Topic:"Cost Recovery" in M03154

GENERAL - 01 Nova Scotia Power Inc. (NSPI) is the primary operating subsidiary of Emera Inc, a diversified energy company based in Halifax, Nova Scotia. Emera invests in electricity generation, transmission and distribution as well as gas...

AI summary Nova Scotia Power Inc. (NSPI), a subsidiary of Emera Inc., outlines its corporate cost allocation policies, ensuring fair distribution of support services and general expenses among NSPI and its affiliates. The policy aligns with the Code of Conduct's Section 6.11, which mandates equitable allocation based on the nature of corporate services.

OVERHEAD ALLOCATION - 22 An overhead load will be charged to NSPI's affiliates to cover indirect support costs not captured in the corporate support group cost centres. - 23 Included in the overhead load are depreciation and carrying charg...

AI summary NSPI will charge its affiliates an overhead load to cover indirect support costs, including depreciation, rent, IT desktop support, and incentives, which are not captured in corporate support group cost centres.

POLICY - 02 Purchase price discrepancies should be amortized to income on the same basis as the assets to which they relate. - 03 Because purchase discrepancies are excluded from rate base 1 , their amortization is a shareholder expense an...

AI summary The text outlines that purchase price discrepancies should be amortized to income aligned with related assets. Since these discrepancies are excluded from the rate base, their amortization is treated as a shareholder expense, with associated tax savings benefiting shareholders. References to Sections 6250 and 1520 are provided for recording and further details.

03 Debt Defeasance Costs Debt Defeasance costs are the incremental cost of assets over the face amount of the long-term debt of Nova Scotia Power Finance Co. ("NSPFC") placed in trust to defease the NSPFC debt. The UARB has permitted the C...

AI summary Debt Defeasance costs refer to the incremental asset costs over the face value of NSPFC's long-term debt, placed in trust to defease the debt. The UARB has allowed the Company to recover these costs over the debt's life.

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.

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.

GENERAL - 01 The Company accrues a liability for severance programs at the date management commits to a staff reduction plan and a reasonable estimate can be made of the amounts involved. - 02 Generally accepted accounting principles presc...

AI summary The Company accrues liabilities for severance programs when management commits to staff reduction plans. Costs are expensed in the year of commitment if they are below 0.25% of annual revenue requirement, otherwise they are deferred and amortized over three years to align with future cost savings from restructuring.

POLICIES - 06 Costs associated with severance programs should be accrued at the date management commits to a staff reduction plan and a reasonable estimate can be made of the amounts involved. - 07 Where the total cost of a severance progr...

AI summary The document outlines policies for accounting for severance program costs. If the cost is less than 0.25% of the annual revenue requirement, it should be expensed immediately. If it exceeds this threshold, the costs should be deferred and amortized over three years.

PROCEDURES - 09 The total expected cost of a severance program should be accrued in the year that management commits to a staff reduction plan and the benefit arrangement has been communicated to the employees. - 10 If the program's total...

AI summary The document outlines procedures for accruing and accounting for the costs of severance programs. It specifies thresholds for charging costs to operations versus recording them as deferred assets, along with guidelines for amortization and liability reduction.

DEFINITION - 01 New business costs include all expenses incurred by NSPI for the development of business opportunities outside the Company's normal sphere of regulated generation and delivery of electricity.[1](#page-143-0) Appropriate exp...

AI summary The document defines new business costs, project viability, and expenditures with future economic benefit. New business costs are those incurred for opportunities outside regulated electricity generation and delivery, excluding internal labor. A project is viable if costs are likely recoverable through future operations, typically demonstrated by an approved business case. Expenditures with future economic benefit must contribute to net cash flows.

- 01 An overhead charge will apply to labour costs of NSPI employees outside of the corporate support groups relating to affiliate or non-regulated activities. This charge is designed to recover all administrative costs benefiting, but not...

AI summary An overhead charge is applied to NSPI employees' labour costs for activities outside corporate support groups to recover administrative costs. This is calculated using various OM&G expense accounts and should be reviewed annually by Corporate Accounting Services.

OVERHEAD APPLICATION RATE

AI summary The document discusses the overhead application rate, which is a key consideration in utility regulation and cost recovery processes.

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.

Introduction of the Fuel Adjustment Mechanism The Fuel Adjustment Mechanism ("FAM") which came into effect January 1, 2009, governs the recovery of NSPI's fuel related costs. Subsequently, the Board approved an amendment to NSPI's Accounti...

AI summary The Fuel Adjustment Mechanism (FAM) was introduced in 2009 to govern the recovery of NSPI's fuel costs. An amendment to NSPI's accounting policy was approved in 2009 to align fuel costs with hedge settlements. NSPI proposes extending this policy to all hedges and requests the Board's approval by September 1, 2010.

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.

POLICY 11 The Company engages in risk management activities to manage the Company's exposure to changes in the market prices of commodities, foreign exchange and interest rates. Deleted: price Deleted: at TUC 12 The Company does not use de...

AI summary The Company engages in risk management for commodity, foreign exchange, and interest rate risks, using derivative instruments solely for risk management purposes. The Company adheres to specific policies and defers the impact of derivative instruments to regulatory assets or liabilities, without testing the effectiveness of these instruments.

realized gains and losses on derivative instruments used to hedge interest rates should be included in the measurement of the hedged interest expense using the effective interest method. - 27 Foreign currency denominated financial assets a...

AI summary The text discusses accounting procedures for derivative instruments, foreign currency exposures, and related fees, emphasizing the inclusion of realized gains and losses in interest expense and the deferral of certain costs to regulatory assets or liabilities.

SELECTION AND APPLICATION OF ALLOCATION METHODOLOGY - The procedures followed by Corporate Accounting to allocate the corporate support services Operating, Maintenance and General ("OM&G") to affiliates are: - a. Identify cost centres that...

AI summary The document outlines procedures for allocating corporate support services costs (OM&G) to NSPI and its affiliates, including identifying direct and shared costs, selecting allocation methodologies aligned with industry practices, and calculating charges. The process involves interviews with cost centre managers and considers overhead load where applicable.

OVERHEAD ALLOCATION - An overhead load will be charged to NSPI's affiliates to cover indirect support costs not captured in the corporate support group cost centres. - 23 Included in the overhead load are depreciation and carrying charges...

AI summary NSPI will charge its affiliates an overhead load to cover indirect support costs, including depreciation, rent, IT desktop support, and incentives, which are not captured in corporate support group cost centres.

POLICIES - Differences between actual fuel costs and amounts recovered from customers accumulate in the FAM Regulatory Asset (Liability) included in "Other Assets" or "Other Liabilities" on the Balance Sheet and subsequently become an adju...

AI summary The document explains how differences between actual fuel costs and recovered amounts are managed through the Fuel Adjustment Mechanism (FAM) Regulatory Asset/Liability, impacting balance sheets and subsequent electricity rates. Interest is earned on accumulated balances using the weighted average cost of capital (WACC), compounded semi-annually by Nova Scotia Power Inc. (NSPI).

COST COMPONENTS AND ELEMENTS - 6140

AI summary The document section discusses cost components and elements, referencing known acronyms such as US GAAP, NSPI, UARB, FASB, FAM, WACC, OM&G, and ACE.

COST COMPONENTS AND ELEMENTS - 6140

AI summary The document section discusses cost components and elements, referencing known acronyms such as US GAAP, NSPI, UARB, FASB, FAM, WACC, OM&G, and ACE.

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.

POLICIES - The Company accrues a liability for termination costs associated with severance programs consistent with the requirements of FASB ASC Topic 420 Exit or Disposal Cost Obligations or ASC Topic 712 Compensation Nonretirement Post R...

AI summary The Company accrues liabilities for termination costs under FASB ASC Topics 420 and 712, recognizing these costs when they are determinable and unavoidable. The treatment of these costs depends on the type of termination benefit and the program's cost relative to annual revenue requirements. Costs below 0.25% of annual revenue are expensed immediately, while higher costs are deferred and amortized over three years.

DEFERRED CHARGES TERMINATION COSTS - 6930 Deleted: SEVERANCE Regulatory decisions allowing the recovery of deferred costs through future rates create a future economic benefit or asset equal to the deferred amounts. Amortization matches th...

AI summary The text discusses the amortization of deferred costs from severance programs over a three-year period, aligning the cost with future cost savings. This approach ensures that the recovery of these costs through future rates matches the economic benefit they provide.

PROCEDURES - O7 The total expected cost of a severance program should be accrued in the year that conditions for recognition are met based on the type of benefit offered as outlined in paragraph 2. - 08 If the program's total expected cost...

AI summary The document outlines procedures for accounting for severance program costs. If the total expected cost is less than 0.25% of annual revenue requirement, costs are expensed immediately. If greater, costs are deferred and amortized over three years. This aligns with accounting standards and involves considerations such as employee termination, pension costs, and legal expenses.

OVERHEAD APPLICATION RATE - 6940A - O1 An overhead charge will apply to labour costs of Nova Scotia Power Inc. ("NSPI") employees outside of the corporate support groups relating to affiliate or non-regulated activities. This charge is des...

AI summary This document outlines the overhead application rate for Nova Scotia Power Inc. (NSPI), which applies to labour costs of employees outside of corporate support groups involved in affiliate or non-regulated activities. The rate is designed to recover administrative costs not directly attributable to these activities, ensuring ratepayers are not adversely affected. It lists various OM&G expense accounts included in the calculation and specifies that the rate should be reviewed annually.

03 Debt Defeasance Costs¶ ¶ Debt Defeasance costs are the incremental cost of assets over the face amount of the long-term debt of Nova Scotia Power Finance Co. ("NSPFC") placed in trust to defease the NSPFC debt. The UARB has permitted th...

AI summary Debt Defeasance costs refer to the incremental cost of assets placed in trust to defease NSPFC debt, which the UARB has allowed the Company to recover over the life of the debt.

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.

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.

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.

GENERAL - 01 Nova Scotia Power Inc. ("NSPI") is the primary operating subsidiary of Emera Inc, a diversified energy company based in Halifax, Nova Scotia - 02 For financial reporting purposes, NSPI is organized into cost centers and has sp...

AI summary Nova Scotia Power Inc. (NSPI) is a subsidiary of Emera Inc. and operates under a Cost Allocation Policy that ensures fair distribution of corporate support services and general expenses between NSPI and its affiliates, aligning with accounting principles.

COST ALLOCATION POLICY -1570 e. On a monthly basis, allocate common corporate support services costs to affiliates. Allocation calculations will be updated monthly, quarterly and annually depending on the cost centre. The overhead load fac...

AI summary The document outlines a policy for the monthly allocation of common corporate support services costs to affiliates, with updates occurring monthly, quarterly, and annually depending on the cost centre, and the overhead load factor being updated annually or more frequently if needed.

COMMON COST ALLOCATORS - 11 Where services are provided to a number of affiliates and direct charging is not readily determinable or practical, one or more of the following methods or lIcosts drivers" are used for allocating costs. - 12 Ti...

AI summary The document outlines common cost allocators used for allocating costs among affiliates when direct charging is impractical. Methods include Time Analysis, Project Analysis, Enterprise Employees, and Total Capitalization, each based on different metrics such as time spent, employee numbers, and capital structure.

OVERHEAD ALLOCATION - 22 An overhead load will be charged to NSPl's affiliates to cover indirect support costs not captured in the corporate support group cost centres. - 23 Included in the overhead load are depreciation and carrying charg...

AI summary The document discusses the allocation of overhead costs to NSPI's affiliates, including depreciation, rent, IT support, and incentives, to cover indirect support costs not captured in corporate support group cost centres.

RESPONSIBILITY - 24 Corporate Accounting Services will be responsible for: - a. identifying cost centres that provide services to both NSPI and its affiliates; - b. choosing allocation cost drivers in conjunction with the service providers...

AI summary The document outlines the responsibilities of Corporate Accounting Services and the Controller of NSPI regarding the allocation of common corporate support services costs to NSPI's affiliates, including identifying cost centres, selecting cost drivers, calculating overhead allocation factors, and reviewing these elements on a quarterly and annual basis.

DEFINITIONS - 28 For the purpose of the Cost Allocation Policy and interpretation of this Policy, the following definitions will apply. - 29 Affiliate The Nova Scotia Companies Act defines an Affiliate as: - (1) A company shall be deemed t...

AI summary This section defines key terms related to cost allocation and corporate structure under the Cost Allocation Policy. It outlines definitions such as 'Affiliate,' 'Corporate Support Service,' 'Cost Allocation,' 'Cost Driver,' 'Common Costs,' and 'Direct Costs' to ensure clarity in interpreting and applying the policy.

EMPLOYEE FUTURE BENEFITS - 2400 - 11 Actuarial valuations are performed annually for all plans. - 12 Pension expense, as determined in the annual actuarial valuation, is charged to both operating departments and corporate adjustments. - 13...

AI summary The document outlines the management and administration of employee future benefits, specifically pension plans, including actuarial valuations, funding, investment, and expense allocation. NSPI plays a central role in managing these plans, with contributions and administrative expenses handled through trustee and fund managers.

REVENUE

AI summary This section of the document discusses revenue-related matters within the context of the Nova Scotia regulatory proceeding. It covers key topics such as rate structures, cost recovery mechanisms, and financial considerations relevant to utility operations.

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.

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.

APPLICATION OF ADMINISTRATIVE OVERHEAD (CONTRACTED ASSETS) - 6235

AI summary The document discusses the application of administrative overhead to contracted assets within a regulatory proceeding. It includes financial and accounting-related considerations, such as cost recovery, capital expenditures, and regulatory compliance.

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.

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.

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.

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.

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 TERMINATION COSTS - 6930

AI summary The text refers to a section labeled 'Deferred Charges - Termination Costs - 6930,' which likely pertains to accounting or financial considerations related to the termination of deferred charges, though no further details are provided in the excerpt.

OVERHEAD APPLICATION RATE

AI summary The document discusses the Overhead Application Rate, which is a key factor in determining the allocation of overhead costs in utility operations. This rate plays a crucial role in financial planning and cost recovery for energy providers.

- 6940A - An overhead charge will apply to labour costs of Nova Scotia Power Inc. ("NSPI") employees outside of the corporate support groups relating to affiliate or non-regulated activities. This charge is designed to recover all administ...

AI summary An overhead charge is applied to Nova Scotia Power Inc. employees' labour costs for activities outside corporate support groups. This charge aims to recover administrative costs associated with affiliate or non-regulated activities, ensuring ratepayers are not negatively impacted. The overhead application rate is calculated using various OM&G expense accounts and reviewed annually by Corporate Accounting Services.

03 Debt Defeasance Costs¶ ¶ Debt Defeasance costs are the incremental cost of assets over the face amount of the long-term debt of Nova Scotia Power Finance Co. ("NSPFC") placed in trust to defease the NSPFC debt. The UARB has permitted th...

AI summary Debt defeasance costs refer to the incremental cost of assets placed in trust to defease long-term debt of NSPFC. The UARB has allowed the Company to recover these costs over the life of the related debt. The text also mentions interest expense and debt issue costs, which are to be recorded and amortized on an accrual basis and straight-line basis, respectively.

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.

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 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.

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.

FINDINGS & CONCLUSIONS We would like to thank members of NSPI management for their cooperation and responsiveness to our questions in assessing the proposed changes. We reviewed the submissions and discussed the proposed changes to the Man...

AI summary The review of NSPI's proposed changes to the Accounting Manual found the Cost Allocation Policy to be comprehensive. Differences between CGAAP and US GAAP in areas like income taxes, employee benefits, and termination costs were noted. The report confirms that no unreasonable practices or unfair advantages were identified.

GENERAL - 01 Nova Scotia Power Inc. ("NSPI") is the primary operating subsidiary of Emera Inc, a diversified energy company based in Halifax, Nova Scotia - 02 For financial reporting purposes, NSPI is organized into cost centers and has sp...

AI summary Nova Scotia Power Inc. (NSPI) is a subsidiary of Emera Inc. and operates under a Cost Allocation Policy that ensures corporate support services and general expenses are fairly allocated between NSPI and its affiliates, in line with accounting standards.

SELECTION AND APPLICATION OF ALLOCATION METHODOLOGY - 06 The procedures followed by Corporate Accounting to allocate the corporate support services Operating, Maintenance and General ("OM&G") to affiliates are: - a. Identify cost centres t...

AI summary The document outlines the procedures used by Corporate Accounting to allocate corporate support services (OM&G) to affiliates of NSPI, including identifying cost centres, determining direct and common costs, selecting an allocation methodology, and updating allocations on a monthly, quarterly, and annual basis.

COMMON COST ALLOCATORS - 11 Where services are provided to a number of affiliates and direct charging is not readily determinable or practical, one or more of the following methods or "costs drivers" are used for allocating costs. - 12 Tim...

AI summary The document outlines various methods for allocating common costs among affiliates of Nova Scotia Power Inc. (NSPI), including time analysis, project analysis, enterprise employees, total capitalization, and others based on factors like number of invoices, journal lines, and asset value.

OVERHEAD ALLOCATION - 22 An overhead load will be charged to NSPI's affiliates to cover indirect support costs not captured in the corporate support group cost centres. - 23 Included in the overhead load are depreciation and carrying charg...

AI summary An overhead load is charged to NSPI's affiliates to cover indirect support costs not captured in the corporate support group cost centres, including depreciation, rent, IT support, and incentives.

RESPONSIBILITY - 24 Corporate Accounting Services will be responsible for: - a. identifying cost centres that provide services to both NSPI and its affiliates; - b. choosing allocation cost drivers in conjunction with the service providers...

AI summary Corporate Accounting Services is responsible for identifying cost centres, selecting allocation cost drivers, and calculating overhead allocation factors for NSPI's affiliates. The Controller of NSPI oversees the management of the Cost Allocation Policy.

DEFINITIONS - 28 For the purpose of the Cost Allocation Policy and interpretation of this Policy, the following definitions will apply. - 29 Affiliate The Nova Scotia Companies Act defines an Affiliate as: - (1) A company shall be deemed t...

AI summary This section defines key terms related to cost allocation and corporate structure under the Cost Allocation Policy. It outlines definitions for affiliate, corporate support services, cost allocation, cost drivers, common costs, and direct costs, with a focus on regulatory and accounting clarity.

DEFINITION - 02 The FAM includes the difference between actual fuel costs and amounts recovered from customers in the current period and in the two preceding years. The following are the components of the FAM: - a) Base Fuel Costs Customer...

AI summary The Fuel Adjustment Mechanism (FAM) is defined as including differences between actual fuel costs and amounts recovered from customers over the current and two preceding years. It has components such as the Base Fuel Costs, Actual Adjustment (AA), Balance Adjustment (BA), and Incentive (discentive), which impact regulatory assets, liabilities, and earnings statements.

POLICIES - 03 Differences between actual fuel costs and amounts recovered from customers accumulate in the FAM Regulatory Asset (Liability) included in "Other Assets" or "Other Liabilities" on the Balance Sheet and subsequently become an a...

AI summary This section outlines the accounting and regulatory treatment of the Fuel Adjustment Mechanism (FAM) in Nova Scotia. It describes how differences between actual and recovered fuel costs are tracked in a FAM Regulatory Asset or Liability, how interest is applied, and how future income tax impacts are recorded. The FAM balance is adjusted annually and approved by the UARB for rate changes.

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.

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.

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.

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.

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.

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.

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.

ociated with a severance program will depend on the program's total cost and the impact on revenue requirement and rate stability. The justification for treating programs differently based on their costs is described in NSPI's Accounting P...

AI summary The document outlines the accounting treatment for severance programs based on their cost relative to the annual revenue requirement. If the cost exceeds 0.25% of the revenue requirement, the costs are deferred and amortized over three years, aligning with future cost savings and rate recovery.

OVERHEAD APPLICATION RATE

AI summary The document discusses the overhead application rate, focusing on accounting and financial standards relevant to utility companies in Nova Scotia. Key topics include accounting standards, cost recovery, and regulatory considerations.

- 6940A - 01 An overhead charge will apply to labour costs of Nova Scotia Power Inc. ("NSPI") employees outside of the corporate support groups relating to affiliate or non-regulated activities. This charge is designed to recover all admin...

AI summary An overhead charge is applied to the labour costs of Nova Scotia Power Inc. employees outside of corporate support groups for affiliate or non-regulated activities. This charge is intended to recover administrative costs not specifically identifiable with these activities, ensuring ratepayers are not adversely affected. The overhead application rate is calculated using various OM&G expense accounts and should be reviewed annually by Corporate Accounting Services.

POLICY - 01 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 outlines the accounting treatment of long-term debt, including commercial paper and debentures, and discusses the deferral and recovery of debt defeasance costs by Nova Scotia Power, as permitted by the Nova Scotia Utility and Review Board.

GENERAL - 01 Nova Scotia Power Inc. ("NSPI") is the primary operating subsidiary of Emera Inc, a diversified energy company based in Halifax, Nova Scotia - 02 For financial reporting purposes, NSPI is organized into cost centers and has sp...

AI summary Nova Scotia Power Inc. (NSPI) is a subsidiary of Emera Inc. and operates under a Cost Allocation Policy that ensures fair allocation of corporate support services and general expenses between NSPI and its affiliates, in line with accounting principles.

COST ALLOCATION POLICY -1570 e. On a monthly basis, allocate common corporate support services costs to affiliates. Allocation calculations will be updated monthly, quarterly and annually depending on the cost centre. The overhead load fac...

AI summary The document outlines a policy for the monthly allocation of common corporate support services costs to affiliates, with updates occurring monthly, quarterly, and annually depending on the cost centre, and the overhead load factor being updated annually or more frequently if needed.

COMMON COST ALLOCATORS - 11 Where services are provided to a number of affiliates and direct charging is not readily determinable or practical, one or more of the following methods or lIcosts drivers" are used for allocating costs. - 12 Ti...

AI summary The document outlines methods for allocating common costs among affiliates of Nova Scotia Power Inc. (NSPI), including Time Analysis, Project Analysis, Enterprise Employees, and Total Capitalization, each based on different metrics such as labor hours, employee count, and capital structure.

COST ALLOCATION POLICY - 1570 - 16 Number of Invoices Number of invoices uses the relative proportion of invoices processed for each affiliate. - 17 Number of Journal Lines Number of journal entry lines uses the relative proportion of acco...

AI summary The document outlines a cost allocation policy that uses various metrics such as the number of invoices, journal lines, vehicles, asset value, and total revenue to allocate costs proportionally among affiliates based on their relative contributions.

OVERHEAD ALLOCATION - 22 An overhead load will be charged to NSPl's affiliates to cover indirect support costs not captured in the corporate support group cost centres. - 23 Included in the overhead load are depreciation and carrying charg...

AI summary The document discusses the allocation of overhead costs to NSPI's affiliates, including depreciation, rent, IT support, and incentives, to cover indirect support costs not captured in the corporate support group cost centres.

RESPONSIBILITY - 24 Corporate Accounting Services will be responsible for: - a. identifying cost centres that provide services to both NSPI and its affiliates; - b. choosing allocation cost drivers in conjunction with the service providers...

AI summary Corporate Accounting Services is tasked with identifying cost centres, selecting allocation drivers, calculating overhead factors, and processing monthly cost allocations to NSPI's affiliates. The Controller of NSPI oversees the management of the Cost Allocation Policy.

DEFINITIONS - 28 For the purpose of the Cost Allocation Policy and interpretation of this Policy, the following definitions will apply. - 29 Affiliate The Nova Scotia Companies Act defines an Affiliate as: - (1) A company shall be deemed t...

AI summary This section defines key terms related to cost allocation and corporate structure as outlined in the Cost Allocation Policy. It includes definitions of 'Affiliate,' 'Corporate Support Service,' 'Cost Allocation,' 'Cost Driver,' 'Common Costs,' and 'Direct Costs' to ensure consistent interpretation and application.

FUEL ADJUSTMENT MECHANISM - 5110

AI summary The document discusses the Fuel Adjustment Mechanism (FAM) as part of a regulatory proceeding, likely involving cost recovery and rate design considerations. It includes a reference to a page with an image, which may contain further details on the mechanism.

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.

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.

APPLICATION OF ADMINISTRATIVE OVERHEAD (CONTRACTED ASSETS) - 6235

AI summary The document discusses the application of administrative overhead related to contracted assets, likely involving accounting practices and regulatory considerations. It includes references to Nova Scotia Power Inc. and the Nova Scotia Utility and Review Board, with potential implications for financial reporting and regulatory compliance.

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.

DEFERRED CHARGES TERMINATION COSTS - 6930 06 Regulatory decisions allowing the recovery of deferred costs through future rates create a future economic benefit or asset equal to the deferred amounts. Amortization matches the cost of that a...

AI summary The text discusses the accounting treatment of deferred charges related to severance programs, including when costs should be accrued, how they are recorded, and the amortization process over three years to align with future cost savings.

- 6940A - An overhead charge will apply to labour costs of Nova Scotia Power Inc. ("NSPI") employees outside of the corporate support groups relating to affiliate or non-regulated activities. This charge is designed to recover all administ...

AI summary An overhead charge is applied to the labour costs of Nova Scotia Power Inc. (NSPI) employees outside of corporate support groups for affiliate or non-regulated activities. This is to recover administrative costs not specifically identifiable with these activities, ensuring ratepayers are not adversely affected. The overhead application rate is calculated using various OM&G expense accounts and should be reviewed annually by Corporate Accounting Services.

POLICY - 01 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 document outlines the accounting treatment of long-term debt and related financial instruments, including the reporting of commercial paper, debentures, and medium-term notes, as well as the deferral and recovery of debt defeasance costs by the Company, with approval from the Nova Scotia Utility and Review Board.