Topic:"Rates And Money" in M11990

WACC and AFUDC Rate Application CONFIDENTIAL (ATTACHMENT ONLY) 1 1.0 INTRODUCTION 2 3 In this Application, Nova Scotia Power Inc. (NS Power, the Company) sets the Allowance for 4 Funds Used During Construction (AFUDC) and Weighted Average...

AI summary Nova Scotia Power Inc. (NS Power) is requesting approval of a new WACC/AFUDC rate of 6.66 percent for 2025, to be used for both capital and non-capital matters. The current rate of 6.72 percent, approved in April 2024, will remain in effect until the new rate is approved.

WACC and AFUDC Rate Application CONFIDENTIAL (ATTACHMENT ONLY) 1 Please refer to the figure below for a table comparing the Bloomberg forecast rate to the estimated 2 short-term rate obtained using three-month T-Bills from the five major C...

AI summary The document compares the Bloomberg forecast rate with the estimated short-term rate derived from three-month T-Bills from five major Canadian banks, focusing on WACC and AFUDC rate application.

6 Bloomberg and the method used in prior years. As the short-term debt represents a small portion 7 of the Company's capital structure, the impact of a difference in short-term interest rates is not 8 significant to the forecast WACC rate....

AI summary NS Power is proposing to use Bloomberg data for forecasting short-term interest rates, citing its reliability and improved forecasting process. The impact of this change on the WACC is minimal, and the company's current debt ratings are BBB (high) by DBRS and BBB- by S&P Global.

NSPI CP Forecast, As of August 20, 2024 2 2025 3 Commercial Paper Rates Q1/25 Q2/25 Q3/25 Q4/25 4 Bloomberg Outlook T-Bills 3.64% 3.35% 3.14% 3.05% 5 Outlook T-Bills to Term CORRA Rates spread 0.32% 0.32% 0.32% 0.32% 6 Estimated CP Rate 3....

AI summary The document presents a forecast of NSPI's commercial paper (CP) rates for 2025, including Bloomberg outlook rates for T-Bills, estimated CP rates, and interest rate calculations based on WACC methodology. It outlines short-term debt balances and interest expenses for the year.

Sourcing additional analyst forecasts of Treasury Bill rates through Bloomberg and transitioning from the discontinued CDOR benchmark rate to the Term CORRA rate in the calculation of the spread between Treasury Bills and NS Power's commer...

AI summary NS Power explains that transitioning from CDOR to Term CORRA in calculating its short-term borrowing rate does not change its methodology, which aligns with previously Board-approved filings. The adoption of Term CORRA was not a decision made by the company but resulted from the Bank of Canada and CFIF's interest rate reform efforts.

Date Filed: January 30, 2025 NSPI (IG) IR-1 Page 2 of 2 1 Request IR-2: 25 26 (b) Please refer to SBA IR-2(d). 1 Request IR-3: 2 3 Reference: Figure 1, page 8, NSPI has provided a table comparing the 4 Bloomberg forecast rate to the estima...

AI summary The document discusses the impact of short-term interest rates on the weighted average cost of capital (WACC) forecast for the company. It references a comparison of Bloomberg forecast rates with estimated short-term rates from various banks and notes that the difference in short-term rates has a minimal impact on the WACC forecast.

1 prior years' data provided. Can NSPI elaborate on why that is the case, and explain 2 why the higher rate noted from Bloomberg data is more appropriate than the 3 Canadian Bank rates for 2025? 4 5 Response IR-3: 6 7 (a) The historical da...

AI summary The questioner is asking NSPI to explain why prior years' data is not available and why Bloomberg's higher rate for 2025 is more appropriate than Canadian Bank rates. NSPI responds that Bloomberg data does not provide information prior to 2022 and therefore cannot provide the requested information.

10 (b) Please see the table below: Short-term Interest Rate Forecast Method Comparison and Actuals (percent) WACC using 3-month T WACC using 3 -month T Bills from 5 Bills from Bloomberg Year Canadian Banks Outlook Impact 2022 6.33 6.33 0.0...

AI summary The table compares short-term interest rate forecasts using 3-month T-Bills from Canadian banks and Bloomberg, with minimal differences observed across years. A note indicates a correction to a figure in the Company's filing regarding the use of Bloomberg's 3-month T-Bill outlook for forecasting.

1 analysts from a greater number of banks (11 vs. 5) which should increase the robustness of 2 the consensus rate. 3 4 (e) NS Power can not comment specifically on why the interest rates estimated by some 5 analysts were higher than their...

AI summary The document discusses NS Power's explanation for discrepancies in interest rate estimates and requests for clarification on the classification of WMA preferred shares and equity thickness calculations. It also raises questions about the representation of specific debt items in financial filings.

PARTIALLY CONFIDENTIAL (Attachment Only) 1 Request IR-2: 2 3 Please provide Appendix A in excel format with cells intact and the worksheets unprotected. 4 5 Response IR-2: 6 7 Please refer to Partially Confidential Attachment 1. NS Power h...

AI summary The document discusses a request and response related to providing Appendix A in Excel format with specific modifications made to line 33, referencing a partially confidential attachment and a response to NSUARB IR-11.

2025 Budget 1 (1) Proposed Projected Weighted (1) 2 Rates 2025 Actual Interest Rate Interest Rates Average Interest Rate Total Interest Cost 3 Capitalization: 4 Debt % 60.0% 5 Common % 40.0% 6 Total Regulated Capitalization ($): $6,002 7 8...

AI summary The 2025 Budget outlines NSP's capitalization structure, including 60% debt and 40% common equity, with total regulated capitalization of $6,002. It provides details on short-term and long-term debt, interest rates, and projected interest costs, including various debt series with maturity dates and rates.

WACC and AFUDC Rates for 2025 Application (NSUARB M11990) NSPI Responses to NSUARB Information Requests 1 Request IR-3: 2 3 How has the transition from Canadian Dollar Offered Rate (CDOR) to Canadian Overnight 4 Repo Rate Average (CORRA) a...

AI summary NSP responds to NSUARB's information requests regarding the impact of transitioning from CDOR to CORRA on borrowing costs, forecasting processes, and risk management, and explains how credit spreads are determined in WACC calculations.

Interest Rate Outlook Interest Rates Spot Rate 20 20 20 21 20 022 Interest Rates Jul-21 Q1 Q2 Q3 Q4 Q1 Q2 Q3F Q4F Q1F Q2F Q3F Q4F CANADA Overnight Target Rate 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.50 3-mth T-Bill Ra...

AI summary The document provides an interest rate outlook for Canada and the U.S., detailing various interest rates such as overnight target rates, T-bill rates, and government bond yields across different time horizons from 2020 to 2022. It includes data on spot rates and forecasts for multiple quarters.

2019 202 0 202 1 202 2 Reserve Bank of Australia 0.75 0.25 0.25 0.25 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 Bank of Japan -0.10 -0.10 -0.10 -0.10 -0.10 -0.10 -0.10 -0.10 -0.10 -0.10 -0.10 -0.10 -0.10 People's Bank of China 4.15 4.05...

AI summary The table presents historical interest rates from various central banks and currency exchange rates across different time periods, providing a snapshot of global financial conditions during the specified years.

Table: Canadian interest rates (end of period) Variable 2021 9-Aug 2021 Sep 2021 Dec 2022 Mar 2022 Jun 2022 Sep 2022 Dec Overnight target rate 0.25 0.25 0.25 0.25 0.25 0.25 0.50 98-Day Treasury Bills 0.18 0.20 0.20 0.25 0.25 0.25 0,50 2-Ye...

AI summary The document presents tables summarizing Canadian and US interest rates across various time periods and maturities, including overnight target rates, Treasury bills, government bonds, and yield curves. The data reflects changes in interest rates from 2021 to 2022.

2025 WACC and AFUDC Rates NSUARB IR-5 Attachment 1 Page 5 of 5

AI summary This document outlines the 2025 WACC and AFUDC rates as part of the NSUARB IR-5 Attachment 1, which is a regulatory proceeding related to Nova Scotia Power Inc.'s financial rates.

Foreca ast Forec ast 20Q1 20Q2 20Q3 20Q4 21Q1 21Q2 21Q3 21Q4 22Q1 22Q2 22Q3 22Q4 2019 2020F 2021F Canada Overnight 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.50 0.75 1.75 0.25 0.25 0.75 Three-month 0.21 0.20 0.12 0.06 0.09 0.15 0....

AI summary The text presents a table showing interest rates for Canada and the United States across various time horizons, including overnight, three-month, two-year, five-year, 10-year, and 30-year rates, as well as yield curve differences. The data spans from 20Q1 to 2021F, providing a historical and forecasted overview of interest rate trends.

2025 WACC and AFUDC Rates NSUARB IR-5 Attachment 2 Page 2 of 2 REDACTED (CONFIDENTIAL INFORMATION REMOVED) Indices (Canada) 2022 2023 2024 2025 98-Day Treasury Bills 0.28 0.83 1.40 1.90 30-Year Gov't Bond 2.04 2.35 2.40 2.38 2025 WACC and...

AI summary This document presents data on Canadian interest rates for 2022 through 2025, including 98-Day Treasury Bills and 30-Year Government Bonds, as part of a regulatory proceeding related to 2025 WACC and AFUDC rates.

Rates Scenario Rates Scenario for August 24, 2023

AI summary The document presents a rates scenario for August 24, 2023, which outlines potential rate changes or considerations related to utility services in Nova Scotia. It likely includes financial and regulatory factors influencing the proposed rates.

Interest Rate Forecasts (% : avg.) Actual Forecas ts 2023 2023 2024 2024 Jul Aug Sep Oct Nov Dec Jan Q1 Q2 Q3 Q4 Canada Overnight target (period end) 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 4.75 4.50 4.25 Overnight target 4.90 5.00 5.00 5....

AI summary This section presents interest rate forecasts for Canada and the United States, including overnight target rates, CORRA, various bond rates, and prime rates, with data spanning from 2023 to 2024.

5 Sterling Overnight Index Average; 6 actual value Sources: BMO Economics, Haver Analytics 2025 WACC and AFUDC Rates NSUARB IR-5 Attachment 3 Page 2 of 12 2025 WACC and AFUDC Rates NSUARB IR-5 Attachment 3 Page 3 of 12 August 2023

AI summary This document provides information on the 2025 Weighted Average Cost of Capital (WACC) and Allowance for Funds Used During Construction (AFUDC) rates, as part of a regulatory proceeding under the Nova Scotia Utility and Review Board (NSUARB). The data is sourced from BMO Economics and Haver Analytics and includes a reference to the Sterling Overnight Index Average.

Central bank bias Central bank Current policy rate (latest move) Next move ₩ BoC 5.00% +25 bps in Jul-23 +0 bps in Sep-23 The BoC followed up its hike in June with another 25 bp move in July. Since then, economic data has been in line with...

AI summary The Bank of Canada (BoC) increased its policy rate by 25 basis points in July 2023, following a June hike. Economic data aligns with forecasts that the economy will slow enough for the BoC to pause rate hikes in September.

2025 WACC and AFUDC Rates NSUARB IR-5 Attachment 3 Page 5 of 12 Q1-22 Q2-22 Q3-22 Q4-22 Q1-23 Q2-23 Q3-23 Q4-23 Q1-24 Q2-24 Q3-24 Q4-24 Canada Overnight rate 0.50 1.50 3.25 4.25 4.50 4.75 5.00 5.00 5.00 5.00 4.50 4.00 Three-month 0.60 2.08...

AI summary The document presents historical interest rate data for Canada, the United States, the United Kingdom, the Euro area, and Australia, including overnight rates, three-month rates, two-year rates, five-year rates, 10-year rates, and 30-year rates from Q1-22 to Q4-24. This data is relevant to calculating the 2025 WACC and AFUDC rates.

2025 WACC and AFUDC Rates NSUARB IR-5 Attachment 3 Page 7 of 12 2021 2022 2 2023 3 2024 1 Q4 Q1 Q2 - Q3 Q4 Q1 Q2 Q3f Q4f Q1f Q2f Q3f Q4 Americas • • (%, end of period) Bank of Canada 0.25 0.50 1.50 3.25 4.25 4.50 4.75 5.00 5.00 5.00 4.75 4...

AI summary This document presents historical and projected interest rates from various central banks across the Americas, Europe, and Oceania from 2021 to 2024. It includes data on the Bank of Canada, Federal Reserve, European Central Bank, and others, reflecting changes in monetary policy over time.

2025 WACC and AFUDC Rates NSUARB IR-5 Attachment 3 Page 11 of 12 Variable 2023 8-Aug 2023 Sep 2023 Dec 2024 Mar 2024 Jun 2024 Sep 2024 Dec Overnight target rate 5.00 5.25 5.25 5.25 4.50 4.00 3.50 98-Day Treasury Bills 5.05 5.25 5.20 5.00 4...

AI summary The document presents a table showing various interest rates and yield curves from 2023 to 2024, including overnight target rates, Treasury bills, government bonds, and exchange rates. This data is relevant to the calculation of WACC and AFUDC rates for 2025.

REDACTED 2025 WACC and AFUDC Rates NSUARB IR-6 Attachment 1 Page 1 of 1 REDACTED (CONFIDENTIAL INFORMATION REMOVED) Nova Scotia Power Inc. Estimated Average Capital and Cost of Capital Year Ended December 31st Thousands of Dollars FOR-10 2...

AI summary The document presents Nova Scotia Power Inc.'s estimated average capital and cost of capital for 2025, including short-term and long-term debt, common equity, and weighted average costs. It also includes a request for clarification on the specific Bloomberg short-term interest rate being referenced in the application.

- 1 (b) The interest expense forecast does use the all-in commercial paper quarterly rates. Please - 2 refer to NSUARB IR-2, Partially Confidential Attachment 1, tab .5 Appendix C STD, - 3 row 9 and row 20.

AI summary The interest expense forecast utilizes all-in commercial paper quarterly rates, as referenced in NSUARB IR-2, Partially Confidential Attachment 1, tab .5 Appendix C STD, row 9 and row 20.

Environmental, Social, and Governance Checklist ESG Factor ESG Credit Consideration Applicable to the Credit Analysis: Y/N Extent of the Effect on the ESG Factor on the Credit Analysis: Relevant (R) or Significant (S) In the long term, wil...

AI summary The Environmental, Social, and Governance (ESG) Checklist assesses the impact of ESG factors on credit considerations. It indicates that none of the ESG factors currently pose a significant financial or regulatory risk to the issuer, based on the analysis of climate, social, and human capital risks.

NON-CONFIDENTIAL 1 Request IR-2: 2 3 Refer to Exhibit N-1, NS Power's Application in M11990, page 8, lines 11-13, which states: 4 "The use of Bloomberg data strengthens the Company's rate forecast by incorporating a 5 larger sample size of...

AI summary The response to IR-2 confirms that NS Power used data from 11 separate financial institutions to forecast interest rates, which were used to support the company's rate forecast. The response highlights that the Bloomberg forecast is a consensus of opinions from reputable banks regarding future interest rates applicable to 3-month Canadian Treasury Bills.

DATE FILED: February 21, 2025 Page 7 of 11 1 4.0 INDUSTRIAL GROUP 2 3 Change in Methodology 4 5 CORRA 6 7 The IG acknowledges that NS Power's change to Term CORRA appears in line with industry 8 change from CDOR, however the IG questions N...

AI summary The Industrial Group (IG) questions Nova Scotia Power's (NSP) change in methodology for Term CORRA, noting that while the change aligns with industry standards, NSP's claim that the transition was outside its decision-making is challenged. The IG requests more detailed information on the implementation and impact of this change. NSP responds by explaining that the use of Term CORRA is due to the discontinuation of CDOR and that it does not affect short-term interest rate estimates.

2025 Budget 1 (1) (1) Proposed Projected Weighted 2 Rates 2025 Actual Interest Rate Interest Rates Average Interest Rate Total Interest Cost 3 Capitalization: 4 Debt % 60.0% 5 Common % 40.0% 6 Total Regulated Capitalization ($): $6,002 7 8...

AI summary This section outlines the 2025 budget proposal, focusing on regulated capitalization, financial ratios, and debt details. It provides breakdowns of short-term and long-term debt, including maturity dates, interest rates, and projected interest costs, with an emphasis on the capital structure and financial obligations for the year.

NSPI CP Forecast, As of August 20, 2024 2 3 Commercial Paper Rates Q1/25 2025 Q2/25 Q3/25 Q4/25 4 BMO (Aug 7) 3.45% 3.15% 2.95% 2.95% 5 BNS (Jul 18) 3.55% 3.30% 3.20% 3.20% 6 CIBC (Aug 10) 3.00% 2.90% 2.70% 2.50% 7 TD (Aug 26) 3.13% 2.88%...

AI summary The document provides a forecast of commercial paper (CP) rates and short-term debt balances for NSPI from Q1/25 to Q4/25. It includes rates from various financial institutions, spreads, estimated CP rates, and interest expenses. The forecast details short-term debt balances and interest costs for each month from December 2024 to December 2025.

HEARING ORDER NS Power applied to the Nova Scotia Utility and Review Board on November 28, 2024, for approval of its Pre-tax Weighted Average Cost of Capital (WACC) and Allowance for Funds Used During Construction (AFUDC) Rates. This proce...

AI summary NS Power has applied to the Nova Scotia Utility and Review Board for approval of its Pre-tax Weighted Average Cost of Capital (WACC) and Allowance for Funds Used During Construction (AFUDC) Rates. The proceeding will initially be conducted as a paper hearing, with the possibility of conversion to an oral hearing if needed.

HEARING ORDER NS Power applied to the Nova Scotia Utility and Review Board on November 28, 2024, for approval of its Pre-tax Weighted Average Cost of Capital (WACC) and Allowance for Funds Used During Construction (AFUDC) Rates. This proce...

AI summary NS Power requested approval from the Nova Scotia Utility and Review Board for its Pre-tax Weighted Average Cost of Capital (WACC) and Allowance for Funds Used During Construction (AFUDC) Rates. The proceeding will initially be a paper hearing, with the possibility of conversion to an oral hearing if needed.

1 2024 M11990 2 3 NOVA SCOTIA UTILITY AND REVIEW BOARD 4 IN THE MATTER OF: The Public Utilities Act, RSNS 1989, c.380, as amended 5 - and - 6 IN THE MATTER OF: An application by Nova Scotia Power Incorporated (NS 7 Power) for approval of W...

AI summary The Nova Scotia Utility and Review Board is handling an application by Nova Scotia Power Incorporated for approval of its 2025 Weighted Average Cost of Capital and Allowance for Funds Used During Constructions Rates. The Industrial Group has submitted information requests regarding changes in methodology for calculating short-term debt.

23 to adoption of CORRA (versus any other benchmark reference)? 1 Request IR-2: - 2 Reference : Page 6, lines 20-26 and Reference: Matter M11563, Exhibit N-3, NSPI (IG) RIR

AI summary The text references a request (IR-2) concerning the adoption of CORRA as a benchmark, citing specific page references and a matter number (M11563) with an exhibit.

M11990 NOVA SCOTIA UTILITY AND REVIEW BOARD The PUBLIC UTILITIES ACT IN THE MATTER OF: An application by NOVA SCOTIA POWER INCORPORATED for approval of Weighted Average Cost of Capital and Allowance for Funds Used During Constructions Rate...

AI summary The Nova Scotia Utility and Review Board is handling an application by Nova Scotia Power Incorporated for approval of Weighted Average Cost of Capital and Allowance for Funds Used During Constructions Rates for 2025. Responses to information requests are due by January 30, 2024, and the Consumer Advocate is involved in the process.