Topic:"Rate Base" in M12394

3.5 2026 Equity Financing Costs NSPML's Return on Equity review is included in Sections 6 and 7. For purposes of this Assessment, NSPML has applied 9 percent on its average rate base as detailed below. Applying the NSEB-approved 30 percent...

AI summary NSPML is proposing an equity financing cost of $40.7 million for 2026 based on applying a 9% return on equity to its forecasted average shareholder equity. The reduction in equity financing costs compared to 2025 is attributed to a lower average rate base due to annual Maritime Link depreciation, partially offset by sustaining capital.

6.1 NSPML's Return on Equity NSPML's authorized ROE is currently tied to NS Power's ROE and has been 9 percent since the Maritime Link was commissioned in 2018. In the Board's Decision approving the Maritime Link in July 201320F 21 , the B...

AI summary NSPML's authorized Return on Equity (ROE) has been 9 percent since 2018, tied to NS Power's ROE. The NSEB requested a separate ROE for NSPML in the 2026 Assessment Application. NSPML argues for maintaining the 9 percent ROE, citing affordability concerns and the complexity of its operations, despite expert evidence suggesting a higher ROE range of 10.1 to 10.35 percent.

7.0 REGULATED CAPITAL STRUCTURE NSPML is requesting that the Board approve (i) a revised regulated capital structure for sustaining capital to align with NS Power's 60 percent debt and 40 percent equity metrics and (ii) to adopt a flexibil...

AI summary NSPML is requesting the Board to approve a revised regulated capital structure aligning with NS Power's 60% debt and 40% equity metrics and to adopt a flexibility band regarding the 70/30 regulated capital structure on original project costs.

tized debt and equity components on the original project costs can be easily identified and tracked. NSPML can also identify original project costs and Date Filed: July 18, 2025 Page 26 of 29 depreciation such that they can be reported sep...

AI summary The document discusses the separation of original project costs from sustaining capital, allowing for the calculation of 70/30 and 60/40 capital structures. It highlights that future debt and equity will be tracked separately for sustaining capital, improving financial reporting transparency.

st of 28 capital, we have relied upon analytical tools and data sources normally used for such purposes 29 before regulators in Canada and the U.S. We have also reviewed past decisions of the Board in 1 Decision 2024 NSUARB 199 M11791 and...

AI summary The report discusses the analysis of ROE and capital structure for NSPML, including examination of legal requirements, authorized ROEs for other utilities, selection of a proxy group, estimation of cost of common equity using various methods, and assessment of NSPML's capital structure based on business and financial risks.

n meeting the financial integrity and capital attraction tests without giving adequate consideration to the comparability test is not sufficient to meet the [Fair Return Standard]. 21 10 22 The UARB has previously cited the statutory requi...

AI summary The document emphasizes that meeting financial integrity and capital attraction tests alone is insufficient to meet the Fair Return Standard. It highlights the importance of a fair return on rate base for the sustainability of NS Power's service and the potential negative consequences of a low return, such as poor credit ratings and increased borrowing costs.

15 Trans Bay Cable: A 85 kilometer HVDC transmission line under San Francisco Bay that 16 provides approximately 40% of San Francisco's peak load. The transmission line was 17 originally granted an ROE of 13.5% and an equity ratio of 50% b...

AI summary The document discusses the Trans Bay Cable, an HVDC transmission line under San Francisco Bay, and its revenue requirement update filed in 2019. The project was originally approved by FERC in 2005 with a 13.5% ROE and 50% equity ratio. The current owner, NextEra Energy Transmission LLC, filed for an updated revenue requirement, which was resolved through a settlement agreement approved by FERC in 2020, without specifying the authorized ROE or capital structure.

2 SELECTION OF PROXY COMPANIES 3 Since ROE is a market-based concept and given that NSPML is not publicly-traded, it is necessary 4 to establish a group of companies that are both publicly-traded and comparable to the Company's 5 business...

AI summary The document discusses the selection of proxy companies for NSPML to estimate ROE, noting that NSPML is not publicly traded and requires comparable publicly-traded companies with similar business and financial characteristics. The proxy group includes North American electric transmission and distribution utilities.

1 Figure 22: Jurisdictional Comparison of Financing and Flexibility Adjustment Jurisdiction Adj. Docket/Proceeding Notes Alberta 50 bps 2018 GCOC Decision 22570-D01-2018 and 2024 GCOC Decision 27084- D02-2023 Adjustment of 50 bps is normal...

AI summary The document compares financing and flexibility adjustments across various Canadian jurisdictions, noting that most have implemented a 50 basis point adjustment for flotation and financing flexibility, with some exceptions. Nova Scotia's 2023 rate application was resolved through a settlement agreement that did not specify whether flotation costs or financing flexibility were included in the authorized ROE.

3 A. NSPML's Deemed Capital Structure 8 examined the business and financial risk profile of NSPML. 4 NSPML has a deemed capital structure of 30% common equity and 70% long-term debt, which was approved by the Board in 2013.56 5 The capital...

AI summary The document discusses NSPML's deemed capital structure, which is 30% common equity and 70% long-term debt, approved by the Board in 2013. This structure is influenced by a Federal Loan Guarantee for the Maritime Link project.

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.

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

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

REDACTED 1 Request IR-11: 2 3 References: (A) On page 57 of its evidence, Concentric states the following (bold added for 4 emphasis): 5 Some may argue that the debt used to finance the Maritime Link 6 project cost of $1.7 billion issued b...

AI summary The document discusses Concentric's assertion that the Canadian government's guarantee of a $1.7 billion loan for the Maritime Link project does not lower NSPML's risk, as disallowances are fully assigned to equity and the equity ratio is thin. NSPML is asked to explain this claim.

CAD Millions BALANCE SHEET 2024 Forecast 2025 Forecast 2026 Forecast CAD Millions Assets Current assets 12.4 13.1 12.5 Receivables - - Total 12.4 13.1 12.5 CWIP Property, plant & equipment - ML Project 1,765.3 1,765.3 1,765.3 Accumulated D...

AI summary The document outlines NSPML's 2024 to 2026 financial forecasts, including balance sheet details and projected capital investments for the Maritime Link. Concentric argues that sustaining capital over the next 25-30 years should be financed with a higher deemed equity ratio (40%) due to increased risk, affecting rate base calculations and current rate payers.

Thanks, www.emera.com Emera Newfoundland & Labradon From: Sent: Monday, June 16, 2025 9:08 AM To: Cc- Subject: Re: NSPML Depreciation Study Update Exercise Caution - This is an external email from: Beware of links or attachments from exter...

AI summary The email discusses the NSPML depreciation study update, noting challenges in locating detailed capital spend data since 2022 due to a cyber event. A net credit of approximately $5 million to rate base was noted as of December 2024, with expectations of a $4 million credit by the end of 2025. The parties are considering delaying the update until 2026 after marine protection work is completed.

NON-CONFIDENTIAL 1 Request IR-09: 2 - 3 Reference: Section 3.3.3 Capital Depreciation, Page 15; and Rate Base Continuity - 4 Schedule, Att.1, Page 95. - 5 Please reconcile the stated request to recover $57.2M for depreciation with the $57....

AI summary The document discusses a request (IR-09) to reconcile the amount of $57.2M for depreciation recovery with a figure of $57.9M shown in an attachment. A response is provided, offering a reconciliation between the Rate Base Continuity Schedule and the Application Table.

12 Rate Base Continuity Schedule 2026 Total 70101 Original ML Project - Depreciation & Amortization 57.9 Sustaining Capital - Depreciation & Amortization 0.6 rounding 0.1 Application Total 58.6 Application Table 1 Total Depreciation 57.2 A...

AI summary The document presents a Rate Base Continuity Schedule for 2026, detailing depreciation and amortization figures for various projects and components, including the Original ML Project and Sustaining Capital, with a total depreciation and amortization of 58.6.

NON- CONFIDENTIAL 1 Request IR-18: 2 3 Reference: Page 26, lines 19-24. 4 NSPML is requesting that the Board grant flexibility in NSPML's equity 5 6 thickness using a range of +/-1.5 percent which results in a range of 28.5-31.5 percent eq...

AI summary NSPML is requesting flexibility in its equity thickness during the operating phase of a project, proposing a range of +/-1.5 percent. This request is being evaluated in light of the Board's 2013 decision, which restricted payout of earnings in excess of the approved ROE with a 30% equity thickness. The disallowance of ~$9 million has created an imbalance in the regulated equity, impacting the rate base.

NON- CONFIDENTIAL 1 increased the shareholder investment without the ability to earn on the additional 2 investment as NSPML's rates are set at 30% of rate base, although the equity thickness has 3 been above 30%, NSPML is not able to earn...

AI summary NSPML faces challenges in managing its capital structure due to rate base limitations and the Holdback mechanism, impacting its ability to finance capital projects. It requests flexibility to payout earnings based on actual equity thickness, similar to regulatory approaches in other jurisdictions that use ROE or capital structure incentives.

NSPML Responses to Industrial Group Information Requests 1 Request IR-19: 2 3 Reference: Section 7 – Regulated Capital Structure. 4 Please confirm that approval of a revised capital structure of 60% debt (a) 5 and 40% equity in respect of...

AI summary NSPML responds to information requests regarding a revised capital structure and asset management outlook. The response indicates that a 60% debt and 40% equity capital structure would increase NSPML's equity return while reducing debt costs. NSPML also references a prior submission (SBA IR-06) for detailed profit differences and acknowledges the Board's requirement to file a Long-Term Asset Management Plan (LTAMP) by June 30, 2025, as per Matter M11791.

NON-CONFIDENTIAL 1 Request IR-22: 2 3 IR-2 to IR-31 Reference Exhibit N-1 Pages 4 -29 4 5 Page 17 6 NSPML states: "Applying the requested (see Section 7) 40 percent equity thickness to 7 NSPML's forecasted 2026 sustaining capital average r...

AI summary The document contains a request (IR-22) asking Nova Scotia Power Marketing Limited (NSPML) to provide detailed calculations and explanations related to its 2026 sustaining capital rate base and equity thickness assumptions, including reconciling discrepancies and estimating equity financing costs.

a) Please see table below with calculation for estimated sustaining capital rate base: Description Q4 2025 Q1 2026 Q2 2026 Q3 2026 Q4 2026 Sustaining Capital Expenditures 1.5 2.8 2.9 35.9 36.0 Accumulated Depreciation (0.1) (0.1) (0.1) (0....

AI summary The table provides a calculation for the estimated sustaining capital rate base across multiple quarters, showing expenditures, accumulated depreciation, and ending balance for each quarter from Q4 2025 to Q4 2026, with a 5-quarter average of 15.5.

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.

NSPML Responses to Nova Scotia Energy Board Information Requests 1 NSPML's balance sheet. Actual factors will be known at the time when future 2 borrowings are pursued." 3 c) Please confirm whether it is still NSPML's view that the FLG2 tr...

AI summary NSPML confirms that the FLG2 transaction did not negatively impact its return on equity or creditworthiness. It also explains that its request for a change in its regulated capital structure is to align with industry standards, strengthen its balance sheet, and harmonize with NSP's financial profile.

NON-CONFIDENTIAL 1 b) i. NSPML was in the process of preparing an application to end the Holdback mechanism at the time of filing the 2024 Financial Statements. Should that process have soon followed the filing of the financial statements,...

AI summary NSPML was preparing an application to end the Holdback mechanism when filing the 2024 Financial Statements. The potential disallowance of revenue recorded in 2024 could impact the 2024 ROE. NSPML believes the rationale for recording the $10M in 2024, based on planned outages and extreme weather events, is appropriate. The holdback application is now expected to be filed in Q4 2025/early 2026.

Response IR-43: - a) Yes. However, NSPML has never paid out to the Shareholder ROE above 9.25% of 30% of rate base in any year. As a result of NSPML's debt financing, NSPML is not able to adjust it's regulated equity by rebalancing debt, a...

AI summary NSPML confirms it has never exceeded a 9.25% return on equity (ROE) based on 30% of the rate base. The company's ROE is constrained by federally guaranteed debt, which limits its ability to adjust equity. The submitted ROE figures used in approved statements differ slightly from those in annual financial reports, with a noted difference of $3.1M in 2023 and 2022.

It is difficult to find "typical" or representative Canadian regulated publicly-traded utilities. However, using averages and medians (which offset to some extent the influence of extreme observations) provides a useful starting point. Col...

AI summary The text discusses the estimation of sustainable growth rates for Canadian and U.S. regulated utilities using ROE and payout ratios. It highlights that growth rates for Canadian utilities are lower than GDP growth rates and that the AUC has emphasized that long-term growth rates for utilities should not exceed long-term GDP growth rates, as they operate in mature markets with limited growth opportunities.

2 RETURNS IN OTHER JURISDICTIONS AS BENCHMARK 3 Q. Is Dr. Cleary's ROE recommendation consistent with the principles of the Fair Return 4 Standard? 5 A. No, it is not. The return recommended by Dr. Cleary (7.60% on 30% deemed common equity...

AI summary The response states that Dr. Cleary's recommended return on equity (ROE) of 7.60% is too low according to the Fair Return Standard, as it may not maintain the financial integrity of NSPML or attract capital for the Maritime Link project. The Fair Return Standard includes three tests: comparable investment, financial integrity, and capital attraction.

SPONSOR DATE CASE/APPLICANT DOCKET SUBJECT Alberta Utilities Commission ENMAX Power Corp. 2022 ENMAX Power Corp. Application No. 27084 Generic Cost of Capital (electric and gas) Beverage Container Management Board (Alberta) Beverage Contai...

AI summary The document lists various regulatory proceedings related to cost of capital, rate adjustments, and other utility-related matters across different jurisdictions, including Alberta and Colorado. It includes information on applicants, dates, docket numbers, and subjects under review.

d the ATCO Utilities filed company-specific evidence. - 11. The Consumers' Coalition of Alberta (CCA), the Office of the Utilities Consumer Advocate (UCA), and the Industrial Power Consumers Association of Alberta (IPCAA) (collectively, th...

AI summary The document outlines the participation of various interveners in the proceeding, including the Consumers' Coalition of Alberta, the Office of the Utilities Consumer Advocate, and the Industrial Power Consumers Association of Alberta. It also describes the Commission's initiative to organize a technical conference to develop a comparator group for estimating the fair rate of return on equity for Alberta utilities.

- 110. In keeping with the prospective or forward-looking nature of the determination of the cost of capital and prior Commission practice, it is appropriate to use a forecast of the 30-year Canada bond yield submitted on the record of thi...

AI summary The Commission favors using direct 30-year Canada bond yield forecasts from major Canadian banks over adjusted 10-year forecasts, citing simplicity, transparency, and public availability. It recommends averaging forecasts from RBC, TD, and Scotiabank, with alternatives available if needed.

6.4 Notional ROE - 115. In this section, the Commission determines the notional ROE of 9.0 per cent using current market data and considering results of well-known and widely accepted empirical models to estimate the required return such a...

AI summary The Commission establishes a notional ROE of 9.0% using current market data and empirical models like CAPM and DCF. This ROE is calculated as the sum of the base forecast long-term GoC bond yield and the base forecast ERP, serving as a benchmark for future adjustments.

123 Exhibit 27084-X0469.01 PDF pages 46-49; Exhibit 27084-X0460_C, BV-12(a) ROE Model - 40%; Exhibit 27084-X0461, BV-12(b) ROE Model - 37%; Exhibit 27084-X0689.01-C, ATCO/Apex/Fortis IR responses to the AUC, PDF pages 1-4. If deemed equity...

AI summary The document references exhibits and calculations related to the Rate of Return on Equity (ROE) model, including different equity percentages and beta values calculated by Dr. Villadsen, which are part of a regulatory proceeding.

6.5.2 Base and test year values for long-term GoC bond yield - 192. As set out in Section 6.3, the risk-free rate of 3.10 per cent will serve as the base longterm GoC bond yield ( YLDbase ) in the formulaic approach. The updated risk-free...

AI summary The Commission establishes a base long-term GoC bond yield of 3.10% and outlines a method for forecasting test year values using a weighted average of bank forecasts and historical data. The approach ensures consistency between base and test year calculations, with October data from the preceding year used as a reference.

7.1 Overview, approved deemed equity ratios for 2024, and review timeframe - 202. To satisfy the fair return standard, the Commission is required to determine a fair return on the deemed equity component of invested capital. In this sectio...

AI summary The Commission determines the approved deemed equity ratios for 2024, maintaining a uniform return on equity (ROE) of 9.0% and adjusting deemed equity ratios based on risk differences among utilities. The deemed equity ratio of 37% for most utilities and 39% for Apex is set to ensure a fair return and support credit ratings in the A-range. The ratios will be reviewed every five years or when the ROE formula is reviewed.

208. The currently approved deemed equity ratios and the ratios recommended by parties for 2024 are set out in the following table. Table 7. Currently approved deemed equity ratios and the deemed equity ratios recommended for 2024 Last app...

AI summary The table outlines the currently approved deemed equity ratios and the ratios recommended by various parties for 2024. Dr. Villadsen conducted a credit ratio analysis to determine the appropriate equity ratios for ATCO Utilities, Fortis, and Apex to meet credit metric benchmarks. She recommended a deemed equity percentage of about 40% for several entities and noted recommendations for adjustments to Fortis's equity ratio.

DESCRIPTION: This project upgraded the thermal ratings of transmission lines L6511 and L7019which consisted of replacing 138kV and 230kV wooden transmission structures and associated framing (including cross-arms, cross-braces, insulators,...

AI summary This project involves upgrading transmission lines L6511 and L7019 by replacing wooden structures and transferring conductor to avoid safety concerns. It was initially submitted to the NSUARB in 2015 but was not approved. NS Power is now resubmitting it as part of a General Rate Application.

- 8 a) Maintain credit ratings of at least BBB+ from S&P or Baa1 from Moody's; - 9 b) Consistently pay quarterly cash dividends, and have not reduced or eliminated those 10 dividends in the past two years; - 11 c) Have positive earnings gr...

AI summary The text outlines several criteria that must be met, including maintaining credit ratings, consistently paying dividends, positive earnings growth projections, and deriving a significant portion of operating income from regulated operations.

rid and the Lower Business Risk (LBR) Grid. In our view, the different types of utility entities covered under this methodology have different levels of business risk. 16 70 FortisBC, Annual Information Form for the Year Ended December 31,...

AI summary The text discusses the business risk associated with generation ownership in utilities, noting that generation utilities and vertically integrated utilities have higher business risk due to the costs and risks involved in power generation. It contrasts this with transmission and distribution-only utilities, and references differences in average authorized ROE and common equity ratios between U.S. integrated electric utilities and T&D-only utilities.

9 The average of all three methods for the North American Electric proxy group is 9.9 percent, within the range of 9.29 percent to 10.32 percent. Based on this analysis, we believe a reasonable estimate of NSPI's required ROE is 9.9 percen...

AI summary The document discusses NSPI's proposed required return on equity (ROE) of 9.9% based on the North American Electric proxy group average, while NSPI requests to maintain its existing authorized ROE of 9.0% to reduce the rate impact on customers. The deemed equity ratio of 40.0% is also proposed, considering the company's business and financial risks.

The Board approved NS Power's Advanced Metering Infrastructure (AMI) Project Application in June 2018. The Company filed its Revised AMI Compliance Filing on September 20, 2018, detailing the plan to inform customers about the opt-out[1](#...

AI summary The Nova Scotia Utility and Review Board approved NS Power's AMI Project Application in 2018, but did not approve the proposed AMI opt-out fee in its February 2023 Decision. The Board provided general direction, which NS Power has addressed in a specified section of the filing.

Non-standard Meter Service (AMI) Opt-out Fee 2026-2027 GRA Direct Evidence Appendix 13A Page 9 of 14 The concept of non-participant[11](#page-122-0) contributions to the AMI capital project costs, as these costs are embedded in rates, is b...

AI summary The document discusses the rationale for non-participant contributions to the AMI capital project costs, emphasizing shared infrastructure costs and equitable distribution. It explains that even opt-out customers benefit from AMI infrastructure, and their costs are passed through to them, ensuring no over-recovery. The AMI project is deemed in the public interest, offering cost savings and operational benefits.

Opt-out customers in OTA-enabled areas require manual meter reading and receive nonstandard meter service. In 2024, NS Power continued to read these opt-out customers per standard read frequency in accordance with current regulations. Goin...

AI summary Opt-out customers in OTA-enabled areas require manual meter reading, which NS Power conducted in 2024 at a cost of approximately $1.1 million for 100,000 reads. NS Power continues to explore cost-reduction strategies and flexible customer options, as detailed in Appendix 13A of the 2026-2027 GRA.

Energy Transition There is an energy transition underway in this province and around the world. It has been defined as a shift from fossil fuels towards a sustainable, renewable energy future. It is expected to result in a greater demand f...

AI summary The energy transition, defined as a shift from fossil fuels to renewable energy, is expected to increase electricity demand by 75% by 2050, impacting the energy sector. The OEB acknowledges both the risks and opportunities this transition presents, including increased demand and returns for utilities. While the OEB is setting a five-year Cost of Capital Framework, it has not adjusted parameters for energy transition effects due to uncertainty over the next five years.

derably above current levels of ROE for Ontario regulated utilities. [29](#page-37-0) Financial integrity and the ability to raise capital are not impaired by the current cost of capital framework. In the current proceeding, the OEB had th...

AI summary The document discusses the use of U.S. utility data in the 2009 Cost of Capital Framework, noting that Canadian investors prefer Canadian utilities. It highlights that the current ROE for Ontario utilities is above current levels and that financial integrity and capital-raising abilities are not impaired. The OEB emphasizes the differences between Canadian and U.S. utilities, including regulatory oversight and business structures.

Expert Report Proposals LEI stated that the OEB's current approach of revising the capital structure upon application if warranted due to an increase in business/financial risks is a reasonable practice, as the OEB has noted that risks rar...

AI summary LEI and Dr. Cleary agree that the OEB's approach to revising capital structure based on risk changes is reasonable. Concentric argues that Ontario's equity ratios are too low compared to U.S. peers and recommends a minimum deemed equity ratio of 45% for all Ontario utilities, with a specific recommendation for OPG to increase its equity ratio to meet the FRS.

have been changes to the Ontario regulatory framework that have reduced risk. OEB staff submitted that any change in risk has already been reflected to some extent in the formulaic adjustments to ROE. In OEB staff's view, Enbridge Gas's eq...

AI summary OEB staff argue that Enbridge Gas's equity ratio should not be adjusted, citing previous regulatory decisions and formulaic adjustments to ROE. They disagree with Dr. Cleary's recommendation to lower Enbridge Gas's equity ratio and revisit Hydro One's 40% equity ratio. The OEA and several ratepayer groups also disagree with these recommendations, though some ratepayer groups support Dr. Cleary's recommendations regarding Hydro One.

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.

Expert Report Proposals LEI recommended that the status quo approach (considering deemed capital structure regardless of the actual capital structure) should be retained. In LEI's view, this ensures fairness to both utilities (flexibility...

AI summary LEI, Concentric, and Dr. Cleary recommend retaining the status quo approach for deemed capital structure, emphasizing fairness, administrative simplicity, and flexibility for utilities. The decision and order reference new transmitters in Ontario since 2009.

ir specific operational and financial circumstances. Further, maintaining the deemed capital structure safeguards ratepayers from distortions that could arise from excessive equity or debt financing. Implications of variances from the deem...

AI summary The OEB maintains the use of a deemed capital structure to prevent distortions from excessive equity or debt financing, ensuring fair returns for ratepayers and utilities. Using actual capital structures could lead to inefficiencies, and the current approach of applying actual weighted average cost of debt remains appropriate and aligned with regulatory best practices.

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.

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.

Submissions OEB staff and CME agreed with LEI that the DSTDR should be applied as a cap for all utilities (and not just electricity distributors and transmitters). OEB staff noted that OEBregulated entities have similar credit ratings and...

AI summary The OEB staff and CME support applying the DSTDR as a cap for all utilities, while the OEA disagrees, arguing that short-term debt costs are set through market auctions. The OEA also supports Concentric's proposals and opposes a blanket cap on short-term debt rates. CCC suggests maintaining the use of actual short-term debt costs for Enbridge Gas and OPG, with the option to request a different approach if needed.

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.

Submissions OEB staff and a number of ratepayer groups agreed with LEI and Dr. Cleary that consistent with the OEB's existing policy, the OEB should continue to implement changes in the cost of capital parameters and capital structure upon...

AI summary The OEB staff and ratepayer groups support aligning cost of capital changes with rebasing, while SEC and VECC recommend updating base rates to avoid variance account imbalances. CCC and SEC caution against mid-Price Cap incentive rate-setting mechanism (IRM) term changes, emphasizing that cost of capital should be treated like other cost components.

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.

Table 2 – Summary of Revised Methodology – Cost of Capital Electricity Natural Gas Distributors Electricity Distributors and Transmitters OPG's Prescribed Generation Assets Natural Gas Distributors

AI summary The text presents Table 2, which provides a summary of the revised methodology for calculating the cost of capital, specifically for electricity distributors, transmitters, and natural gas distributors. The table outlines different categories and entities involved in the cost of capital calculation.

Capital Structure General Approach The 2009 Report continued the deemed equity ratio of 40% equity / 60% debt for electricity distributors established previously by the OEB in 2006. [110](#page-138-3) The 2009 Report said that for electric...

AI summary The document outlines the capital structure approach for electricity distributors and transmitters in Ontario, including the deemed equity ratio of 40% equity / 60% debt established by the OEB in 2006 and extended to electricity transmitters. Gas utilities and OPG have case-by-case deemed equity ratios, and the OEB sets a uniform ROE for all regulated entities based on business and financial risks.

3 ROE and Sustaining Capital DER 4 5 In its Decision, the NSEB determined an ROE of 8.75 percent for NSPML. Table 1 6 provides a comparative assessment of the impact of the 9.0 percent ROE requested by 7 the Company to the 8.75 percent ROE...

AI summary The NSEB set an ROE of 8.75 percent for NSPML, contrasting with the 9.0 percent ROE requested by the Company. Table 1 compares the impact of these ROE rates on NSPML's rate base and sustaining capital.

10 Table 1 Category (in $millions) Original Assessment 9.0% Compliance Filing 8.75% Variance Rate Base 40.2 39.0 1.2 Sustaining Capital 0.5 0.5 0.0 Total ROE 40.7 39.5 1.2 11

AI summary Table 1 presents a comparison between the original assessment and compliance filing for the Rate Base and Sustaining Capital categories, showing a variance of 1.2 million dollars for both. The Total ROE also reflects a similar variance, indicating discrepancies in financial reporting.

17 Table 2 Category (in $millions) Original Assessment 60/40 Compliance Filing 70/30 Variance Rate Base 40.2 40.2 0.0 Sustaining Capital 0.5 0.4 0.1 Total ROE 40.7 40.6 0.1 18

AI summary Table 2 presents financial data related to rate base and sustaining capital under different assessment ratios, showing minimal variance between the original assessment (60/40) and the compliance filing (70/30). The total return on equity (ROE) also shows a slight difference of 0.1 million dollars.

in $millions Average Rate Base Sustaining Capital 2026 $ 1,487.17 $ 15.10 9.0% to 8.75% ROE Impact Original 2026 Assessment Compliance Filing 2026 Assessment Category ROE 9% ROE 8.75% Variance Rate Base $ 40.2 $ 39.0 $ 1.2 Sustaining Capex...

AI summary The text presents financial data related to the 2026 compliance filing, including rate base, sustaining capital, and return on equity (ROE) impacts under different scenarios. It details changes in sustaining capital, depreciation, and equity financing, along with a variance of 1.3 million dollars in total costs.

1.0 OVERVIEW On May 11, 2026, the Nova Scotia Energy Board (NSEB, Board) released its decision on NSP Maritime Link Inc.'s (NSPML, Company) 2026 Assessment Application (Assessment). In its decision, the Board directed NSPML to file its com...

AI summary The Nova Scotia Energy Board (NSEB) directed NSP Maritime Link Inc. (NSPML) to file a compliance filing following its 2026 Assessment Application decision, including a reduction in ROE, restatement of equity financing, and revised payment schedules to Nova Scotia Power (NS Power).

3 ROE and Sustaining Capital DER 4 5 In its Decision, the NSEB determined an ROE of 8.75 percent for NSPML. Table 1 6 provides a comparative assessment of the impact of the 9.0 percent ROE requested by 7 the Company to the 8.75 percent ROE...

AI summary The NSEB set an ROE of 8.75 percent for NSPML, contrasting with the 9.0 percent requested by the Company. The impact of this decision on NSPML's rate base and sustaining capital is analyzed in Table 1.

10 Table 1 Category (in $millions) Original Assessment 9.0% Compliance Filing 8.75% Variance Rate Base 40.2 39.0 1.2 Sustaining Capital 0.5 0.5 0.0 Total ROE 40.7 39.5 1.2 11

AI summary Table 1 presents a comparison of the original assessment and compliance filing for the Rate Base and Sustaining Capital categories, showing a variance of 1.2 million dollars in both categories. The total Return on Equity (ROE) is also outlined with a similar variance.

17 Table 2 Category (in $millions) Original Assessment 60/40 Compliance Filing 70/30 Variance Rate Base 40.2 40.2 0.0 Sustaining Capital 0.5 0.4 0.1 Total ROE 40.7 40.6 0.1 18

AI summary Table 2 presents financial data related to rate base and sustaining capital under different assessment methods. The original assessment (60/40) and compliance filing (70/30) show minimal variance in both rate base and sustaining capital, with the total return on equity (ROE) also showing a slight difference.

in $millions Average Rate Base Sustaining Capital 2026 $ 1,487.2 $ 15.5 9.0% to 8.75% ROE Impact Original 2026 Assessment Compliance Filing 2026 Assessment Category ROE 9% ROE 8.75% Variance Rate Base $ 40.2 $ 39.0 $ 1.2 Sustaining Capex 0...

AI summary The document presents financial data and analysis related to the 2026 compliance filing, including rate base, sustaining capital, and ROE impacts under different scenarios. It details the effects of varying ROE and DER on cost components such as rate base, sustaining capex, and total costs, highlighting variances between original and compliance filing assessments.

2.0 RATE BASE [7] In its Order dated February 25, 2022, following the Final Project Costs decision (2022 NSUARB 18 (M10206)), the Nova Scotia Utility and Review Board (NSUARB) confirmed NSPML's opening rate base, after adjustments, of $1,7...

AI summary The NSUARB confirmed NSPML's opening rate base of $1,752.4 million after adjustments in its February 2022 Order. NSPML stated that no further adjustments to the rate base have been made for outstanding claims and that any adjustments would occur after claims are settled. In its current application, NSPML outlined equity financing costs based on different equity thickness percentages for forecast 2026 rate base amounts.

2.1 Findings - [9] NSPML said it would address the rate base treatment of any 2026 sustaining capital expenditures when it files its rate base reconciliation for outstanding insurance, warranty, expropriation and contract claims. It said t...

AI summary NSPML has committed to addressing the rate base treatment of 2026 sustaining capital expenditures in its rate base reconciliation. The Board emphasizes the need to monitor sustaining capital expenses to avoid undue rate pressures and intergenerational equity issues, and reiterates the requirement for NSPML to provide a rate base continuity schedule in future applications.

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

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

4.1 Findings - [28] The significance of the LTAMP was reviewed by the NSUARB in its 2025 NSPML cost assessment decision: - [37] Beyond the LTAMP's importance to establishing expected NSPML capital needs, the LTAMP can also be used to estab...

AI summary The NSUARB reviewed the significance of the LTAMP in its 2025 NSPML cost assessment decision. The Board emphasized the importance of the LTAMP for establishing capital needs and multi-year cost assessments for the Maritime Link. NSPML filed a single-year assessment due to ongoing matters and the need for operational certainty.

5.0 RETURN ON EQUITY AND CAPITAL STRUCTURE [38] NSPML's existing cost of capital is based on an approved return on equity of 9.0% for ratemaking purposes, as decided in the initial Maritime Link decision, 2013 NSUARB 154 ( 2013 Maritime Li...

AI summary NSPML's existing return on equity is 9.0%, as approved in the 2013 Maritime Link decision. NSPML submitted a report recommending a higher return on equity (10.10% to 10.35%), but proposed to maintain the 9.0% rate to avoid increasing customer rates. NSPML also requested changes to its capital structure, including a shift to a 60% debt and 40% equity sustaining capital structure and introducing flexibility in its regulated capital structure for original project costs.

5.3 Capital Structure [116] NSPML said that sustaining capital is not supported by federal government guarantees, and the 30% deemed equity ratio used with the guaranteed financing of the Maritime Link is materially lower than equity ratio...

AI summary NSPML argues that the 30% deemed equity ratio for the Maritime Link is lower than industry standards and requests a 40% equity ratio for sustaining capital investments. It also seeks flexibility in regulated equity balances, citing fixed federal guarantees on original capital debt. Dr. Cleary supports the 40% equity ratio for sustaining capital, aligning it with NS Power's current ratio.

equity to be tied to NS Power's, although not necessarily set at the same rate. The Consumer Advocate considered it would be appropriate to tie NSPML's return on equity to NS Power's in some fashion. [126] The Consumer Advocate submitted t...

AI summary The Consumer Advocate argues that NSPML's return on equity should be tied to NS Power's, but not necessarily at the same rate. They disagree with Concentric's suggestion of a 75 to 100 basis point increase, citing insufficient analysis and noting NSPML's lower risk due to federal loan guarantees and financial stability.

5.5.2 Capital Structure [202] NSPML is a single purpose entity. It was created to secure lower cost financing under a federal loan guarantee for the development of the Maritime Link. This included constituting NSPML as a more highly levera...

AI summary NSPML is a highly leveraged entity established to secure lower cost financing for the Maritime Link project under a federal loan guarantee. The Board acknowledges the 30% equity ratio used in the 2013 approval but declines NSPML's request to increase it to 40% or allow a higher return on equity, citing insufficient evidence of changed circumstances and the need to maintain cost controls.

6.0 2026 SUSTAINING CAPITAL COSTS [208] NSPML expects to incur sustaining capital expenditures of about $33.5 million in 2026. This total amount is comprised of its Submarine Cable Protection Project of $32,962,333, which was approved by t...

AI summary NSPML expects to incur $33.5 million in sustaining capital expenditures in 2026, including the Submarine Cable Protection Project and routine capital projects. These costs will add depreciation expenses, and adjustments to the Maritime Link Project capital costs are expected but not expected to have a material impact on rate base or revenue requirement.

The Board orders that: - 1. The 2026 cost assessment for recovery from NS Power of NSPML's 2026 revenue requirement in the total amount of $197.5 million, recovered through a schedule of monthly charges commencing on January 1, 2026, and c...

AI summary The Board approves the 2026 cost assessment for NSPML, authorizes quarterly reporting requirements, and reserves jurisdiction over adjustments to the rate base. It also mandates updates to the depreciation study and the submission of a rate base continuity schedule in future applications.

Schedule A Assessment FLG 2 Total Jan 1, 2026 $13,250,000 $13,250,000 Feb 1, 2026 $13,250,000 $13,250,000 Mar 1, 2026 $13,250,000 $13,250,000 Apr 1, 2026 $13,250,000 $13,250,000 May 1, 2026 $13,250,000 $21,129,903.37 $34,379,903.37 Jun 1,...

AI summary Schedule A presents a monthly assessment table with amounts for FLG 2 and totals, including a note about a $4 million monthly holdback starting January 1, 2026, directed by the Board. The table shows varying amounts across months, with some months having additional FLG 2 amounts.

Question: - (a) Please explain Concentric's assertion that " Some may argue that the debt used to finance the Maritime Link project cost of $1.7 billion issued by the Maritime Link Financing Trust and guaranteed by the government of Canada...

AI summary The question addresses Concentric's assertions regarding the Maritime Link project's financing, including the impact of a government loan guarantee on NSPML's risk, bond yields, equity ratio calculations, and the rationale behind Concentric's proposed higher equity ratio requirements for NSPML.

Request IR-12: Preamble: On page 58 of its evidence, Concentric states the following (bold added for emphasis): The Maritime Link will require additional capital investment (sustaining capital) over the next 25-30 years, with the majority...

AI summary Concentric argues that the Maritime Link will require significant future capital investment, which will be financed with highly leveraged debt. This increases risk, and thus, Concentric recommends a higher deemed equity ratio of 40% for sustaining capital, matching NS Power's ratio, rather than the current 30% used for the Maritime Link.

Request IR-22: - Page 17 - NSPML states: "Applying the requested (see Section 7) 40 percent equity thickness to NSPML's - forecasted 2026 sustaining capital average rate base of $15.5 million yields an average sustaining - capital equity i...

AI summary NSPML is asked to provide calculations and reconciliations related to its 2026 sustaining capital rate base and equity thickness. Specifically, it must show how it arrived at the $15.5 million rate base, reconcile discrepancies between figures in Attachment 1 and Table 3, confirm the equity investment under a 30% thickness, and provide estimated equity financing costs.

3 Request IR-18: 4 Reference: Page 26, lines 19-24. NSPML is requesting that the Board grant flexibility in NSPML's equity thickness using a range of +/-1.5 percent which results in a range of 28.5- 31.5 percent equity and 68.5-71.5 percen...

AI summary NSPML is requesting flexibility in its equity thickness during the operating stage of the project, proposing a range of +/-1.5 percent. The request is aligned with the Board's 2013 decision regarding NS Power, but the Board is asked to clarify how this aligns with the 30% equity thickness rule and whether other utilities apply different capital structures for sustaining capital.

24 Request IR-21: - 25 Reference: Appendix A, Concentric Evidence, Page 6, lines 16-18. - 26 NSPML is requesting a higher common equity ratio of 40 percent for that 27 portion of its capital structure, which is consistent with the deemed e...

AI summary NSPML is requesting a higher common equity ratio of 40 percent for a portion of its capital structure, aligning with the deemed equity ratio for NS Power, as referenced in Appendix A, Concentric Evidence, Page 6, lines 16-18.

2.0 RATE BASE [7] In its Order dated February 25, 2022, following the Final Project Costs decision (2022 NSUARB 18 (M10206)), the Nova Scotia Utility and Review Board (NSUARB) confirmed NSPML's opening rate base, after adjustments, of $1,7...

AI summary The NSUARB confirmed NSPML's opening rate base of $1,752.4 million in its February 2022 order. NSPML stated that no adjustments have been made to the rate base for outstanding claims and that any future adjustments would occur after claims are settled. NSPML's proposed equity financing costs are based on 30% and 40% equity thickness on forecast 2026 rate bases.

2.1 Findings - [9] NSPML said it would address the rate base treatment of any 2026 sustaining capital expenditures when it files its rate base reconciliation for outstanding insurance, warranty, expropriation and contract claims. It said t...

AI summary NSPML has committed to addressing the rate base treatment of 2026 sustaining capital expenditures in its rate base reconciliation. The Board emphasizes the importance of monitoring sustaining capital expenses to prevent undue rate pressures and intergenerational equity issues, and reiterates the need for NSPML to provide a rate base continuity schedule in future applications.

rcial Power, which was August 15, 2021, Emera shall, with respect to the Maritime Link, develop and maintain an LTAMP for the service life of the Maritime Link. Section 5.2(b) of the Agreement states: 5.2(b): Emera In-Service LTAMPs - Not...

AI summary The document discusses the requirement for Emera to develop and maintain an LTAMP for the Maritime Link, referencing Section 5.2(b) of the Agreement. NSPML's LTAMP was a work in progress and was not filed with the Board in 2022 as directed. NSPML provided updates on the status of the LTAMP in response to IR-4 in M11285.

4.1 Findings - [28] The significance of the LTAMP was reviewed by the NSUARB in its 2025 NSPML cost assessment decision: - [37] Beyond the LTAMP's importance to establishing expected NSPML capital needs, the LTAMP can also be used to estab...

AI summary The NSUARB reviewed the significance of the LTAMP in its 2025 NSPML cost assessment decision. The Board emphasized the importance of the LTAMP for establishing NSPML's capital needs and for multi-year cost assessments. NSPML responded to the CA's inquiry by explaining that single-year assessments continued due to uncertainties in operational matters, including the LTAMP. The Board's oversight role under the Public Utilities Act is highlighted, along with the need for certainty in operational and capital matters before considering multi-year assessments.

nd we had the debt fixed at the 70 percent level, and so now some of that can be balanced when we do the final cost at true-up, I suppose we're calling it, but that does incrementally cause the issue. So every time we've attempted to rebal...

AI summary The discussion revolves around the challenges of maintaining a 30/70 debt-to-equity ratio in regulatory reporting, with the inability to rebalance equity without increasing debt. The speaker acknowledges that raising equity thickness would benefit shareholders but is constrained by existing disallowances and holdback mechanisms ordered by the Board.

5.5.2 Capital Structure [202] NSPML is a single purpose entity. It was created to secure lower cost financing under a federal loan guarantee for the development of the Maritime Link. This included constituting NSPML as a more highly levera...

AI summary NSPML, a single-purpose entity, requested a higher equity ratio for sustaining capital, but the Board declined the request, citing insufficient evidence of changes since 2013 that justify higher equity costs. The Board emphasized the historical basis of the 30% equity ratio and the need for NSPML to address these concerns in a future proceeding.

July 10, 2026 By Email Parties of M12394 Dear Parties: M12394 - NSP Maritime Link Inc. (NSPML) - 2026 Cost Assessment Application - Compliance Filing The Nova Scotia Energy Board issued its decision in this matter on May 11, 2026 (2026 NSE...

AI summary The Nova Scotia Energy Board issued a decision on May 11, 2026, reducing NSPML's Return on Equity from 9.0% to 8.75% and adjusting the debt-to-equity ratio. NS Power submitted compliance filings, resulting in a $1.2 million reduction in the 2026 cost assessment from $198.7 million to $197.5 million. The Board is satisfied with the compliance filing.

The Board orders that: - 1. The 2026 cost assessment for recovery from NS Power of NSPML's 2026 revenue requirement in the total amount of $197.5 million, recovered through a schedule of monthly charges commencing on January 1, 2026, and c...

AI summary The Board approves the 2026 cost assessment for NSPML, authorizing the recovery of $197.5 million through monthly charges, with a $4 million holdback. NSPML is directed to provide future rate base continuity schedules, continue quarterly reporting, and update the depreciation study after the cable protection project is completed in 2026.