101354Board Decision
10 passages
standard and deviates materially from the range of equity returns authorized for similar utilities across Canada. It finds that the current return on equity and capital structure should be maintained. - [17] Accordingly, the Board finds th...
AI summary The Board maintains NS Power's return on equity at 9.0% with an 8.75%-9.25% earnings band, approves depreciation rates, and establishes a securitization deferral for coal plant-related costs. It also approves the PHP Deferral account to track revenue variances, estimating $18.2M in deferrals and $5.7M in fuel balances under FAM.
the remaining life technique. For certain General Plant accounts, the proposed annual and accrued depreciation amounts are based on amortization accounting, which is discussed later in this decision. [127] To meet federal and provincial de...
AI summary NS Power plans to retire coal-fired assets by 2030 but seeks affordable recovery of unrecovered investments and decommissioning costs via a Decarbonization Deferral Account (DDA) in its 2023-2024 GRA. A settlement with customers narrowed the DDA's scope, and the NSUARB approved it in principle, avoiding immediate rate hikes.
y risks associated with ELG accelerated recovery in earlier periods. Mr. Wiedmayer characterized these effects as neutral timing differences that can be addressed through ongoing depreciation studies. [226] The Board does not necessarily d...
AI summary The Board weighs ELG vs. ALG depreciation methods for NS Power, favoring ALG for rate stability and fairness despite Mr. Wiedmayer's neutral timing difference claim. Mr. Madsen argues ALG reduces volatility, while the Board notes potential credit rating risks from ALG changes impacting FFO:Debt metrics and securitization under DDA.
the effect of decreasing the company's cash flow. It would also reduce recovery of capital investment thereby increasing debt. These factors would negatively impact NS Power's FFO:Debt credit metrics. [274] In Undertaking U-7, NS Power pro...
AI summary NS Power's FFO:Debt credit metrics are projected to decrease under ALG depreciation compared to ELG, with securitization of DDA assets influencing outcomes. If ALG is mandated without securitization, metrics may fall below 10% by 2026-2027. Adjustments recommended by Mr. Madsen would cause minor further degradation.
costs. Any such approach would not come at a cost to the Government of Nova Scotia. It is my hope that this work can be successfully completed within the year. [Exhibit N-7, Appendix 8F, PDF p. 650] [310] Further, NS Power noted that the D...
AI summary The document discusses the Decarbonization Deferral Account (DDA) established during the 2023-2024 GRA proceeding (M10431), aimed at managing costs from retired thermal assets. NS Power highlights the DDA as a step toward securitization, while Christine Runge from Power Advisory LLC emphasizes the need for more information on amortization periods and rate impacts before approval. The Board aligns with a future securitization process.
, its decision was intended to secure an early benefit for customers from securitization in this general rate application and there is no basis to disallow the recovery of these costs for that reason. [325] NS Power continues to be optimis...
AI summary The Board approves NS Power's securitization deferral for thermal assets under the DDA but restricts retroactive application to avoid double recovery. NS Power may only earn WACC during the test period, with future accruals requiring Board approval. The Board emphasizes timely resolution of deferral costs and adherence to ratemaking principles.
3.6.1 Capital Additions [365] NS Power's capital outlook for 2026-2027 for additions to Plant reflects the company's best estimate of capital investment over the test years at a point in time. The test period investment is intended to supp...
AI summary NS Power outlines its 2026-2027 capital investment plans to ensure safe electricity delivery, environmental compliance, and alignment with Renewable Electricity Standards. The proposed investments support the 5-Year Reliability Plan and growing customer demand. Rate base growth will depend on DDA securitization proceeds, with potential offsets if securitization fails.
gnized by Christine Runge, Power Advisory, an expert retained by the Department (then NRR) as noted in the NSUARB's decision dealing with the approval of NS Power's DDA (2024 NSUARB 67, paras. 85-88). [414] If the Board were to consider a...
AI summary The text argues against departing from the original cost-based approach for valuing rate base and depreciation, emphasizing consistency across all asset classes. It warns that alternative methods could cause value fluctuations, potentially requiring reserves or regulatory assets. Rapid declines in coal asset values near 2030 could also increase depreciation expenses and revenue requirements.
e assets over their shorter remaining useful life (and the corresponding impact on rates that would have been occasioned as a result). In its decision approving the DDA in principle, the NSUARB noted: [299] In this context, NS Power is a u...
AI summary The NSUARB approved the Decarbonization Deferral Account (DDA) to recover prudently incurred costs of retiring thermal assets due to decarbonization policies. The DDA balances cost recovery for NS Power with customer affordability, ensuring costs are recovered even after asset retirement from policy-driven transitions, without making unrecoverable costs recoverable.
t those costs approved and added to rate base. Continued testing of costs to ensure prudence of investments is, therefore, required in order to ensure just and reasonable rates. [Exhibit N-10, p. 24] [59] Ms. Runge recommends that NS Power...
AI summary The Board requires prudence testing of costs to ensure just and reasonable rates. Ms. Runge recommends NS Power recover unamortized coal asset retirement costs via the DDA but emphasizes the Board must evaluate prudence before adding such costs to the DDA. NS Power must seek Board approval for this purpose.
101354Board Decision
11 passages
standard and deviates materially from the range of equity returns authorized for similar utilities across Canada. It finds that the current return on equity and capital structure should be maintained. - [17] Accordingly, the Board finds th...
AI summary The Board maintains NS Power's return on equity at 9.0% and approves the settlement agreement, including depreciation rates, cost-of-service methodology adjustments, and the establishment of deferral accounts for coal plant expenses and PHP revenue variances. The decision also addresses load-carrying capability adjustments and fuel balance tracking under FAM.
the remaining life technique. For certain General Plant accounts, the proposed annual and accrued depreciation amounts are based on amortization accounting, which is discussed later in this decision. [127] To meet federal and provincial de...
AI summary NS Power plans to retire coal-fired assets by 2030 due to decarbonization laws but has not recovered investments or decommissioning costs. To manage affordability, it proposes a Decarbonization Deferral Account (DDA) in its 2023-2024 GRA, with a narrower scope agreed upon by stakeholders. The NSUARB approved the DDA in principle.
the effect of decreasing the company's cash flow. It would also reduce recovery of capital investment thereby increasing debt. These factors would negatively impact NS Power's FFO:Debt credit metrics. [274] In Undertaking U-7, NS Power pro...
AI summary The text discusses the financial impact of depreciation methods (ALG vs. ELG) on NS Power's FFO:Debt metrics, showing ALG would reduce the metric by ~1.2% in 2026-2027. It also highlights risks if securitization of DDA assets fails, potentially lowering the metric below 10%. Mr. Madsen's adjustments would slightly worsen metrics.
costs. Any such approach would not come at a cost to the Government of Nova Scotia. It is my hope that this work can be successfully completed within the year. [Exhibit N-7, Appendix 8F, PDF p. 650] [310] Further, NS Power noted that the D...
AI summary The document discusses the Decarbonization Deferral Account (DDA) established during the 2023-2024 GRA proceeding (M10431), its role in managing costs from retired thermal assets, and the need for further information on amortization periods and rate impacts before approval. NS Power and Power Advisory LLC emphasize the DDA's potential as a cost-recovery mechanism, while the Board notes the need for a separate securitization process.
3.5.1.2.1 Findings [314] The approval of the potential securitization is not before the Board in this application. The sole issue in the present matter is whether the Board should approve the securitization deferral. NS Power asked for thi...
AI summary The Nova Scotia Utility and Review Board (NSUARB) considers whether to approve a deferral of depreciation and financing costs for thermal assets under the Decarbonization Deferral Account (DDA), as NS Power requested due to delayed securitization. Securitization is blocked by unenacted provincial regulations. The Consumer Advocate doubts securitization's feasibility, but customer representatives support it long-term.
3.6.1 Capital Additions [365] NS Power's capital outlook for 2026-2027 for additions to Plant reflects the company's best estimate of capital investment over the test years at a point in time. The test period investment is intended to supp...
AI summary NS Power outlines its 2026-2027 capital investment plan to ensure safe electricity delivery, environmental compliance, and alignment with Renewable Electricity Standards and coal phase-out by 2030. The plan supports the 5-Year Reliability Plan and growing customer demand. Rate base growth is expected, partially offset by DDA securitization if successful.
d be followed to establish the DDA. As with the "black box" settlement in 2011 this had the effect of mitigating the rate impact for customers at the time by avoiding the acceleration of depreciation. [392] In its reply submissions in this...
AI summary NS Power argues that the UAD decisions and principles from Alberta's 'Stores Block' case do not apply outside Alberta, citing the 2023 Alberta Court of Appeal decision. It also contends that the Smyth v Ames case is irrelevant to current proceedings, as it pertains to U.S. railroad rate regulation. NS Power asserts its coal assets are not stranded and remain in use, challenging the Department's reliance on UAD and DDA frameworks.
ased on the estimated remaining service lives of the assets in each category. The estimated service lives of intangible assets requires regulatory approval. [M11090, Exhibit N-1, Attachment 2, p. 13] [411] The Board summarized the two cons...
AI summary The document discusses NS Power's asset management practices, consulting findings on processes and depreciation methodologies, and regulatory considerations for asset lives. Consultants highlighted strengths in asset management but recommended strategic planning. The Department of Natural Resources and Renewables (NRR) did not object to NS Power's asset valuation approach, emphasizing the original cost method's impact on depreciation rates.
nting Policy 6350 provides the Board with flexibility, on a case-by-case basis, to address the rate-base treatment of the undepreciated cost when such an application is made. The Board finds that this flexibility is important and can only...
AI summary The NSUARB emphasizes flexibility in rate-base treatment under Policy 6350 for asset retirement, particularly for coal assets retiring due to decarbonization mandates. The Board previously accepted the DDA as a method to recover undepreciated coal asset costs, avoiding adjustments to depreciation rates or Policy 6350. Factors like financial position, regulatory schemes, and rate impacts are critical in balancing decisions.
t those costs approved and added to rate base. Continued testing of costs to ensure prudence of investments is, therefore, required in order to ensure just and reasonable rates. [Exhibit N-10, p. 24] [59] Ms. Runge recommends that NS Power...
AI summary The Board requires continued testing of costs to ensure prudence for just rates. Ms. Runge recommends allowing NS Power to recover unamortized coal asset retirement costs if prudently incurred, but emphasizes the need for prior Board evaluation before transferring such costs to the DDA. [Exhibit N-10, p. 24; 2024 NSUARB 67]
as required by the North American Electric Reliability Corporation (NERC) and Northeast Power Coordinating Council (NPCC) requirements. It explained the changes to the coal plant retirement timelines: (a) The retirement assumption for Ling...
AI summary The retirement timelines for Lingan Unit 2 and Trenton Unit 5 were extended due to updated load forecasts and system outlooks. Lingan 2's retirement was delayed to 2027 following a 108 MW increase in 2024 firm peak load, while Trenton 5's timeline was updated based on the 2023 Evergreen IRP and further adjusted in the 2024 DDA report, delaying decommissioning until after 2029.