Topic:"Rate Smoothing Adjustment" in M12914

1 4.0 MARINE SURVEY COST RECOVERY (IN YEAR OR SMOOTHED) 2 3 Discussion of how to recover marine survey costs, which occur approximately once 4 every three years, has been part of recent regulatory reviews and stakeholder 5 engagement. 6 7...

AI summary The document discusses the recovery of marine survey costs, which occur approximately every three years. NSPML argues against multi-year smoothing of these costs, citing financial and administrative complexity, though it acknowledges compliance with such an approach if required by the Board.

15 Key considerations include: 16 17 NSPML's borrowing rates are higher than NS Power's due to the absence of a credit 18 rating and the pledging of all assets under FLG and FLG2. 19 Based on NSPML's understanding of the traditional applic...

AI summary NSPML faces higher borrowing rates due to the absence of a credit rating and asset pledging under FLG and FLG2. Smoothing mechanisms may lead to adverse WACC impacts for customers, and NSPML lacks a balancing mechanism like FAM, complicating debt-to-equity ratio management. NSPML would comply with smoothing if directed by the Board but requests flexibility to adjust DER impacts and revisit the approach if needed.

NON-CONFIDENTIAL - c) NSPML is progressing towards a 3-year interval for full scale marine surveys, noting that certain areas have just had cable protection augmented through the submarine cable protection initiative. The timing of each su...

AI summary NSPML is planning to conduct marine surveys every three years, but flexibility may be needed if a multi-year cost smoothing mechanism is implemented. This could lead to timing mismatches between cash flows and revenue recovery, creating regulatory assets or liabilities.