, Towers and Fixtures' account includes the installed cost of poles and towers used for distribution and transmission overhead facilities, excluding those used solely for street and highway lighting. Poles used jointly for transmission and distribution should be charged to the transmission function.

Line Transformers - Underground 22 Includes the installed cost of all transformers and associated equipment used in the transformation of electrical energy in the underground system to a voltage which can be used by the customer.

AI summary The text describes the inclusion of the installed cost of all transformers and associated equipment used in the underground system for transforming electrical energy to a voltage usable by customers.

Communication Equipment 26 Includes the installed cost of all radio, telephone and microwave equipment for use within the Company.

AI summary The text refers to the installed cost of communication equipment, including radio, telephone, and microwave equipment used within the company.

Transportation Equipment 28 Includes the installed cost of all transportation and work vehicles used for utility purposes.

AI summary The text refers to the installed cost of transportation and work vehicles used for utility purposes, which is included in the accounting of transportation equipment.

GENERIC ACCOUNT ACTIVITY CODE STM (S) GAS (G) HYD (H) TRN (T) DIST (DP) GEN (P) WIND (W) Land and Land Rights Land 001 Х Х Х Х Х Х Land and Land Highlis Land Rights 002 Х Х X Х х Х Х Buildings, Structures & Grounds Buildings, Structures &...

AI summary The document presents a table outlining various generic accounts, their activities, and associated codes, which are categorized under different asset types such as land, buildings, equipment, and infrastructure. This table is part of a financial reporting system used to classify and track capital assets.

DEPRECIATION AND AMORTIZATION EXPENSE - 5300 - 09 The remaining life is forecasted through the use of mortality statistics that determine the best fit Iowa CUlVe which gives the expected retirement characteristics. This technique is applie...

AI summary The document discusses the forecasting of remaining life for production plant assets using mortality statistics and engineering studies, as well as the annual filing of depreciation and amortization rates with the Annual Capital Expenditures Plan to the UARB.

AMORTIZATION - CAPITAL CONTRIBUTIONS IN AID OF CONSTRUCTION - 5310

AI summary The document discusses the topic of amortization and capital contributions in aid of construction, likely related to regulatory proceedings involving Nova Scotia Power and the Utility and Review Board.

03 Debt Issue Costs The issue of long-term debt is usually an involved process in which the Company may retain the services of brokers, lawyers and auditors. Since the cost of using these services can be significant and provide future bene...

AI summary The document discusses how long-term debt issuance costs, including those for brokers, lawyers, and auditors, are treated under US GAAP. These costs are deferred and amortized over the life of the debt, while premiums, discounts, and commissions are also deferred. Other costs are expensed in account 084 bank charges.

06 Long-term Debt - Interest Expense Long-term debt interest expense includes interest on Nova Scotia Power Inc. ("NSPI") debentures and medium term notes. Interest expense is accrued monthly based on a 30-day months whether interest payme...

AI summary The interest expense for long-term debt includes interest on NSPI debentures and medium-term notes, accrued monthly based on a 30-day month, regardless of annual or semi-annual payment schedules. Actual payments are recorded in the accrued interest account.

07 Amortization of Long-term Debt Issue Costs The Company defers costs associated with the issuance of long-term debt including commissions, discounts/premiums and legal and audit fees, if significant. These costs are amortized monthly usi...

AI summary The Company defers significant costs related to long-term debt issuance, such as commissions, discounts, premiums, and legal and audit fees, and amortizes them monthly using the effective interest rate method over the life of the debt.

08 Short-term Interest Short-term interest includes all interest, commissions, stamping fees, overdraft charges associated with the issuance of commercial paper, banker's acceptances, hedge settlements, and prime loans These costs are expe...

AI summary Short-term interest refers to the costs associated with financial instruments like commercial paper and banker's acceptances, which are expensed or amortized monthly over the number of days of the associated debt.

09 Other Financing Charges The Company expenses related banking costs in the month in which they occur. Stand by fees and letters of credit fees are expensed monthly. Credit facility fees are expensed over the period to which they relate.

AI summary The company expenses banking costs, including standby fees and letters of credit fees, monthly. Credit facility fees are expensed over the period they relate to, rather than being capitalized.

GENERAL - 02 An expenditure must create a benefit having a life of more than one year to be considered capital. Annual fees or maintenance costs do not create an asset; they simply maintain the existing asset base and should be expensed an...

AI summary This section outlines the criteria for capitalizing expenditures, emphasizing that only those with benefits lasting more than one year are considered capital. It also explains that capital expenditures are recorded as assets and are depreciated over their useful life, impacting future net earnings.

POLICIES 07 Expenditures meeting the criteria described in Paragraphs 02, 03 and 06 create a benefit that will be realized by the Company beyond the current year. Accordingly, they should be capitalized. - 08 Every expenditure must be clas...

AI summary This section outlines policies for classifying expenditures as capital or operating, emphasizing that capital expenditures are those with benefits extending beyond the current year. It also mentions the use of the Annual Capital Expenditure Plan (ACE Plan) and the Unknown and Unforeseen (U&U) process for approval and accounting, with references to specific sections of NSPI's Accounting Policy & Procedures Manual.

DEFINITION 01 Cost is the amount of consideration (cash or other assets) given up to acquire, construct, develop, or better a capital asset and includes all costs directly attributable to the acquisition, construction, development or bette...

AI summary The document defines 'cost' as the total consideration given up to acquire, construct, develop, or improve a capital asset, including all directly attributable costs necessary for its intended use.

POLICY 02 A capital asset should be recorded at cost. 1 - 03 The cost of a capital asset includes all expenditures necessary to place the asset in service. Therefore, cost not only includes the purchase price, but also other acquisition co...

AI summary The document outlines the principles for recording capital assets, specifying that the cost includes all expenditures necessary to place the asset in service, such as purchase price, installation, legal fees, and carrying costs during construction. It also notes that capitalization of carrying costs stops when the asset is substantially complete and ready for use.

COST COMPONENTS Cost components represent examples of the types of major pieces of equipment included in each capital activity. They are created through detailed consultation with our asset builders and maintainers, and conform to Federal...

AI summary The document outlines cost components as examples of major equipment included in capital activities, developed through consultation with asset builders and maintainers, and aligned with FERC guidelines.

COST ELEMENTS Cost elements are examples of the minor pieces of equipment or expenses included in the capital activities.

AI summary The document describes cost elements as minor pieces of equipment or expenses included in capital activities, highlighting their role in broader capital expenditures.

Cost Elements for both (001) and (002) Appraisal costs prior to closing title Arbitrator, in the case of expropriation Bulkheads - buried and not requiring maintenance/replacement Clearing land for lines Condemnation proceedings including...

AI summary The document outlines various cost elements associated with the acquisition and development of infrastructure, including appraisal costs, legal fees, expropriation expenses, and land clearing. These costs are relevant to both (001) and (002) and include items such as condemnation proceedings, special assessments, and initial acquisition costs.

Cost Elements Elevator, Crane or Hoist Air Conditioner Units Alarms Architects Plans Backfill Blowers Boilers Booms Braces Breakers Building Inspections Fences Fill Fire Escapes Floors Flotation Devices Flow Control Devices Framing Furnace...

AI summary The text lists various cost elements related to construction and infrastructure, including equipment, materials, and services such as elevators, cranes, building permits, and environmental remediation. It appears to be a catalog of items and services that may be included in cost calculations for projects.

Environmental Equipment (007) Cost Components Fish Ladders Measuring Devices Storage Devices Cost Elements Concrete Controls Enclosures Foundations Holding Tanks Meters Pumps Turbogenerator Installation (010) - Steam Cost Components Conden...

AI summary The text lists cost components and elements related to environmental equipment and turbogenerator installation, including items such as fish ladders, measuring devices, storage devices, concrete, controls, enclosures, foundations, holding tanks, meters, pumps, and components of the turbogenerator system.

Cost Elements Concrete Heaters Platforms Controls Insulators Pumps Excavation Ladders Signs Equipment Foundation Lining Steel Fencing Measuring Devices Wiring Gates Meters Gravel Painting - First time Hangers Piping

AI summary The text lists various cost elements related to infrastructure and construction, including materials, equipment, and labor. It includes items such as concrete heaters, platforms, controls, and wiring, as well as a reference to a picture on page 60.

Boiler (013) Cost Components Boiler Fuel Burning Equipment Insulation Package Boiler Piping & Headers Reheater Soot Blower System Superheater Cost Elements Baffles Blowdown System Burners Desuperheater Drums Enclosures Grates Motors Water...

AI summary The document outlines various cost components and elements related to different systems in a power generation facility, including boilers, fuel burning equipment, insulation, reheaters, and other infrastructure components.

COST COMPONENTS AND ELEMENTS - 6140 Deaerator Economizer Feedwater Heaters Feedwater Pipework Pumps Tanks Cost Elements Brackets Controls Headers Motors Wiring

AI summary The text lists various components and cost elements related to a system, including deaerator economizers, feedwater heaters, pumps, tanks, brackets, controls, headers, motors, and wiring. These items are likely part of infrastructure or equipment relevant to energy or utility operations.

Cost Components Air Heater Duct System Fans Fly Ash Collection System Precipitators Scrubbers Heaters Stacks Cost Elements Breeching System Brick Cleanouts Concrete Ducts Foundations Guys Hoppers Insulation Ladders Liners Motors Painting -...

AI summary The text outlines various cost components associated with utility infrastructure, including air heater duct systems, fly ash collection systems, heaters, stacks, and other related elements such as breeching systems, ducts, foundations, and fuel handling for coal.

Cost Elements Cable Connectors Conduit Terminal Blocks Wiring

AI summary The text lists various cost elements related to electrical infrastructure, including cable connectors, conduit, terminal blocks, and wiring.

COST COMPONENTS AND ELEMENTS· 6140 Feedlines Guys Motor Generator Set Foundations Radio Transmitters and Receivers Telecom Building Cost Elements Monitoring Equipment Structures Supports Telecommunication Systems (061) Cost Components Netw...

AI summary The document outlines various cost components and elements related to infrastructure and telecommunication systems, including feedlines, motor generator sets, foundations, radio transmitters, telecom buildings, and fibre optics. It categorizes costs under different systems such as telecommunication systems, fibre optics, and mobile radio infrastructure.

PROPERTY, PLANT AND EQUIPMENT

AI summary The section discusses Property, Plant, and Equipment, including accounting standards, depreciation methods, and regulatory considerations related to asset management and capital expenditures.

Office Equipment (067) Cost Component Duplicating Equipment Mailing Equipment Microfilm, Microfiche Miscellaneous Equipment Printing Equipment Office Furniture - General (068) Cost Components Bookcases Cabinets Chairs Desks Dividers Drafti...

AI summary The document outlines various categories of office and shop equipment, including duplicating equipment, mailing equipment, microfilm, and office furniture, along with their respective cost components and elements.

Leasehold Improvements (071)

AI summary The section titled 'Leasehold Improvements (071)' introduces a topic related to leasehold improvements, though no detailed discussion or arguments are provided in the text. It includes several acronyms and references to regulatory and financial terms.

Cost Elements Contract Costs Electrical Materials Mechanical Security

AI summary The text lists various cost elements including contract costs, electrical materials, mechanical, and security. These are likely categories of expenses related to infrastructure or operations.

GENERAL 01 The construction work in progress ("CWlp") accounts contain all work orders relating to assets that are under construction, but not placed in service. These accounts also include retirements in progress. The work order is the ma...

AI summary The construction work in progress (CWlp) accounts track all work orders for assets under construction and retirements in progress. Work orders are central to data control, processing, and the budget process.

WORK ORDER PROCESS - 02 The following steps portray the capital asset cycle at Nova Scotia Power Inc. (UNSPI"). - a. Prepare budget item and enter into Power Plant 1 ("PP") as a Capital Item ("CI"); - b. Review and revise the CI item (if n...

AI summary This section outlines the work order process at Nova Scotia Power Inc., detailing the steps involved in preparing, approving, and activating capital items within the Power Plant system, including the roles of the Investment Review Team and the Nova Scotia Utility and Review Board.

CONSTRUCTION WORK IN PROGRESS - 6200 - k. Set up the capital work order in CWIP; - I. Summarize and control charges; - m. Change status of work order from CWIP to Operational ("OPS") when asset goes in service and is being used to generate...

AI summary The document outlines procedures for managing construction work in progress (CWIP), including setting up work orders, controlling charges, changing statuses, finalizing costs, obtaining approvals, and retiring items. These steps ensure proper accounting and regulatory compliance for capital projects.

POLICY 02 The cost of land must be accounted for separately from other capital assets due to its unique life characteristics. - 03 The following are costs which must be considered in determining the total value of a land purchase: - a. Pur...

AI summary The document outlines the unique accounting treatment for land as a capital asset, specifying that its costs differ from other capital assets. It lists various costs to be considered when determining the total value of a land purchase, such as purchase price, appraisal fees, legal fees, and environmental assessment costs. Land acquisition follows the same process as other capital assets but is often only a part of a larger project's work order.

POLICY - 01 Purchases of computer hardware and software, and telecommunications equipment as well as software development projects with a cost in excess of the amount prescribed in NSPI Accounting Policy and Procedures Manual 1560A should...

AI summary The policy outlines guidelines for capitalizing purchases of computer hardware, software, and telecommunications equipment, as well as large software development projects. It specifies that costs in the preliminary stages, data conversion, and training should be included in capital expenditures, referencing specific accounting manuals for criteria and descriptions.

CAPITAL CONTRIBUTIONS IN AID OF CONSTRUCTION - 6220

AI summary The document discusses capital contributions in aid of construction, focusing on financial accounting standards and related processes. It includes references to accounting standards, capital expenditures, and regulatory oversight.

DEFINITION - 01 Capital contributions in aid of construction include the value of cash, other assets and/or services received to defray the construction costs of capital assets. These contributions are generally received from two sources:...

AI summary Capital contributions in aid of construction refer to financial or in-kind support received to fund the construction of capital assets, typically from customers or government entities.

GENERAL - 02 The Company has an obligation to provide electric service to the consuming public in the most cost effective manner. This obligation is discharged when a customer group receiving special services pays for the cost of those ser...

AI summary The Company is obligated to provide electric service in the most cost-effective manner, ensuring that special services are paid for by the customer group receiving them. Policies in the Rate and Regulations Manual dictate maximum service extension distances, and any exceeding requirements may necessitate customer capital contributions, considering factors like location, public safety, and cost deferral.

POLICIES - 05 Contributions in aid of construction should be offset against the property, plant or equipment to which they relate so that the net amount is depreciated and included in rate base. - 06 If a relationship to a specific asset c...

AI summary The text outlines policies for accounting treatment of contributions in aid of construction, specifying that they should be offset against related assets and depreciated. If no specific asset can be identified, contributions should be offset against 'Assets in Service' and amortized at the composite rate of the relevant asset class. The policies also mention that contributions from customers are determined by internal guidelines and procedures, with specific documentation requirements.

GENERAL - 01 Overhead expenses are integral costs associated with the construction of capital assets. As per NSPl's Accounting Policy & Procedures Manual Section 6100 - Cost, the cost of a capital asset not only includes direct constructio...

AI summary Overhead expenses are essential in capital asset construction and must be allocated to capital projects. Common allocation methods include machine hours, labour hours, and direct labour costs. The Nova Scotia Utility and Review Board has historically approved the use of direct labour costs for overhead allocation.

POLICY 04 The Company should apply "Capital-related Overhead Expenses" to capital projects based on the direct labour costs charged to those projects

AI summary The document suggests that the Company should allocate 'Capital-related Overhead Expenses' to capital projects based on the direct labour costs associated with those projects.

IDENTIFICATION OF DIVISIONS 05 The first step in the application of overhead costs to capital projects is the disaggregation of Nova Scotia Power Inc.'s (HNSPl's") Annual Capital Expenditure Plan ("ACE Plan") into several broad areas of re...

AI summary The document outlines the process of applying overhead costs to capital projects by dividing Nova Scotia Power Inc.'s Annual Capital Expenditure Plan into three divisions: Customer Operations, Power Production, and Shared Services, which includes Information Technology.

08 Power Production Division Eligible Overhead Expenses for Power Production include all costs incurred by the Division's head office cost centres as well as the costs included in the administration cost centres for all operational generat...

AI summary Eligible overhead expenses for the Power Production Division include costs from head office and administrative centres for operational generating stations, with a separate allocation of head office expenses added to these eligible expenses.

DETERMINATION OF CAPITAL-RELATED OVERHEAD EXPENSES 11 Once the Eligible Overhead Expenses have been determined, the overhead expenses related to the Company's capital activities must be calculated. This calculation involves prorating the e...

AI summary The document outlines the process for determining capital-related overhead expenses after identifying eligible overhead expenses. It references the need to prorate these expenses and directs readers to NSPI's Accounting Policy and Procedures Manual for further details on the general ledger account structure.

APPLICATION OF ADMINISTRATIVE AND VEHICLE OVERHEAD (SELF - CONSTRUCTED ASSETS) - 6230 - overhead expenses determined above based on capital labour to total labour for both administrative and vehicle overheads. - 12 Some capital-related exp...

AI summary The document discusses the allocation of overhead expenses, specifically administrative and vehicle overheads, based on capital labour to total labour ratios. It emphasizes that certain capital-related expenses should be included in overhead expenses charged to capital projects and allocated to divisions based on their capital labour costs.

CALCULATION OF OVERHEAD APPLICATION RATE 13 Once the Capital-related Overhead Expenses have been determined, the overhead application rate can be calculated. The application rate is simply the quotient, expressed as a percentage, of the Ca...

AI summary The overhead application rate is calculated by dividing capital-related overhead expenses by capital labour costs, expressed as a percentage. This calculation is performed separately for each division after determining the capital-related overhead expenses.

APPLICATION OF OVERHEAD 15 The overhead charged to a particular project is determined by multiplying the labour costs charged to the project by the appropriate overhead application rate. The charge is debited to a Capital Work Order while...

AI summary The overhead for a project is calculated by multiplying labour costs by the appropriate overhead application rate. This charge is recorded as a debit to a Capital Work Order and a credit to Operating, Maintenance and General Expenses.

APPLICATION OF ADMINISTRATIVE OVERHEAD (CONTRACTED ASSETS) - 6235

AI summary The document pertains to the application of administrative overhead for contracted assets, likely involving Nova Scotia Power and the Nova Scotia Utility and Review Board. It references accounting standards, financial systems, and regulatory processes relevant to the management and evaluation of capital expenditures and asset-related costs.

GENERAL - 01 Overhead expenses are integral costs associated with the construction of capital assets. As per NSPl's Accounting Policy & Procedures Manual Section 6100 - Cost, the cost of a capital asset not only includes direct constructio...

AI summary Overhead expenses are considered integral to the construction of capital assets and must be allocated to capital projects even though they are not directly tied to specific projects. NSPl's accounting policy outlines that overhead costs are determined using labour costs for externally contracted projects, following the Public Utilities Board's ruling.

POLICY 04 The Company should apply "Capital-related Overhead Expenses" to externally contracted capital projects based on the contract costs charged to those projects.

AI summary The Company is advised to apply 'Capital-related Overhead Expenses' to externally contracted capital projects based on the contract costs associated with those projects.

IDENTIFICATION OF DIVISIONS 05 The first step in the application of overhead costs to capital projects is the disaggregation of Nova Scotia Power Inc's ("NSPI's") Annual Capital Expenditure Plan (IIACE Plan") into several broad areas of re...

AI summary The document discusses the initial step in applying overhead costs to capital projects, which involves disaggregating Nova Scotia Power Inc.'s Annual Capital Expenditure Plan into three divisions: Customer Operations, Power Production, and Shared Services, with the latter including Information Technology.

DETERMINATION OF ELIGIBLE OVERHEAD EXPENSES 06 The next step is the identification of operating expenses that will benefit construction or development activities. A separate determination is made for each division. The process relies on bu...

AI summary The document outlines the process for identifying operating expenses that benefit construction or development activities, emphasizing the use of budgeted figures to determine overhead application rates before the fiscal year begins.

DETERMINATION OF CAPITAL-RELATED OVERHEAD EXPENSES - 10 Once the Eligible Overhead Expenses have been determined, the overhead expenses related to the Company's capital activities must be calculated. This calculation involves prorating the...

AI summary The document outlines the process for determining capital-related overhead expenses by prorating eligible overhead expenses based on contractor labour and adjusting for double application of self-constructed overhead costs.

APPLICATION OF OVERHEAD 14 The overhead charged to a particular project is determined by multiplying the contract costs charged to the project by the appropriate overhead application rate. The charge is debited to a Capital Work Order whil...

AI summary The overhead charged to a project is determined by multiplying the contract costs by the appropriate overhead application rate, with the charge debited to a Capital Work Order and credited to Operating, Maintenance and General Expenses.

ALLOWANCE FOR FUNDS USED DURING CONSTRUCTION - 6240

AI summary The document discusses the Allowance for Funds Used During Construction (AFUDC), including its calculation and application in the context of construction work in progress (CWlp) and power plant (PP) projects. It references accounting standards and regulatory considerations related to capital expenditures and financial reporting.

05 Criteria for Application AFUDC is applied to all capital work orders with the following exceptions: - a. work orders with a construction period less than two months (e.g. routine work orders); - b. work orders used to purchase assets th...

AI summary The document outlines the exceptions to the application of AFUDC (Allowance for Funds Used During Construction) to capital work orders, including short construction periods, immediate in-service assets, land purchases, fully customer-funded projects, deferred work orders, and retirement work orders.

ALLOWANCE FOR FUNDS USED DURING CONSTRUCTION .. 6240

AI summary The document discusses the Allowance for Funds Used During Construction (AFUDC) in the context of Nova Scotia Power's accounting practices, including its relationship with the Accumulated Other Comprehensive Income (AOCI), and the use of the Oracle relational database system for tracking construction work in progress (CWlp).

07 Timing of Application AFUDC application begins in the month in which a work order receives charges and continues until the month the work order becomes operational plant. On most work orders, AFUDC is applied at the full rate to cumulat...

AI summary The AFUDC application process starts when a work order receives charges and continues until the work order becomes operational. For most work orders, AFUDC is applied at the full rate to cumulative charges each month. For major capital work orders, the start and operational dates are considered in the AFUDC calculation.

08 Calculation of AFUDC Rate The rate used to capitalize AFUDC is the Company's weighted average cost ofcapital before tax. The rate is calculated annually, in advance, by dividing the forecasted annual interest expense, preferred dividend...

AI summary The AFUDC rate is calculated annually using the Company's weighted average cost of capital before tax, derived from forecasted interest expense, preferred dividends, and net earnings. This rate is then divided by twelve to determine the monthly AFUDC rate.

ASSETS - NOT USED AND USEFUL - 6350 - 16 No cost of capital (neither return nor interest) is to be capitalized on the existing cost base during the out of service period. Any related cost of capital is to be recovered from customers and ex...

AI summary The text outlines the treatment of costs related to assets that are out of service, specifying that no cost of capital should be capitalized during this period. Maintenance and mothballing costs are to be expensed, with potential deferral and recovery over five years with UARB approval.

RETIREMENT AND DISPOSAL OF CAPITAL ASSETS - 6420 13 When a work order has received final cost approval, an entry is made for the final disposition of charges to capital assets in service and accumulated depreciation.

AI summary The document discusses the process of retiring and disposing of capital assets, specifying that when a work order receives final cost approval, an entry is made for the final disposition of charges to capital assets in service and accumulated depreciation.

GAIN OR LOSS ON DISPOSITION OF CAPITAL ASSETS - 6440

AI summary The document discusses the gain or loss on the disposition of capital assets, likely involving accounting standards and financial reporting practices related to asset retirement obligations and capital expenditures.

POLICY 03 Common equity, defined as common shares and retained earnings, should be used to maintain an overall capital structure that is within the range(s) approved by the Nova Scotia Utility and Review Board ("UARB"). - 04 The UARB defin...

AI summary The document outlines that common equity, including common shares and retained earnings, should be used to maintain a capital structure within the range approved by the Nova Scotia Utility and Review Board. The UARB sets the maximum common equity percentage, and share capital issuance is recorded in general ledger account 750 - Common Shares.

POLICY 02 Preferred shares could be issued in series to maintain an overall capital structure that is within the ranges approved by the Nova Scotia Utility and Review Board ("UARB").

AI summary The document mentions that preferred shares could be issued in series to maintain a capital structure within the ranges approved by the Nova Scotia Utility and Review Board.