Topic:"Cost Deferral" in M12394

4.0 MARINE SURVEY COST RECOVERY As detailed in the 2024 Assessment and approved in the Board's Decision, NSPML has smoothed the associated 2024 marine survey costs over three years (2024, 2025 and 2026) to assist in softening the year-by-y...

AI summary NSPML proposes that future marine survey costs be collected and expensed in the year incurred, rather than smoothing them over multiple years. This decision is based on considerations such as the efficiency of tracking expenses in a single balancing account and the impact on WACC. The proposal is intended to better match expenses with the assessment received.

Original Maritime Link Project (in millions of $) 2022 2023 2024 2025 (est.) 2026 (est.) Opening Rate Base 1,752.4 1,689.1 1,631.4 1,576.0 1,516.8 Difference between approved and actual ML Project spend as at December 31, 2021 (4.7) Net ca...

AI summary The document presents financial data related to the Original Maritime Link Project and Sustaining Capital, including rate base changes, capital additions, depreciation, and deferrals. The data spans from 2022 to 2026, highlighting fluctuations in the rate base and capital additions over time. FLG2 is excluded from rate base calculations for rate setting purposes.

CONFIDENTIAL (ATTACHMENTS ONLY) 1 Request IR-01: 2 3 Reference: Section 2.1 Asset Management Cost Uncertainties (p.7). 4 (a) For each of the identified uncertainties, please discuss when the 5 uncertainty is anticipated to resolve, and wha...

AI summary The document contains a series of information requests related to asset management cost uncertainties, marine surveys, converter station agreements, and transmission line maintenance costs. It also asks for an assessment of the costs associated with these activities and the reasons for any delays in completing the assessment.

REDACTED 1 Request IR-13: 2 3 Reference: Section 4 – Marine Survey Cost Recovery, pages 18-19. 4 Reference: NSPML 2024 Cost Assessment Decision, 2023 NSUARB 231, para.22. 5 If NSPML believes it is appropriate to smooth this expense over a...

AI summary The document outlines the Nova Scotia Power Maritime Limited (NSPML) request regarding the recovery of marine survey costs and the Board's expectations for handling such expenses. The Board discourages using a rate of return for smoothing these costs and instead suggests normalizing them in O&M expenses over a multi-year period. The Board also seeks clarification on the cyclical nature of marine surveys and NSPML's intentions for future expense recovery.

REDACTED 1 h) Confirmed, it is referring to the same matter. 2 i. The $0.4m attributed to inflationary pressures relate to labour, office expenses, travel, 3 and administrative costs including shared services. The escalation rate used was...

AI summary The text discusses a $0.4m increase attributed to inflationary pressures, including labour, office expenses, travel, and administrative costs, with an escalation rate of approximately 3%.

Reason for Variance The final costs of $2,982,714 for the project were $767,760 lower than the original submission of $3,750,474, primarily due to the use of internal versus external labour. At the time of the original submission, the Proj...

AI summary The final project cost was significantly lower than the original budget due to the use of internal labor instead of external resources. This shift led to cost savings across multiple categories, eliminated the need for contingency funds, and reduced AFUDC costs, although some increases were offset by market and unforeseen conditions.

67N Onslow 345 kV Node Swap Title: Description Unit Quantity Unit Estimate Total Estimate Cost Support Reference Completed Similar Projects (FP#'s) Overtime Labour - 51,817 51,817 There was very little ability for the Transmission Outage S...

AI summary The document details the 67N Onslow 345 kV Node Swap project, highlighting overtime labour costs due to scheduling constraints and adjustments in term labour and travel expenses as the project plan evolved. The project required adjustments in staffing and travel arrangements due to changes in construction supervision.

red. SEC stated that the EDA provided no evidence of "effectively confiscating from utilities", and given how much higher the current premium is than actual flotation costs, it is unlikely to be true. AMPCO/IGUA stated that going forward,...

AI summary The OEB is considering the recovery of financing costs through mechanisms like a ROE adder. AMPCO/IGUA and ratepayer groups debate the appropriateness of a 50 basis points ROE adder, while SEC and others highlight the lack of evidence and the nature of flotation costs. A generic deferral account is proposed for recording transaction costs.

consistent with the approach from the 2009 Report. - 3. There are counter-arguments that actual costs should be recovered going forward through a deferral account, with no adder to the 2025 base ROE. The OEB is including 25 basis points in...

AI summary The OEB is setting the 2025 base ROE at 9.00% by including 25 basis points for flotation costs. While evidence for this number is limited, it is considered better than evidence for 50 basis points. Utilities may provide evidence in future applications if their flotation costs exceed 25 basis points. The lack of evidence in this proceeding and the intermingling of flotation costs with financial flexibility were noted as challenges.

Expert Report Proposals No expert made comments on this issue in its report, as the issues list focused on what interest rate should apply to the account. The OEB's Accounting Order suggests that the continuance of this DVA be addressed at...

AI summary The document discusses the regulatory treatment of cloud computing implementation costs for utilities, emphasizing that these costs should be addressed during the next rebasing rate proceeding. The OEB's Accounting Order suggests considering new deferral accounts or other approaches, informed by results from related generic proceedings.

Submissions OEB staff submitted that it is clear from the above excerpt from the Accounting Order that the Cloud Computing deferral account is not expected to be an on-going generic account. On the contrary, OEB staff noted that it is expe...

AI summary OEB staff emphasized that the Cloud Computing deferral account is not a generic ongoing account and that utilities should propose the regulatory treatment of material cloud implementation costs in cost-based applications.

Findings The Cloud Computing deferral account was set up for instances when utilities incur material expenditures on their initial transition from on-premise solutions to cloud 82 Accounting Order (003-2023) for the Establishment of a Defe...

AI summary A deferral account was established in November 2023 to manage incremental costs from transitioning to cloud computing solutions. The utility may propose methods for its disposition during the next rebasing rate application, considering the contract term and expenditure magnitude. Recovery is expected over the remaining contract term, unless otherwise justified.

a) Prescribed Interest Rates 20.Should the prescribed interest rates applicable to DVAs and the construction work in progress (CWIP) account for electricity transmitters, electricity distributors, natural gas utilities, and OPG continue to...

AI summary The document discusses the continued use of the current approach for calculating prescribed interest rates for DVAs and CWIP accounts for various utilities, including OPG, and whether alternative methods should be used. It also raises the question of applying carrying charges or other rates to the Cloud Computing deferral account.

[17] In the prior year assessment decision, the NSUARB directed NSPML to address the collection of future marine survey costs. In the current application NSPML proposed that the 2027 survey costs be fully expensed in 2027 rather than smoot...

AI summary The NSUARB previously directed NSPML to address future marine survey costs, and NSPML now proposes expensing 2027 costs fully in that year rather than spreading them over three years. NSPML argues that using the Fuel Adjustment Mechanism (FAM) for balancing is more efficient and less costly than deferring payments, but the Industrial Group opposes full payment in 2027, preferring a collaborative process.

[17] In the prior year assessment decision, the NSUARB directed NSPML to address the collection of future marine survey costs. In the current application NSPML proposed that the 2027 survey costs be fully expensed in 2027 rather than smoot...

AI summary NSPML proposes expensing 2027 marine survey costs fully in that year rather than spreading them over three years. The NSUARB previously supported cost smoothing but is concerned about NSPML earning a return on deferred costs. NSPML argues that using the Fuel Adjustment Mechanism (FAM) would be more efficient, while the Industrial Group opposes full payment in 2027 and suggests a collaborative process.