Topic:"Rate Smoothing Adjustment" in M12394

4.0 MARINE SURVEY COST RECOVERY As detailed in the 2024 Assessment and approved in the Board's Decision, NSPML has smoothed the associated 2024 marine survey costs over three years (2024, 2025 and 2026) to assist in softening the year-by-y...

AI summary NSPML proposes that future marine survey costs be collected and expensed in the year incurred, rather than smoothing them over multiple years. This decision is based on considerations such as the efficiency of tracking expenses in a single balancing account and the impact on WACC. The proposal is intended to better match expenses with the assessment received.

REDACTED 1 Request IR-13: 2 3 Reference: Section 4 – Marine Survey Cost Recovery, pages 18-19. 4 Reference: NSPML 2024 Cost Assessment Decision, 2023 NSUARB 231, para.22. 5 If NSPML believes it is appropriate to smooth this expense over a...

AI summary The document outlines the Nova Scotia Power Maritime Limited (NSPML) request regarding the recovery of marine survey costs and the Board's expectations for handling such expenses. The Board discourages using a rate of return for smoothing these costs and instead suggests normalizing them in O&M expenses over a multi-year period. The Board also seeks clarification on the cyclical nature of marine surveys and NSPML's intentions for future expense recovery.

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.

though the impact on customers cannot be a factor in determining the utility's entitlement to a specific return on equity, any resulting increase in tolls may be a factor in determining the way the utility may be able to recover its costs....

AI summary The fair return standard ensures utilities can secure necessary financing without balancing interests between the utility and customers. Rate increases may be phased in to avoid 'rate shock,' but must still allow the utility to recover its cost of capital over time.

[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 NSPML proposes expensing 2027 marine survey costs fully in that year rather than spreading them over three years. The NSUARB previously supported cost smoothing but is concerned about NSPML earning a return on deferred costs. NSPML argues that using the Fuel Adjustment Mechanism (FAM) would be more efficient, while the Industrial Group opposes full payment in 2027 and suggests a collaborative process.

though the impact on customers cannot be a factor in determining the utility's entitlement to a specific return on equity, any resulting increase in tolls may be a factor in determining the way the utility may be able to recover its costs....

AI summary The fair return standard ensures utilities can secure necessary financing without balancing utility and customer interests. Rate increases may be phased in to avoid 'rate shock' while ensuring the utility recovers its cost of capital. The Ontario Energy Board emphasizes that return on equity should reflect market expectations and financial integrity, not customer impact.