N-23M12835 Exhibit N-2 Att 3 2025 Managements Discussion AnalysisHIGHLIGHTED
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roved regulated return on equity ("ROE") range is 8. 75 per cent to 9.25 per cent, based on an actual five-quarter average regulated common equity component of up to 40 per cent of approved rate base. NSPI has a NSEB approved Fuel Adjustme...
AI summary NSPI has an approved Fuel Adjustment Mechanism to recover fluctuating fuel costs from customers. The regulated return on equity range is set at 8.75% to 9.25%, with a common equity component of up to 40% of the approved rate base. Seasonal and weather-related factors impact energy demand and service costs, making quarterly results not necessarily indicative of annual performance.
Highlights of the changes are summarized in the following table: For the Three months ended Year ended millions of dollars December 31 December 31 Net income - 2024 $ 71 $ 160 Increased operating revenues (refer to "Operating Revenues" sec...
AI summary The document summarizes net income and revenue changes for the periods ending December 31, 2024 and 2025. It highlights increased operating revenues, decreased fuel costs, and increased FAM and other deferrals. Notable factors include increased storm costs, a cybersecurity incident, and changes in income tax recovery.
NSPl's fuel costs are affected by commodity prices and generation mix, which is largely dependent on economic dispatch of the generating fleet. NSPI brings the lowest cost options on stream first after renewable energy from IPPs including...
AI summary NSPI's fuel costs are influenced by commodity prices and the generation mix, which depends on economic dispatch of the generating fleet. Thermal plant availability was 80% in 2025, slightly lower than 82% in 2024 but in line with the four-year average of 81%. Renewable energy sources, including the NS Block and IPPs, also play a role in the generation mix.
Production volumes by fuel type and average fuel cost are summarized in the following table: Three months ended Year ended For the December 31 December 31 GWh (except as indicated) 2025 2024 2025 2024 Coal 1,329 976 4,370 3,347 Natural gas...
AI summary The text provides a summary of production volumes by fuel type and average fuel costs for Nova Scotia Power Inc. (NSPI) over specific periods. It highlights variations in production volumes and notes a significant over-recovery of fuel costs due to a refund received in Q4 2024.
Average fuel costs per MWh increased in Q4 2025 compared to Q4 2024 primarily due to a refund of previous NSPML assessment payments received in Q4 2024. For further details, refer to Note 5 in the NSPI Consolidated Financial Statements as...
AI summary Average fuel costs per MWh increased in Q4 2025 and year-to-date 2025 compared to the previous year, primarily due to a refund of previous NSPML assessment payments and increased generation from solid fuel and oil. These increases were partially offset by favorable commodity prices and decreased generation from natural gas.
Highlights of the changes in fuel for generation and purchased power are summarized in the following table: For the Three months ended Year ended millions of dollars December 31 December 31 Fuel for generation and purchased power - 2024 $...
AI summary This section discusses changes in fuel for generation and purchased power, including increased Maritime Link assessments, changes in generation mix, and impacts from the Nova Scotia Output-Based Pricing System (OBPS) carbon tax. It also introduces the Fuel Adjustment Mechanism (FAM) and FAM Regulatory Deferral.
NSPI has a NSEB approved FAM, allowing NSPI to recover fluctuating fuel and certain fuel-related costs from customers through annual fuel rate adjustments. Differences between prudently incurred fuel costs and amounts recovered from custom...
AI summary NSPI has a Fuel Adjustment Mechanism (FAM) approved by the NSEB, allowing it to recover fuel costs from customers. The NSEB released audit findings in October 2025, resulting in a $1 million disallowance for fiscal years 2022 and 2023, impacting Q4 2025 financials. Details are provided in note 5 of NSPI's 2025 consolidated financial statements.
Significant changes in the Consolidated Balance Sheets between December 31, 2025 and December 31, 2024 include: Increase millions of dollars (Decrease) Explanation Assets Receivables, net $ 140 Increased due to timing of billing and receip...
AI summary The Consolidated Balance Sheets show significant changes between December 31, 2025 and December 31, 2024, including increases in receivables, income taxes receivable, and regulatory assets, as well as changes in liabilities and equity due to factors like timing of payments, capital investments, and regulatory deferrals.
As at December 31, 2025, contractual commitments for each of the next five years and in aggregate thereafter consisted of the following: millions of dollars 2026 2027 2028 2029 2030 Thereafter Total Purchased ~ower(1} $ 344 $ 360 $ 347 $ 3...
AI summary The document outlines contractual commitments as of December 31, 2025, including purchased power, long-term debt, interest payments, asset retirement obligations, transportation costs, and other financial commitments over the next five years and beyond.
Fuel Supply Disruptions: NSPI is also exposed to the risk of fuel supply chain disruptions, both within and outside NSPl's service territory. Fuel supply disruptions which may be caused by damage to, operational issues with, terrorist or c...
AI summary NSPI faces risks from fuel supply chain disruptions, including those caused by operational issues, severe weather, cyberattacks, and third-party facility failures. These disruptions could increase commodity price risk, disrupt utility operations, and harm NSPI's reputation, potentially leading to a Material Adverse Effect.
Commodity Price Risk The Company's fuel supply is subject to commodity price risk. The Company's fuel supply is exposed to broader global market conditions, which may include impacts on delivery reliability and price, despite contracted te...
AI summary The Company's fuel supply is subject to commodity price risk due to global market conditions, including currency fluctuations, geopolitical risks, and supply disruptions. NSPI aims to hedge 50-100% of fuel costs for 2026 and 50-90% for 2027, adjusting as needed to maintain fuel cost stability and minimize transaction costs.
Coal: A substantial portion of NSPl's coal supply comes from international suppliers, which was contracted at or near the market prices prevailing at the time of contract. The Company has entered into fixed-price and index price contractua...
AI summary NSPI sources a significant portion of its coal from international suppliers under fixed-price and index-price contracts. As of December 31, 2025, approximately 81% of forecast coal requirements for 2026 and 8% for 2027 are hedged.
Heavy Fuel Oil: NSPI periodically enters into physical and/or financial contracts based on forecast heavy fuel oil purchases to meet load and system security requirements. Volumes exposed to market prices are managed using financial instru...
AI summary NSPI manages heavy fuel oil purchases through physical and financial contracts to meet load and system security needs. As of December 31, 2025, forecast heavy fuel oil requirements for 2026 are fully hedged using financial instruments under NSPI's hedging program.
The Company recognized the following net (losses) gains in income related to derivatives receiving regulatory deferral: For the Year ended December 31 millions of dollars 2025 2024 Fuel for generation and purchased power (1) $ $ (12) (36)...
AI summary The Company recognized net losses in income related to derivatives receiving regulatory deferral, specifically $12 million in 2025 and $36 million in 2024, under 'Fuel for generation and purchased power'. These losses are from settled derivative instruments and hedging relationships that have been terminated or are no longer probable.