N-23M12835 Exhibit N-2 Att 3 2025 Managements Discussion AnalysisHIGHLIGHTED
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Management's Discussion & Analysis As at February 23, 2026 Management's Discussion & Analysis ("MD&A") provides a review of the results of operations of Nova Scotia Power Inc. during the fourth quarter of 2025 relative to the same quarter...
AI summary This section of the document outlines the Management's Discussion & Analysis (MD&A) for Nova Scotia Power Inc. (NSPI) for the fourth quarter of 2025 and the full year of 2025, comparing results to 2024 and including selected financial information for 2023. It also discusses NSPI's financial position as of December 31, 2025, and notes that NSPI follows USGAAP and that its accounting policies are subject to approval by the Nova Scotia Energy Board.
FORWARD-LOOKING INFORMATION This MD&A contains forward-looking information and statements which reflect the current view with respect to the Company's expectations regarding future growth, results of operations, performance, earnings, capi...
AI summary This section outlines forward-looking information and statements from the MD&A, reflecting the Company's expectations regarding future growth, operations, performance, earnings, capital investment, and the impact of a cybersecurity incident. These statements are made under safe harbour provisions and include terms such as 'anticipates,' 'estimates,' and 'projects.'
nmental laws and regulations, and risks around achieving climate-related and environmental legislative requirements refer to the "Outlook - Environmental Legislation and Climate Change" section below. NSPI is a wholly-owned subsidiary of E...
AI summary NSPI is a wholly-owned subsidiary of Emera Incorporated and operates as a public utility under the Public Utilities Act (Nova Scotia), regulated by the NSEB. NSPI holds investments in NSPEMI and WTI, and its electricity rates are subject to NSEB approval. NSPI is regulated under a cost-of-service model with an approved return on equity range of 8.75% to 9.25%.
General Rate Application ("GRA 'J: On September 18, 2025, NSPI filed a consensus GRA with the NSEB, reflecting a settlement agreement reached with customer representatives. The GRA proposes average annual rate increases of 1.8 per cent in...
AI summary NSPI filed a consensus GRA with the NSEB on September 18, 2025, proposing average annual rate increases of 1.8% in 2026 and 2.4% in 2027. The hearing concluded in January 2026, with a decision expected by early Q2 2026. The proposed rates would result in annual revenue increases of $62 million in 2026 and $108 million in 2027.
Consolidated Statements of Income For the Three months ended Year ended millions of dollars December 31 December 31 2025 2024 2025 2024 Operating revenues $ 504 $ 479 $ 1,944 1,855 $ Fuel for generation and purchased power 269 (216) 1,065...
AI summary The consolidated statements of income for Nova Scotia Power Inc. show operating revenues of $504 million for the three months ended December 31, 2025, and $1,944 million for the year ended. Fuel costs and other deferrals, operating expenses, and income from operations are detailed, with net income at $22 million for the quarter and $141 million for the year.
Highlights of the changes are summarized in the following table: For the Three months ended Year ended millions of dollars December 31 December 31 Net income - 2024 $ 71 $ 160 Increased operating revenues (refer to "Operating Revenues" sec...
AI summary The document summarizes net income and revenue changes for the periods ending December 31, 2024 and 2025. It highlights increased operating revenues, decreased fuel costs, and increased FAM and other deferrals. Notable factors include increased storm costs, a cybersecurity incident, and changes in income tax recovery.
NSPl's operating revenues include sales of electricity and other services as summarized in the following table: Three months ended Year ended For the December31 December 31 millions of dollars 2025 2024 2025 2024 Electric revenues $ 495 $...
AI summary NSPl's operating revenues include electric revenues and other revenues, with electric revenues increasing from $467 million in 2024 to $495 million in 2025, and other revenues decreasing from $12 million in 2024 to $9 million in 2025.
NSPl's electric revenues are affected by rates approved by the NSEB and electric sales volumes. NSPl's electric revenues include revenues related to the recovery of fuel costs and non-fuel costs. The FAM allows NSPI to recover all prudentl...
AI summary NSPI's electric revenues depend on NSEB-approved rates and sales volumes, influenced by factors such as weather, customer numbers, usage, economic conditions, and DSM activities. Residential, commercial, and industrial customers are categorized, with other customers including municipal utilities and export energy users. The FAM enables NSPI to recover fuel costs without significantly impacting net income.
Electric Sales Volume Three months ended Year ended For the December31 December 31 Gigawatt hours ("GWh") 2025 2024 2025 2024 Residential 1,411 1,343 5,292 5,096 Commercial 766 763 3,084 3,046 Industrial 535 569 2,098 2,217 Other 57 57 231...
AI summary The text presents data on electric sales volume and electric revenues for the periods ending December 31, 2025, and December 31, 2024. It highlights changes in revenues, including impacts from increased electricity pricing, favorable weather, and shifts in sales volumes across residential, commercial, and industrial sectors.
The Company generates internally sourced cash primarily through the generation, transmission and distribution of electricity. NSPl's customer base is diversified by both sales volumes and rates among customer classes. Circumstances that co...
AI summary NSPI generates cash through electricity generation, transmission, and distribution. Its future liquidity needs include working capital, rate base investment, and debt servicing. In 2026, NSPI plans to invest $720 million, including AFUDC, in capital projects for power system reliability. It has access to $800 million in credit facilities.
Significant changes in the Consolidated Statements of Cash Flows between the years ended December 31, 2025 and 2024 include: millions of dollars 2025 2024 Change Cash, beginning of period $ - $ 78 $ (78) Provided by (used in): Operating ca...
AI summary The document highlights significant changes in the Consolidated Statements of Cash Flows between the years ended December 31, 2025 and 2024, showing a substantial decrease in operating cash flow and a large increase in financing activities.
Working Capital As at December 31, 2025, NSPl's working capital increased to $567 million from $468 million in 2024 primarily due to changes in accounts receivable, changes in income taxes receivable, and changes in other current liabiliti...
AI summary As of December 31, 2025, NSPI's working capital increased to $567 million from $468 million in 2024, driven by changes in accounts receivable, income taxes receivable, and other current liabilities, partially offset by changes in accounts payable and cash collateral positions on derivative instruments. The company expects to meet future liquidity and capital needs through internal cash flows, short-term credit facilities, and long-term financing.
ENTERPRISE RISK AND RISK MANAGEMENT NSPI has a business-wide risk management process which is monitored by the Board of Directors, and also reviewed with the Emera Enterprise Risk Management Committee to ensure risks are appropriately iden...
AI summary NSPI has a business-wide risk management process monitored by the Board of Directors and the Emera Enterprise Risk Management Committee. The document outlines significant business risks that could have a Material Adverse Effect on NSPI's operations, liquidity, financial position, and reputation.
Regulatory and Political Risk NSPI is subject to complex legislative and regulatory frameworks that cover material aspects of their businesses. These frameworks influence key factors such as rates and cost structures, revenue requirements,...
AI summary NSPI operates under a complex regulatory framework that influences rates, revenue, and capital investments. Regulatory delays, disallowance of costs, or changes in policy could lead to Material Adverse Effects. The IESO Nova Scotia's operational status remains uncertain, and changes in environmental legislation may further impact regulatory stability.
Change in Law Risk The Company is also exposed to changes in the political environment and leadership, changes in law or regulations, changes to governmental policies, trade disputes, and the imposition of tariffs, any of which may impact...
AI summary The Company faces risks from changes in law, regulations, and governmental policies, which could impact its operations, markets, and economic conditions. These changes may include deregulation or restructuring of the energy industry, leading to increased competition and costs. NSPI cannot predict or effectively respond to such changes in a timely manner.
Physical Risk: Changes in climate may negatively impact the Company's operations as a result of increased frequency and intensity of weather events and related physical risks, any of which could result in a Material Adverse Effect (for mor...
AI summary The text discusses how climate change may increase physical risks to the Company's operations, leading to potential material adverse effects. It also highlights the impact on insurance costs, credit ratings, and liquidity due to increased physical risks associated with climate change.
Transition Risk: As government policy related to the environment, renewable energy, and decarbonization continues to shift, the Company is exposed to increased uncertainty and risk arising from policy, legal, regulatory, technology, and ma...
AI summary The Company faces transition risks due to evolving environmental policies, renewable energy mandates, and decarbonization efforts. These changes require significant capital investment and may affect customer demand, rates, and the Company's ability to recover costs. Insurance and legal risks are also increasing as carbon-emitting assets become harder to insure and face potential litigation.
ld also delay delivery or result in contamination or degradation of hydrocarbon products the Company transports, stores or distributes. 2025 Annual Financial Statements Attachment 3 Page 22 of 30 Cyberattacks or unauthorized access may cau...
AI summary The text discusses the potential financial and operational risks posed by cybersecurity threats to the Company, including lost revenues, regulatory penalties, and third-party damages. It highlights the limitations of cybersecurity insurance coverage and the potential for a Material Adverse Effect if these risks are not adequately managed.
Foreign Exchange Risk The Company is exposed to foreign currency exchange rate changes. NSPI may enter foreign exchange forward and swap contracts to limit exposure on certain foreign currency transactions such as fuel purchases and capita...
AI summary NSPI is exposed to foreign exchange risk, particularly from USD-denominated fuel purchases. To mitigate this, NSPI uses forward contracts to lock in CAD costs for USD, with 64% of 2026 and 27% of 2027 USD requirements covered as of December 31, 2025. The company does not use derivatives for speculation or trading.
General Economic Risk The Company has exposure to the macro-economic conditions in Nova Scotia. Like most utilities, economic factors such as consumer income, employment and housing affect demand for electricity, and in turn the Company's...
AI summary The Company faces economic risks influenced by Nova Scotia's macroeconomic conditions, including impacts on customer affordability of rate increases and potential challenges in recovering costs and regulatory assets due to adverse economic changes and inflation.
Interest Rate Risk: NSPI utilizes a combination of fixed and floating rate debt financing for operations and capital expenditures, resulting in an exposure to interest rate risk. The allowed range of ROE will generally follow the direction...
AI summary NSPI uses a mix of fixed and floating rate debt, exposing it to interest rate risk. The allowed ROE range follows interest rate trends with a lag. 75% of NSPI's debt is fixed rate with an average maturity of 17 years. Inflation may increase operating costs and fuel expenses beyond customer rate revenues.
Counterparty Credit Risk The Company is exposed to risk related to its reliance on certain key partners, suppliers, and customers any of which may endure financial challenges resulting from commodity price and market volatility, economic i...
AI summary The Company faces counterparty credit risk due to potential insolvency or default by key partners, suppliers, and customers, which could lead to financial losses. This risk is exacerbated by factors such as commodity price volatility, economic instability, and regulatory changes. Management strategies may not fully mitigate these risks, potentially resulting in a Material Adverse Effect.
Commercial Relationship Risk The Company is exposed to commercial relationships risk in respect of its reliance on certain key partners, suppliers and customers. For the year ended December 31, 2025, NSPl's five largest customers contribut...
AI summary The Company faces commercial relationship risk due to its reliance on key partners, suppliers, and customers. In 2025, the five largest customers contributed 7% of electric revenues, and losing a major customer could significantly impact operating revenues and lead to a Material Adverse Effect.
Labour Risk NSPl's ability to deliver service to its customers depends on attracting, developing and retaining a skilled workforce. Utilities are faced with demographic challenges related to trades, technical staff and engineers with an in...
AI summary NSPI highlights the importance of maintaining a skilled workforce and addresses potential risks from labor agreements expiring in 2026. Approximately 42% of NSPI employees are unionized, and failure to negotiate new agreements could lead to increased costs and service disruptions.
Uninsured Risk NSPI maintains insurance to cover accidental loss suffered to its facilities, and to provide indemnity in the event of liability to third parties. A significant portion of NSPl's transmission and distribution assets are not...
AI summary NSPI maintains insurance for some of its assets but a significant portion of its transmission and distribution assets remain uninsured due to high costs. NSPI also has deductibles and self-insured retentions. Uninsured claims or claims exceeding coverage limits could have a Material Adverse Effect if regulatory recovery is not available.
The following table sets forth selected annual consolidated financial information of the Company for the three years ended December 31: millions of dollars 2025 2024 2023 O~erating revenues $ 1,944 $ 1,855 $ 1,671 Net income $ 141 $ 160 $...
AI summary The document provides selected annual consolidated financial information for the Company for the years 2023, 2024, and 2025, including operating revenues, net income, total assets, and total long-term debt.