N-1Application
9 passages
this time. The material near term expenditures forecasted during this period are the cable protection project4F 5 and updating or replacement of HVDC station control and monitoring system. In addition to the items ordered by the Board for...
AI summary NSPML is requesting adjustments to its capital structure and approval for a single-year assessment to recover its 2026 revenue requirement of $198.7 million from NS Power. The application includes requests related to aligning debt-to-equity requirements and accommodating liquidity needs.
8 TABLE 1 Description $M Operating & Maintenance 22.0 Depreciation 57.2 Debt Financing Costs • Interest (Net) 37.7 • Amortization of Deferred Financing Costs 1.4 Equity Financing Costs 40.7 FLG2 39.7 Total Costs 198.7 9
AI summary Table 1 outlines various cost categories, including operating and maintenance, depreciation, debt and equity financing costs, and FLG2, with total costs amounting to $198.7 million.
9 3.4 Debt Financing Costs 10 11 Debt financing costs consist of two components: (i) annual net interest costs and (ii) 12 amortization of deferred financing charges. These debt financing arrangements were 13 reviewed by the NSEB and confi...
AI summary Debt financing costs are composed of annual net interest costs and amortization of deferred financing charges. The NSEB reviewed these arrangements and confirmed their prudence in the Final Costs Decision.
1 expense as a result of a reduction in NSPML's approved Project Costs arising from the 2 Final Cost Decision. 3 4 The debt financing of ML under the ML Credit Agreement is based on the $1.3 billion 5 of bonds issued by ML Financing Trust...
AI summary The document discusses the impact of the Final Cost Decision on NSPML's Project Costs, including the amortization of Deferred Financing Charges and the debt financing under the ML Credit Agreement. The reduction in coupon interest costs and the recovery of Deferred Financing Costs in the 2026 revenue requirement are highlighted.
charges as of the commercial operation date of the ML for deferred recovery. The NSEB has previously directed NSPML to amortize these deferred financing charges over a period to match the term of the FLG bonds. Recovery of these charges wa...
AI summary The NSEB directed NSPML to amortize deferred financing charges over the term of FLG bonds, with recovery starting in 2020 over a 33-year period. By the end of 2025, NSPML will have recovered $8.0 million, leaving $37.7 million to be recovered, including $1.4 million sought in 2026.
Highly Complex Asset: As further elaborated upon in Concentrics's Expert Evidence, the Maritime Link is a highly complex set of assets. The High Voltage Direct Current ("HVDC") interconnection comes with increased operational risk as compa...
AI summary The Maritime Link is a highly complex asset involving HVDC technology, subsea cables, and complex agreements with NLH. It has a higher debt-to-equity ratio compared to traditional T&D utilities, increasing operational and financial risks. Comparators with subsea transmission assets are limited, and ROE ranges are provided for reference.
7.1 Analysis of Capital Structure NSPML's capital structure of 70/30 was initially set in 2013, with the lower capital structure supported by the Federal Load Guarantee ("FLG"). The benefits of such a capital structure as supported by the...
AI summary NSPML's capital structure was initially set at 70/30 in 2013 with support from the Federal Loan Guarantee. However, with the removal of FLG2, NSPML's debt-to-equity ratio increased to 78% debt and 22% equity, leading to higher financial risk. NSPML argues that aligning with the T&D proxy group's average of 49% equity would help improve its capital structure and future borrowing costs.
9 B. Risk Analysis 10 Concentric examines risk from two primary perspectives: (1) business risk; and (2) financial risk. 11 Business risk for a regulated utility encompasses both operational risk (e.g., economy of service 12 territory, wea...
AI summary Concentric analyzes risk for a regulated utility from two perspectives: business risk, which includes operational and regulatory factors, and financial risk, which relates to the company's capital structure and leverage. These risks influence investment decisions and return requirements.
13 Figure 28: Authorized Equity Ratios for T&D Proxy Group Operating Utility Jurisdiction Equity Ratio Canadian Utilities, Inc. ATCO Electric Alberta 37.0% Hydro One Inc. Hydro One Networks Ontario 40.0% Consolidated Edison, Inc. Consolida...
AI summary The text discusses the authorized equity ratios for transmission and distribution (T&D) proxy groups in various jurisdictions, highlighting the relatively thin equity ratio of NSPML and the risks associated with the debt guarantee for the Maritime Link project, which could disproportionately affect equity investors.
N-8NSPML (NSEB) RIR 1 to 44 - Redacted
10 passages
a-c) Please see table below: 2025 2025 21 commercial matters", complete with an estimate of required consultant 22 hours. 23 h) Is the consulting related to ongoing commercial matters between NSPML and NLH 24 the same issue noted earlier i...
AI summary The document discusses NSPML's response to questions about increased administrative costs in 2025 and 2026, attributing the increase to higher debt issuance and associated financing costs, as well as inflationary pressures. The response explains that these costs are related to the original FLG and are not new administrative duties.
NON-CONFIDENTIAL 1 d) Please confirm that costs associated with managing these complex commercial 2 agreements (as asserted by NSPML) are accounted for in NSPML's O&M cost 3 projections. 4 i. If not confirmed, please explain. 5 e) Please d...
AI summary The document includes information requests and responses from NSPML regarding the management of complex commercial agreements, risks associated with managing these agreements, and the performance of the Maritime Link project. The responses outline the nature of these agreements and NSPML's role in managing them.
12.3 Own Property Damage For the avoidance of doubt, it is the Parties' intent that, subject to any right a Party may have to seek compensation from a third party who caused the Loss or from insurance, each Party shall be responsible for a...
AI summary The Parties agree that each is responsible for Losses to its own property, including facilities, equipment, and materials on the site of Defined Assets, regardless of the cause, including O&M Activities or the actions of the other Party or its affiliates. This applies unless compensation from a third party or insurance is available.
2.2 Assumption of Liabilities The Assignee hereby accepts the within assignment of the Assigned Agreement as of the Effective Date and covenants and agrees with the Assignor and the Consenting Party to assume the covenants and obligations...
AI summary The Assignee accepts the assignment of the Assigned Agreement and agrees to assume all liabilities and obligations of the Assignor under the Agreement from the Effective Date onwards, including the payment and fulfillment of all covenants and obligations arising after that date.
ARTICLE EIGHT: CREDIT AND COLLATERAL REQUIREMENTS 8.3 Grant of Security Interest/Remedies. Section 8.3 is deleted and replaced with the following provision: To the extent a Party delivers (each such delivering party, a "Pledgor") Performan...
AI summary This section outlines the credit and collateral requirements under the agreement, specifying that a Pledgor grants a security interest in cash or cash equivalent collateral to a Secured Party. It details the remedies available to the Secured Party in the event of a default, including setoff, drawing on letters of credit, and liquidation of collateral.
Input Source (all to equal the amounts contained in the Application) amount of annual energy to be delivered 0.986 TWh transmission losses The then most current estimate of transmission losses as determined pursuant to Schedule 3 of this A...
AI summary The document outlines inputs required for an application, specifying how various financial and operational parameters are determined based on current estimates and agreements. It details the calculation of energy delivery, transmission losses, capital costs, AFUDC rates, operating and maintenance costs, tax rates, and capital cost allowance classes. The process involves Emera preparing a draft for Nalcor's review.
NON-CONFIDENTIAL 1 Request IR-27: 2 3 IR-2 to IR-31 Reference Exhibit N-1 Pages 4 -29 4 5 Page 23 6 NSPML refers at several points in the application to the impact of the FLG2 which changed 7 NSPML's capital structure to about 78/22 debt t...
AI summary NSPML discusses the impact of FLG2 on its capital structure, which has shifted to approximately 78% debt and 22% equity, increasing its financial risk compared to typical T&D utilities. This change has resulted in higher financing costs and increased risk exposure.
NON-CONFIDENTIAL leverage would be considered by creditors as debt obligations of NSPML. As explained in Section 2 of our report, there is a relationship between the capital structure and the authorized ROE. That is, other factors being eq...
AI summary The text discusses the impact of NSPML's new $500 million debt on its required rate of return on equity (ROE), credit rating, and future financing capabilities. It references a Board decision and asks NSPML to confirm its statements regarding the financial implications of the new debt.
REDACTED 1 The Maritime Link submarine cables, compared to more traditional HVAC assets, have a 5 a) Please describe the guarantee provisions of the FLG and FLG2. 6 b) Excluding risk associated with capital structure, please explain how th...
AI summary The text discusses the guarantee provisions of FLG and FLG2 related to the Maritime Link submarine cables, including subordination of additional debt, DSCR and DER thresholds, and revenue waterfall provisions. It also notes that these provisions do not directly impact NSPML's financial risk but may influence perceptions of borrowing costs.
NSPML Responses to Nova Scotia Energy Board Information Requests 1 Request IR-39: 27 S&P rating of BBB- (or BBB high from DBRS), suggesting that the proxy group 1 companies are generally considered to have lower risk from the perspective o...
AI summary NSPML responds to information requests from the Nova Scotia Energy Board regarding S&P ratings, contractual arrangements, and economic integration between Canada and the U.S. It notes that NSPML's contracts are atypical and that the economic environments of Canada and the U.S. are highly integrated, with no significant differences in macroeconomic indicators.
N-11Evidence - Sean Cleary BCC
6 passages
ally- weighted average of my capital asset pricing model (CAPM) estimate of 6.9%, my discounted cash flow (DCF) estimate of 7.9%, and my bond yield plus risk premium (BYPRP) approach estimate of 8.0%. As mentioned above, this ROE recommend...
AI summary The document discusses the recommended Return on Equity (ROE) for NS Power and NSPML, based on estimates from the Capital Asset Pricing Model (CAPM), Discounted Cash Flow (DCF), and Bond Yield Plus Risk Premium (BYPRP) approaches. It also addresses the allowed equity return (ER) for NSPML, considering its unique risks and the impact of the Maritime Link project's guaranteed loan.
6 4.1.2 Capital Market Conditions The 30-year Government of Canada bond yield as of September 29, 2025 was 3.63%, while the 10-year yield was 3.18%. The total cost of borrowing to utilities is a function of both the level of government yie...
AI summary This section discusses capital market conditions, focusing on government and utility bond yields from 2003 to 2025. It notes that as of August 2025, the A-rated utility yield was 4.92%, with a spread of 1.11% over the 30-year government bond yield of 3.81%, which is below the long-term average spread of 1.39%.
4.3.1 Debt Markets What does all this mean for capital markets? I begin by looking at bond yields in particular. Figure 5 shows the relationship between long-term Canada bond yields and inflation since 1957. The graph shows that yields are...
AI summary The text discusses trends in Canadian bond yields and inflation from 1957 to 2024, highlighting a strong correlation between the two. It notes that since 1998, both yields and inflation have shown reduced volatility, with long-term Canada bond yields averaging 3.58% and inflation averaging 2.18%. The analysis also compares yield curves for Canada and the U.S. as of September 29, 2025, showing differences in rates between the two countries.
6.2 The Cost of Debt for NS Power As of August 29, 2025 the yield on long-term A-rated Canadian utility bonds was 4.92% according to the Bloomberg data used to construct Figure 3. This figure was slightly above the September 29, 2025 avera...
AI summary The document discusses the cost of debt for NS Power, noting that as of September 29, 2025, NS Power's bond yield was 4.97%, slightly above the average of 4.79% for other Canadian utilities. This is attributed to NS Power's bond ratings and maturity, but the spread remains small, indicating a reasonable cost of debt.
\ \ \ Forecast metrics from S&P. Regulated Utility – FRA Metrics Metric AA Α BBB BB/B Cash flow-to-debt (%) > 17.5 12.5 to 17.5 10.0 to 12.5 0.0 to 10.0 Debt-to-capital (%) < 55 55 to 65 65 to 75 75 to 90 EBIT-to-interest (x) > 2.8 1.8 to...
AI summary The document presents credit metrics from S&P for regulated utilities, including cash flow-to-debt, debt-to-capital, and EBIT-to-interest ratios. It also compares NS Power's historical and forecast metrics to S&P's categories for credit risk, noting that while NS Power has an 'aggressive' financial risk rating, most of its metrics fall into less risky categories.
6.5 Summary Overall, this section highlights that NS Power is a low-risk Canadian utility; however, it is slightly riskier than the average A-rated Canadian operating utility. This conclusion is consistent with the following main points re...
AI summary The summary highlights that NS Power is a low-risk Canadian utility, though slightly riskier than average A-rated utilities. Its debt ratings are stable, and its financial risk profile is reasonable. A 40% allowed equity ratio is deemed reasonable despite lower debt ratings compared to some utilities, partly due to its parent company Emera Inc.'s higher ratings and the low-risk financing of the Maritime Link project.
N-22Decision Ontario Energy Board EB-2024-0063
32 passages
Submissions OEB staff agreed with Concentric's view that the perspectives of debt and equity investors in the utility sector are among the most relevant considerations in setting the cost of capital parameters and capital structure. These...
AI summary OEB staff and several stakeholders agree that the perspectives of debt and equity investors are important in setting the cost of capital parameters. However, CCMBC argues that municipal investors have different perspectives than outside investors, while OEA and VECC emphasize the relevance of investor perspectives across North America and the importance of market data and credit ratings in determining cost of capital.
Findings The OEB has reviewed the appropriateness of the capital structure for electricity transmitters, electricity distributors, natural gas utilities, and OPG considering the FRS. As part of the 2009 Report, the OEB determined that a de...
AI summary The OEB has reviewed and maintained a deemed capital structure of 60% debt and 40% equity for electricity distributors and transmitters, aligning with the FRS. OPG's capital structure is set at 55% debt and 45% equity, with a recommendation to submit evidence for potential changes. The OEB rejects the need for an upward ROE adjustment if the capital structure remains unchanged.
Findings The OEB has considered whether a different approach to setting capital structure is warranted for single-asset electricity transmitters versus multiple-asset transmitters (i.e., whether a risk premium should be applied to the equi...
AI summary The OEB concludes that no distinction is needed in the capital structure approach for single-asset and multiple-asset electricity transmitters, as current mechanisms like DVAs sufficiently mitigate financial risks. While acknowledging concerns about Indigenous equity participation, the OEB finds no evidence of heightened risk for single-asset transmitters and reaffirms the current 2009 Cost of Capital Framework as appropriate.
Submissions OEB staff and several ratepayer groups agreed with LEI and Dr. Cleary that the status quo approach (considering deemed capital structure regardless of the actual capital structure) should be retained. OEB staff noted that this...
AI summary The document discusses the approach to notional debt in rate-making, with OEB staff and ratepayer groups supporting the status quo of using deemed capital structure. SEC and OEA agree on applying actual weighted average cost of debt to notional debt, while VECC suggests adjusting pricing based on variances between actual and deemed debt. OEB staff and OEA disagree with VECC's proposal, emphasizing utility discretion in managing capital structures.
Electricity Distributors and Transmitters The 2009 Report affirmed the deemed equity ratio of 40% equity / 60% debt for electricity distributors. Since the 2009 Report, the OEB has extended the deemed equity ratio of 40% to electricity tra...
AI summary The OEB has maintained the deemed equity ratio of 40% equity / 60% debt for electricity distributors and transmitters, ensuring consistent financial assumptions for rate-setting. This approach balances fairness between utilities and customers and aligns with FRS, while allowing flexibility in financing.
EPCOR Natural Gas EPCOR Natural Gas's current approved equity ratio is 36% for its South Bruce service territory and 40% for its Aylmer service territory. The deemed debt component includes a deemed 4% component for short-term debt for bot...
AI summary EPCOR Natural Gas has different approved equity ratios for its service territories. The OEB determines long-term debt costs based on actual debt costs and the DLTDR, applying this method when there are material variances affecting the revenue requirement, aligning with practices for electricity distributors and transmitters.
Enbridge Gas The current OEB-approved capital structure for Enbridge Gas is based on a deemed 38% equity component, with the remaining 62% financed through short-term and longterm debt. The difference is that the deemed structure is not se...
AI summary The OEB adjusted Enbridge Gas's deemed capital structure to 62% debt and 38% equity in the EB-2022-0200 proceeding, based on an updated assessment of business and financial risks. The current approach to determining debt costs, including actual and forecasted rates, is deemed appropriate and aligns with FRS.
OPG OPG's current approved equity ratio is 45%. The current OEB-approved capital structure is based on a deemed 45% equity component, with the remaining 55% financed through short-term and long-term debt. As with Enbridge Gas, the deemed c...
AI summary OPG's current approved equity ratio is 45%, with the remaining 55% financed through short-term and long-term debt. The OEB finds that the current approach for determining debt costs is appropriate, ensuring regulatory stability and compliance with FRS. Short-term debt is used to true up the deemed capital structure to OPG's actual capitalization.
Concentric suggested that an additional consideration is that not all Ontario utilities have an A-rating and the OEB should monitor any impacts on the DLTDR for utilities that have different credit ratings. Using Canadian data over the 201...
AI summary Concentric advised the OEB to monitor the impact of different credit ratings on the DLTDR. Dr. Cleary found that using historical 30-year bond yields from the Government of Canada provides more accurate forecasts than predicted values, noting an upward bias of 0.4%.
Use of the DLTDR No expert took issue with the OEB's general policy to rely primarily on the embedded or actual cost for existing long-term debt instruments. The experts disagreed on whether the DLTDR should be used as a cap in certain cir...
AI summary Experts generally agree with the OEB's policy of using actual or embedded costs for existing long-term debt, but disagree on whether the DLTDR should act as a cap. LEI and Dr. Cleary support using DLTDR as a cap for all utilities, while Concentric argues for allowing utilities to forecast their own debt rates under OEB oversight.
Calculation of DLTDR OEB staff and Pollution Probe supported LEI's suggested approach. OEB staff noted that using updated data as at September 30, 2024, the base LCBF should be 3.127% and the base utility bond spread should be 1.427%, summ...
AI summary The document discusses the calculation of the Deemed Long-Term Debt Rate (DLTDR), with various stakeholders presenting different approaches. OEB staff and Pollution Probe supported using updated data, while Concentric recommended using bank forecasts. AMPCO/IGUA and CCC supported Dr. Cleary's approach of using actual bond yields, and the SEC suggested averaging yields over a slightly larger range for accuracy.
Findings The DLTDR will continue to be applicable to all electricity distributors and transmitters, as well as EPCOR Natural Gas (both Aylmer and South Bruce), rebasing rates in 2025 and beyond, in prescribed circumstances, unless some oth...
AI summary The OEB concludes that the DLTDR will continue to be used for rate rebasing, with modifications to its calculation and clarity on applicability. Actual market-based debt will be prioritized, and the DLTDR will be set annually, with the 2025 rate at 4.51%. The OEB will assess prudence in debt management for OPG and Enbridge Gas.
Where: is the Long Canada (30-year Government of Canada) Bond yield as at September 30 for year t. is the spread between the 30-year A-rated Utility Corporate Bond yield (taken from ticker Bloomberg BVCAUA30 BVLI Index) and Long 65 2009 Re...
AI summary The document discusses the calculation of the Deemed Long-Term Debt Rate (DLTDR) using actual bond yield data from September 30, including the Long Canada (30-year Government of Canada) Bond yield and the spread between A-rated Utility Corporate Bond yields and Long Canada Bond yields. The approach uses actual values rather than forecasts, and the Office of the Energy Board (OEB) considers this method simpler and more accurate.
Expert Report Proposals LEI recommended that transaction costs be considered as operating expenses, as this approach is more suitable for the nature of the expense, which may fluctuate from year to year. LEI also noted the irregularity in...
AI summary LEI recommends treating transaction costs as operating expenses due to their fluctuating nature, while Concentric, Nexus, and Dr. Cleary argue that these costs should be recovered through the embedded cost of long-term debt, as per OEB's current practice, and that LEI's approach may not comply with IFRS.
Submissions Several ratepayer groups and OEB staff disagreed with LEI and submitted that the current approach of recording the actual transaction cost as an interest expense and amortizing the transaction cost over the term of the debt ins...
AI summary Ratepayer groups and OEB staff disagree with LEI's approach to recording debt transaction costs, supporting the current method of amortizing costs over the term of the debt instrument. CCC and OEA support the existing approach, while CCMBC agrees with LEI that transaction costs should be included as OM&A costs in the revenue requirement.
Findings The DSTDR will continue to apply to all electricity distributors and transmitters, as well as EPCOR Natural Gas (Aylmer and South Bruce), rebasing rates in 2025 and beyond, unless some other approach was previously approved by the...
AI summary The DSTDR will apply to electricity distributors and transmitters, as well as EPCOR Natural Gas, with rate rebasing in 2025 and beyond. For OPG and Enbridge Gas, DSTDR will not cap the unfunded portion of their capital structure, and the OEB will assess prudence in debt management and treasury processes.
Specific Items Monitored OEB staff agreed with LEI and Dr. Cleary that consistent with the OEB's existing policy, the OEB should continue to monitor the cost of capital parameters and test their reasonableness in the context of prevailing...
AI summary The OEB staff agrees with LEI and Dr. Cleary on the need to monitor cost of capital parameters annually but disagrees with quarterly reporting. Ratepayer groups and SEC support public disclosure of reports. The OEA and others debate the need for tracking debt and equity issuances and credit rating reports, with differing views on administrative burden and utility transparency.
Findings The OEB will continue to monitor market conditions. It is expected that OEB staff will undertake this monitoring at least quarterly and will report internally on their assessment. This monitoring will include quarter-over-quarter...
AI summary The OEB will monitor market conditions quarterly, focusing on DSTDR, DLTDR, and ROE formulas, and will report externally annually on the reasonableness of cost of capital parameters. The OEB will require reporting of major long-term debt issuances over $50 million by Ontario utilities but not credit ratings outside of rebasing rate applications.
Findings The cost of capital parameters of ROE, DSTDR, and DLTDR are applicable to utilities rebasing rates for 2025 (if cost of capital is in scope). For other utilities, the new cost of capital parameters will be implemented on a one-tim...
AI summary The OEB outlines the application of new cost of capital parameters (ROE, DSTDR, DLTDR) for 2025 rate rebasing, emphasizing that they should be implemented alongside other cost of service reviews. Variance accounts are granted for utilities using interim parameters, and adjustments to base rates will be based on final revenue requirements. Prescribed interest rates for DVAs and CWIP are effective April 1, 2025.
Expert Report Proposals LEI noted that the current methodology for DVAs is no longer appropriate, due to the winding down of the 3-month BA rate, as explained in Section 3.5 of this Decision. For DVAs, LEI recommended aligning the prescrib...
AI summary LEI recommended updating the methodology for calculating Demand Volatility Adjustments (DVAs) to align with the revised DSTDR calculation. Dr. Cleary supported this, while Concentric agreed for short-term DVAs but recommended using each utility's WACC for long-term DVAs, arguing that utilities should earn a fair return on committed capital.
recognition that, just like its assets, a utility's financing resources comprise a mix of shorter- and longer-term funding and is also not based on the level of risk associated with a particular DVA. A number of ratepayer groups agreed wit...
AI summary The document discusses the calculation of the prescribed interest rate on Demand Volatility Adjustments (DVAs), with ratepayer groups supporting LEI's proposal, while CCC suggests using different methodologies for calculating the Deemed Short-Term Debt Rate (DSTDR) and applying the same approach for DVAs.
THE ONTARIO ENERGY BOARD ORDERS THAT: - 1. The following cost of capital parameters are approved on a final basis, effective January 1, 2025. Please refer to the Decision for details regarding implementation and applicability. - a. The Dee...
AI summary The Ontario Energy Board (OEB) has finalized cost of capital parameters effective January 1, 2025, including a Deemed Return on Equity of 9.00%, Deemed Long-Term Debt Rate of 4.51%, and Deemed Short-Term Debt Rate of 3.91%. Prescribed interest rates for deferral and variance accounts and construction work in progress are also set, with updates to occur annually and quarterly. Utilities must report new long-term debt over $50 million annually.
REVISED METHODOLOGY TO UPDATE THE DEEMED LONG-TERM DEBT RATE March 27, 2025
AI summary This document introduces a revised methodology for updating the deemed long-term debt rate, effective March 27, 2025, reflecting changes in financial and regulatory approaches to debt valuation.
Schedule E – Revised Methodology – Deemed Long-Term Debt Rate The revised methodology for calculating the DLTDR is summarized below. The OEB will use the LCBF plus a spread of 30-year A-rated Corporate Utility bond yields over the actual L...
AI summary The revised methodology for calculating the Deemed Long-Term Debt Rate (DLTDR) involves using the Long Canada Bond Factor (LCBF) plus a spread between 30-year A-rated Corporate Utility bond yields and the Long Canada Bond yield. This approach is applied annually and updated as of September 30 each year.
REVISED METHODOLOGY TO UPDATE THE DEEMED SHORT-TERM DEBT RATE March 27, 2025
AI summary This document outlines a revised methodology for updating the deemed short-term debt rate, effective March 27, 2025. It reflects changes in financial and regulatory approaches to debt valuation and capitalization.
Schedule F – Revised Methodology – Deemed Short-Term Debt Rate The revised methodology for calculating the DSTDR is summarized below. The OEB will use a methodology to estimate the DSTDR consisting of the September 30 data point sourced fr...
AI summary The Ontario Energy Board (OEB) has introduced a revised methodology for calculating the Deemed Short-Term Debt Rate (DSTDR) using the September 30 data point from the Bloomberg ticker BVCAUA3M BVLI Index (3-month) in each year.
Schedule G – Revised Methodology – Prescribed Interest Rates The revised methodology for calculating the prescribed interest rates is summarized below. The prescribed interest rates applicable to DVAs and CWIP shall continue to be set quar...
AI summary This schedule outlines the revised methodology for calculating prescribed interest rates, which are set quarterly and updated only if there is a change of 25 basis points or more. The rates are based on data from one month prior to the start of the quarter and published on the OEB website.
DVAs DVAs will reflect the Bloomberg ticker BVCAUA3M BVLI Index (3-month) data point taken from Bloomberg LP. The formula for the quarterly update of the prescribed interest rate for DVAs is: DVAS = BVCAUA3M BVLI
AI summary The Debt Valuation Adjustments (DVAs) are calculated using the Bloomberg ticker BVCAUA3M BVLI Index (3-month) data point. The quarterly update formula for the prescribed interest rate for DVAs is set as DVAS equals BVCAUA3M BVLI.
(v) Base A-rated utility bond yield spread. The OEB set the LCBF adjustment factor and utility bond spread adjustment factor as 0.5 based on regression analysis performed by participants, as noted in the 2009 Report.[107](#page-138-0) The...
AI summary The OEB set the LCBF adjustment factor and utility bond spread adjustment factor at 0.5 based on regression analysis from the 2009 Report. It concluded that corporate bond yields significantly influence the cost of equity and should be included in the annual ROE adjustment formula. In September 2009, the base LCBF was set at 4.250% and the base utility bond spread at 1.415%.
Approach to Long-Term Debt The status quo approach to the long-term debt rate is to use the weighted average of embedded (actual) debt plus forecasted debt rate(s) of new debt in the test period. For Enbridge Gas and OPG, the DLTDR is not...
AI summary The document discusses the approach to long-term debt rates, noting that the status quo uses a weighted average of embedded and forecasted debt rates. For Enbridge Gas and OPG, the DLTDR is not used, while for electricity distributors and transmitters, a DLTDR formula acts as a ceiling in certain cases, referencing the 2009 Report.
Where: is the Long Canada (30-year Government of Canada) Bond yield forecast for year . is the spread between 30-year A-rated Utility Corporate Bond yields and Long Canada (30-year Government of Canada) Bond Yields. The data for and are de...
AI summary The document discusses the methodology for forecasting long-term and short-term debt rates, including the use of Consensus Forecasts, Bank of Canada data, and Bloomberg LP data. It outlines the OEB's approval of interim DLTDR and DSTDR rates for 2025 and the approach to short-term debt, including the use of Canada 3-month T-bill rates instead of BA rates.
Variances from Deemed Capital Structure The OEB sets rates using a deemed capital structure. The OEB sets the equity ratio at 40% and the short-term debt ratio at 4% for electricity distributors and transmitters. Although both of EPCOR Nat...
AI summary The OEB sets deemed capital structures for utilities, including equity and short-term debt ratios. EPCOR Natural Gas has different equity ratios in its service territories, and notional debt is discussed as the difference between deemed and actual debt. Different rates, such as DLTDR and DSTDR, have been used for notional debt in the past.