Topic:"Rate Design" in M03154

DEFINITION - 01 Rate base is comprised of the net value of certain assets upon which NSPI can earn a specified rate of return. The rate base and rate of return are approved by the UARB in compliance with the Public Utilities Act. - 02 The...

AI summary The rate base, defined as the net value of assets upon which NSPI can earn a specified rate of return, is approved by the UARB under the Public Utilities Act. The UARB periodically reviews both the rate base and the allowed rate of return.

GENERAL - 02 The Company has an obligation to provide electric service to the consuming public in the most cost effective manner. This obligation is discharged when a customer group receiving special services pays for the cost of those ser...

AI summary The Company is obligated to provide electric service in the most cost-effective manner, ensuring that special services are paid for by the customer group receiving them. Policies in the Rate and Regulations Manual outline maximum service extension distances, and when these are exceeded, customer capital contributions are required. Factors such as location, future development, public safety, and return on investment are considered in determining these contributions.

REVIEW OF OVERHEAD APPLICATION RATE 14 The overhead application rate will be reviewed on a periodic basis by Capital Accounting to assess its reasonableness. Deleted: Corporate Deleted: Services

AI summary The overhead application rate will be periodically reviewed by Capital Accounting to assess its reasonableness. The terms 'Corporate' and 'Services' have been deleted from the text.

DEFINITION 01 Rate-regulated enterprises such as NSPI have to consider the impact of accounting decisions on revenue requirements and rate stability. If a regulatory authority approves the recovery of certain costs over a period of years i...

AI summary This section discusses how rate-regulated enterprises like NSPI account for deferred costs and their recovery through rates, emphasizing the recording of deferred amounts as a deferred asset and the matching of expenses to benefits through amortization.

OVERHEAD APPLICATION RATE

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

June 11, 2010 Nancy McNeil Clerk of the Board Nova Scotia Utility and Review Board 1601 Lower Water Street, 3 rd Floor P.O. Box 1692, Unit "M" Halifax, NS B3J 3S3 Re: NSPI Accounting Policy and Procedures Manual - Accounting Policy 6960-Ac...

AI summary The Nova Scotia Utility and Review Board directed NSPI to annually report on hedge accounting policies used by other rate-regulated entities in Canada and any changes in accounting standards affecting NSPI's policies. NSPI continues to monitor developments in the Canadian utility industry regarding financial instruments and hedges.

2011 Accounting Standards In February 2008, the CICA announced Canadian Generally Accepted Accounting Principles ("GAAP") for publicly accountable enterprises will be replaced by International Financial Reporting Standards ("IFRS") for fis...

AI summary In 2008, the CICA announced the replacement of Canadian GAAP with IFRS for fiscal years starting in 2011. Nova Scotia Power Inc. (NSPI) began planning the transition but, due to uncertainty around IFRS for rate-regulated accounting, its parent company, Emera, opted to adopt US GAAP instead, which was approved in 2010.

COMPLIANCE 06 NSPI applies ASC 980 for specific rate regulated accounting policies which are approved by the UARB. Where there is no specific accounting policy identified in the Accounting Policy and Procedures Manual, NSPI will follow the...

AI summary NSPI applies ASC 980 for specific rate regulated accounting policies approved by the UARB. For unregulated policies, NSPI follows U.S. GAAP. Some sections of the CICA Handbook were deleted, with a reference to August 10, 2006.

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

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

GENERAL - The Company has an obligation to provide electric service to the consuming public in the most cost effective manner. This obligation is discharged when a customer group receiving special services pays for the cost of those servic...

AI summary The Company must provide electric service in a cost-effective manner, ensuring no customer group subsidizes another. Policies in the Rate and Regulations Manual dictate service extension distances, and any service beyond these must be funded by the customer. Factors such as location, future development, public safety, and return on investment are considered when determining customer capital contributions.

GENERAL - The cost-of-capital invested in construction work in progress is included in an allowance for funds used during construction 1 ("AFUDC") as an addition to the cost of property constructed using a weighted average cost-of-capital....

AI summary The document discusses the inclusion of the cost-of-capital in the allowance for funds used during construction (AFUDC) for capital assets. This cost is capitalized and recovered over time through depreciation, ensuring equitable recovery from customers.

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

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

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

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

PART VI.1 TAX The Company is subject to Part VI.1 tax at a prescribed rate applied to preferred share dividends paid. The Company receives a tax deduction equal to a prescribed multiple of the Part VI.1 tax. Deleted: 01 The taxes payable m...

AI summary The Company is subject to Part VI.1 tax on preferred share dividends, with a tax deduction based on a prescribed multiple of the tax. The text includes deleted content and references to accounting standards and dates.

APPLICATION OF ADMINISTRATIVE AND VEHICLE OVERHEAD (SELF - CONSTRUCTED ASSETS) - 6230

AI summary The document discusses the application of administrative and vehicle overhead for self-constructed assets, specifically referencing Nova Scotia Power Inc. (NSPI) and the Nova Scotia Utility and Review Board (UARB). It includes references to accounting standards and regulatory processes.

REVIEW OF OVERHEAD APPLICATION RATE 14 The overhead application rate will be reviewed on an annual basis by Capital Accounting to assess its reasonableness.

AI summary The overhead application rate will be reviewed annually by Capital Accounting to ensure its reasonableness.

APPLICATION OF ADMINISTRATIVE OVERHEAD (CONTRACTED ASSETS) - 6235

AI summary The document discusses the application of administrative overhead for contracted assets, likely involving financial and regulatory considerations related to Nova Scotia Power Inc. and the Nova Scotia Utility and Review Board.

REVIEW OF OVERHEAD APPLICATION RATE The overhead application rate will be reviewed on an annual basis by Capital Accounting to assess its reasonableness.

AI summary The overhead application rate is subject to annual review by Capital Accounting to ensure its reasonableness.

PREFERRED DIVIDENDS - 7320

AI summary The document discusses preferred dividends under matter 7320, including financial details and regulatory considerations. It includes references to Nova Scotia Power Inc. and the Nova Scotia Utility and Review Board, highlighting the importance of accounting standards and regulatory oversight in dividend calculations.

LIABILITIES INCOME TAXES PAYABLE - 8300 01 Includes all income taxes payable to both levels of government. 1 Deleted: August 10, 2006 & lt;sup>1 Please refer to NSPI Accounting Policy and Procedures Manual Section 5900. September 23,2010 M...

AI summary The letter from Grant Thornton LLP confirms that the accounting policies and procedures of Nova Scotia Power Inc. (NSPI) align with US GAAP for regulated entities. The review was conducted on the policies outlined in the NSPI Accounting Policies and Procedures Manual, with a focus on sections related to income taxes payable and other accounting practices.

INTRODUCTION - [1 ] Nova Scotia Power Inc. ("NSPI" or the "Company") made an Application to the Nova Scotia Utility and Review Board ("Board" or "UARB") for approval of changes to its Accounting Policy and Procedures Manual (the "Manual")...

AI summary Nova Scotia Power Inc. (NSPI) is seeking approval from the Nova Scotia Utility and Review Board (UARB) to update its Accounting Policy and Procedures Manual to align with US-GAAP, as opposed to Canadian GAAP (C-GAAP), to ensure consistency in financial reporting practices.

FOREIGN CURRENCY TRANSLATION - 2200

AI summary This section of the document discusses the topic of foreign currency translation, focusing on accounting standards and practices relevant to Nova Scotia Power Inc. and other related entities.

POLICIES - 01 The functional currency of the company is Canadian dollars. Monetary assets and liabilities denominated in a foreign currency are converted to the functional currency at the rate of exchange prevailing on each balance sheet d...

AI summary The policies outlined define the functional currency as Canadian dollars and detail the accounting treatment for foreign currency transactions, including conversion rates, recognition of exchange gains and losses, and handling of hedged transactions.

FINANCIAL REPORTING SYSTEM

AI summary The document introduces the Financial Reporting System, outlining its purpose and structure within Nova Scotia's utility regulatory framework.

REVENUE

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

Computer Hardware &Operating Software (072)

AI summary The section titled 'Computer Hardware & Operating Software (072)' outlines the regulatory context and technical considerations related to computer systems and software used in utility operations, including references to accounting standards and regulatory bodies.

REVIEW OF OVERHEAD APPLICATION RATE 14 The overhead application rate will be reviewed on an annual basis by Capital Accounting to assess its reasonableness.

AI summary The overhead application rate will be reviewed annually by Capital Accounting to ensure its reasonableness.

REVIEW OF OVERHEAD APPLICATION RATE 13 The overhead application rate will be reviewed on an annual basis by Capital Accounting to assess its reasonableness.

AI summary The overhead application rate will be reviewed annually by Capital Accounting to ensure its reasonableness.

ALLOWANCE FOR FUNDS USED DURING CONSTRUCTION .. 6240

AI summary The document discusses the Allowance for Funds Used During Construction (AFUDC), which is a financial accounting method used to calculate the cost of capital during the construction of power plants and other capital projects. It involves considerations such as Return on Equity (ROE), Weighted Average Cost of Capital (WACC), and regulatory oversight by the Nova Scotia Utility and Review Board (UARB).

CURRENT ASSETS

AI summary The section 'CURRENT ASSETS' introduces the topic of current assets, which are short-term assets expected to be converted into cash within a year. This section likely includes details on liquidity, working capital, and asset management strategies.

CURRENT ASSETS

AI summary The section 'CURRENT ASSETS' introduces the topic of current assets, which are short-term assets expected to be converted into cash within a year. This section likely includes details on liquidity, working capital, and asset management strategies.

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

AI summary The document outlines the accounting treatment for deferred charges related to termination costs in severance programs. It explains how costs should be accrued, when they should be recorded as deferred assets, and how they should be amortized over three years to match the cost with future savings.

OVERHEAD APPLICATION RATE

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

COST OF OPERATIONS INCOME TAXES - 5900

AI summary The document discusses the cost of operations and income taxes, focusing on financial reporting and accounting principles. It includes references to income tax expenses and related accounting standards.

APPLICATION OF ADMINISTRATIVE AND VEHICLE OVERHEAD (SELF - CONSTRUCTED ASSETS) - 6230

AI summary The document discusses the application of administrative and vehicle overhead related to self-constructed assets, with a focus on accounting principles and regulatory considerations.

REVIEW OF OVERHEAD APPLICATION RATE 14 The overhead application rate will be reviewed on an annual basis by Capital Accounting to assess its reasonableness.

AI summary The overhead application rate will be reviewed annually by Capital Accounting to assess its reasonableness.

DETERMINATION OF ELIGIBLE OVERHEAD EXPENSES O7 The next step is the identification of operating expenses that will benefit construction or development activities. A separate determination is made for each division. The process relies on bu...

AI summary The document discusses the determination of eligible overhead expenses, focusing on the allocation of operating expenses benefiting construction or development activities. It references past approvals by the Public Utilities Board and UARB for using direct labour costs to allocate overhead expenses to capital projects.

APPLICATION OF ADMINISTRATIVE OVERHEAD (CONTRACTED ASSETS) - 6235

AI summary The document discusses the application of administrative overhead related to contracted assets, likely involving Nova Scotia Power Inc. and the Nova Scotia Utility and Review Board. It includes references to accounting principles and regulatory processes.

REVIEW OF OVERHEAD APPLICATION RATE The overhead application rate will be reviewed on an annual basis by Capital Accounting to assess its reasonableness.

AI summary The overhead application rate is subject to annual review by Capital Accounting to ensure its reasonableness.

Tel: (416) 865-0200 Fax: (416) 865-0887 www.bdo.ca BDO Canada LLP Royal Bank Plaza, South Tower 200 Bay Street. 33rd Floor PO Box 32 Toronto, ON M5J 2J8 Canada December 9th, 2010 Nancy McNeil Regulatory Affairs Officer/Clerk Nova Scotia Ut...

AI summary BDO Canada LLP confirms that the proposed changes to Nova Scotia Power Inc.'s Accounting Policies and Procedures Manual do not appear unreasonable or provide an unfair advantage. The report highlights differences between US GAAP and Canadian GAAP, particularly regarding termination costs, employee benefits, and investment tax credits. BDO recommends monitoring the first US GAAP statements for transitional changes.

INTRODUCTION & SCOPE BDO Canada LLP was engaged by Nova Scotia Utility and Review Board (the Board) to monitor the conversion of Nova Scotia Power Inc's (NSPI) financial accounting and reporting from Canadian to US Generally Accepted Accou...

AI summary BDO Canada LLP was engaged by the Nova Scotia Utility and Review Board to review Nova Scotia Power Inc.'s proposed changes to its Accounting Policies and Procedures Manual under US GAAP and assess their reasonableness and fairness.

INTRODUCTION - [1 ] Nova Scotia Power Inc. ("NSPI" or the "Company") made an Application to the Nova Scotia Utility and Review Board ("Board" or "UARB") for approval of changes to its Accounting Policy and Procedures Manual (the "Manual")...

AI summary Nova Scotia Power Inc. is seeking approval from the Nova Scotia Utility and Review Board to update its Accounting Policy and Procedures Manual to align with US-GAAP, as Canadian GAAP is transitioning to IFRS, which would affect how financial results are presented for rate determination.

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

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

APPLICATION OF ADMINISTRATIVE AND VEHICLE OVERHEAD (SELF - CONSTRUCTED ASSETS) - 6230 expense figures since the overhead application rate for a particular fiscal year must be determined before the year commences.

AI summary The document discusses the necessity of determining the overhead application rate for a fiscal year before the year begins, ensuring accurate expense figures for administrative and vehicle overhead related to self-constructed assets.

09 Shared Services Division Eligible Overhead Expenses and rates are calculated for each Shared Services Division, deemed to have capital related labour and expenses. These eligible expenses include, but are not limited to, office supplies...

AI summary The Shared Services Division's eligible overhead expenses, including office supplies, training, rent, and materials, are calculated and combined with a separate allocation of head office expenses.

10 HEAD OFFICE RENT Head Office expenses are allocated to the three operating divisions based on the square footage occupied by each division.

AI summary Head Office expenses are allocated to three operating divisions based on the square footage each division occupies. This method ensures a fair distribution of overhead costs.

CALCULATION OF OVERHEAD APPLICATION RATE 12 Once the Capital-related Overhead Expenses have been determined, the overhead application rate can be calculated. The application rate is simply the quotient, expressed as a percentage, of the Ca...

AI summary The overhead application rate is calculated as a percentage of Capital-related Overhead Expenses divided by contract costs. A detailed discussion of the general ledger account structure can be found in NSPI's Accounting Policy and Procedures Manual Section 3100.

REVIEW OF OVERHEAD APPLICATION RATE 13 The overhead application rate will be reviewed on an annual basis by Capital Accounting to assess its reasonableness.

AI summary The overhead application rate will be reviewed annually by Capital Accounting to evaluate its reasonableness.

ALLOWANCE FOR FUNDS USED DURING CONSTRUCTION - 6240

AI summary The document discusses the Allowance for Funds Used During Construction (AFUDC), a financial mechanism used in the construction of power plants. It outlines the calculation and application of AFUDC, which is influenced by factors such as the Weighted Average Cost of Capital (WACC) and the Return on Equity (ROE).

POLICY - 04 Allowance for funds used during construction should be capitalized at the effective cost-of-capital rate, compounded semi-annually, except in the following circumstances: - a. Projects that will be under construction for less t...

AI summary The text discusses the capitalization of the Allowance for Funds Used During Construction (AFUDC) at the effective cost-of-capital rate, compounded semi-annually, with exceptions for projects under short construction timelines, those delayed by extraordinary circumstances, and those where capitalization would exceed economic value or future benefits.

gulated assets and liabilities. Thereafter, it is a possibility, that the IFRS may be amended, such that rate regulated assets and liabilities can be recognized, in which case the financial statements would revert back, giving a couple of...

AI summary The text discusses the implications of transitioning from IFRS to US-GAAP for NSPI, highlighting the potential confusion from non-recognition of regulatory assets and liabilities under IFRS. It emphasizes the benefits of US-GAAP, including its similarity to C-GAAP, ensuring continued recognition of rate-regulated assets and liabilities, and providing transparency in financial reporting.

COMPLIANCE 06 NSPI applies ASC 980 for specific rate regulated accounting policies which are approved by the UARB. Where there is no specific accounting policy identified in the Accounting Policy and Procedures Manual, NSPI will follow the...

AI summary NSPI applies ASC 980 for specific rate regulated accounting policies approved by the UARB, and follows U.S. GAAP for non-regulated entities when no specific policy is identified.

YEAR END 11 NSPI maintains a fiscal year from January 1st to December 31 st.

AI summary NSPI operates on a fiscal year from January 1st to December 31st, as stated in the document.

GENERAL INFORMATION COST ALLOCATION POLICY - 1570 - 35 Regulated refers to services or products that are subject to price regulation by regulatory authorities. - 36 Non-Regulated refers to services or products that are not subject to price...

AI summary The document defines key terms related to cost allocation policy, distinguishing between regulated and non-regulated services and explaining total capitalization as it relates to financial structures.

POLICIES - 01 The Company records revenue from the sale of electricity to customers at rates approved by the Nova Scotia Utility and Review Board ("UARB"). - 02 Revenues are recognized in accordance with FASB ASC Topic 605-10-25 and S25 Re...

AI summary The company records revenue from electricity sales at rates approved by the UARB, following FASB ASC Topic 605-10-25 and S25 Revenue Recognition. Revenue is billed cyclically, with an estimate of unbilled revenue accrued monthly and reported as a current asset.

FUEL ADJUSTMENT MECHANISM - 5110

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

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

AI summary The text discusses the Fuel Adjustment Mechanism (FAM) and how differences between actual fuel costs and recovered amounts are accounted for in the FAM Regulatory Asset (Liability) on the Balance Sheet. Interest is earned on this balance at the weighted average cost of capital (WACC), compounded semi-annually by NSPI.

Computer Hardware &Operating Software (072)

AI summary The section titled 'Computer Hardware & Operating Software (072)' outlines the accounting and regulatory considerations related to computer hardware and operating software used in the utility sector, including references to accounting standards and regulatory bodies.

GENERAL - 02 The Company has an obligation to provide electric service to the consuming public in the most cost effective manner. This obligation is discharged when a customer group receiving special services pays for the cost of those ser...

AI summary The Company is obligated to provide electric service in the most cost-effective manner, ensuring that special services are paid for by the customer group receiving them. Policies in the Rate and Regulations Manual dictate maximum service extension distances, and any exceeding requirements may necessitate customer capital contributions, considering factors like location, public safety, and cost deferral.

09 Shared Services Division Eligible Overhead Expenses and rates are calculated for each Shared Services Division, deemed to have capital related labour and expenses. These eligible expenses include, but are not limited to, office supplies...

AI summary The Shared Services Division's eligible overhead expenses, including office supplies, training, rent, and materials, are calculated and allocated along with separate head office expenses to determine rates for the division.

REVIEW OF OVERHEAD APPLICATION RATE 14 The overhead application rate will be reviewed on an annual basis by Capital Accounting to assess its reasonableness.

AI summary The overhead application rate will be reviewed annually by Capital Accounting to assess its reasonableness.

09 Shared Services Division Eligible Overhead Expenses and rates are calculated for each Shared Services Division deemed to have capital related labour and expenses. These eligible expenses include, but are not limited to, office supplies,...

AI summary The Shared Services Division calculates eligible overhead expenses and rates for divisions with capital-related labour and expenses, including office supplies, training, rent, and materials.