Topic:"Return On Equity" in M11990

Nova Scotia Utility and Review Board IN THE MATTER OF The Public Utilities Act, R.S.N.S. 1989, c.380, as amended -and- IN THE MATTER OF an Application for approval of NS Power's Pre-Tax Weighted Average Cost of Capital (WACC) and Allowance...

AI summary The Nova Scotia Utility and Review Board is considering an application by NS Power under the Public Utilities Act for approval of its Pre-Tax Weighted Average Cost of Capital (WACC) and Allowance for Funds Used During Construction (AFUDC) rates.

WACC and AFUDC Rate Application CONFIDENTIAL (ATTACHMENT ONLY)

AI summary A confidential attachment from a Nova Scotia regulatory proceeding concerning a WACC and AFUDC rate application. The document focuses on financial metrics for utility rate setting but lacks detailed content beyond the heading.

WACC and AFUDC Rate Application CONFIDENTIAL (ATTACHMENT ONLY)

AI summary Confidential attachment related to a WACC and AFUDC rate application. The document outlines regulatory proceedings involving capital cost calculations and construction funding allowances, though no detailed content is provided in the excerpt.

1 2.0 FINANCING OUTLOOK & METHODOLOGY 2 - 3 NS Power is an asset intensive business that owns and operates many large facilities and systems. - 4 As a result, the Company's financing costs are significant. To minimize these costs, it is es...

AI summary NS Power requires diverse financing to manage costs and ensure cost-effective service. They request a 6.66% WACC/AFUDC rate for 2025, using past methodologies and a 40% equity ratio as per Board Order M10431.

5 3.1.1 Short-term Interest Rate Forecast Methodology 6 - 7 As part of its decision in Matter M11563 NS Power Inc WACC and AFUDC Rates Application - 8 for 2024, the Board directed NS Power to file a Compliance Filing, comparing the rate th...

AI summary The Nova Scotia Utility and Review Board (NSUARB) evaluated NS Power's Compliance Filing comparing Bloomberg and T-Bill methodologies for short-term interest rate forecasts. The Board found negligible differences but required NS Power to demonstrate which method is more accurate over time, with alternatives if Bloomberg data is unavailable.

WACC and AFUDC Rate Application CONFIDENTIAL (ATTACHMENT ONLY) 1 3.2 Cost of Long-Term Debt 2 3 Long-term debt, which has a fixed interest rate, represents approximately 58.5 percent of the 4 forecast capital structure for the Company in 2...

AI summary The document discusses NS Power's WACC and AFUDC rate application, detailing the cost of long-term and short-term debt, equity structure, and the impact of low-cost debt from the Canada Infrastructure Bank (CIB). Long-term debt constitutes 58.5% of the 2025 capital structure, with CIB financing expected to reduce costs by $2M. The ROE is set at 9.0% with 40.0% equity thickness, as approved by the Board.

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

AI summary Nova Scotia Power Inc. submitted a 2025 WACC and AFUDC application, with Appendix A containing financial data for estimated capital and cost of capital. The document includes a table titled 'FOR-10 Estimated Average Capital and Cost of Capital Year Ended December 31st' in thousands of dollars, though confidential information is redacted.

2025 Budget 1 (1) (2) (3) (4) (5) (6) (7) (8) 2 2025 Cost Cost Weighted Weighted Average Pre-tax After-tax Pre-tax After-tax 3 Opening Closing Capital Capital Ratio Factor Factor Cost Cost 4 5 Estimated Cost of Capital 6 7 Short-term debt...

AI summary The 2025 Budget table outlines the estimated cost of capital for short-term and long-term debt, as well as common equity, with weighted average costs provided. It includes figures for opening and closing balances, capital ratios, and pre-tax and after-tax cost factors.

NON-CONFIDENTIAL 1 Request IR-2: 2 3 Please refer to pages 4 and 5 of Appendix A of the Application dated November 28, 2024. 4 5 (a) Please provide the date of the forecasts used to prepare the proposed short-term and 6 long-term debt rate...

AI summary The response to Request IR-2 explains that the interest rates used in the forecast were retrieved on August 20, 2024, and are in compliance with the NSUARB directive from M11563. The company notes that the most recent forecast rates from January 15, 2025, would result in a WACC rate of 6.64 percent, with short-term and long-term debt rates at 4.26 and 5.08 percent, respectively. Changes in forecast rates typically have limited impact on the company's weighted average cost of capital.

2025 Budget 1 (1) (2) (3) (4) (5) (6) (7) (8) 2 2025 Cost Cost Weighted Weighted Average Capital Pre-tax After-tax Pre-tax After-tax 3 Opening Closing Capital Ratio Factor Factor Cost Cost 4 5 Estimated Cost of Capital 6 7 Short-term debt...

AI summary The document provides an overview of the 2025 budget, focusing on the estimated cost of capital, including details on short-term and long-term debt, common equity, and weighted average costs. It includes figures for opening and closing balances, capital ratios, and cost factors.

REDACTED 2025 WACC and AFUDC Rates NSUARB IR-2 Attachment 1 Page 2 of 6 REDACTED (CONFIDENTIAL INFORMATION REMOVED) Nova Scotia Power Inc. CS-1-3 Capital Structure and Ratios Year Ended December 31st Millions of Dollars

AI summary Nova Scotia Power Inc. (NSP) submitted its 2025 Weighted Average Cost of Capital (WACC) and Allowance for Funds Used During Construction (AFUDC) rates to the Nova Scotia Utility and Review Board (NSUARB) as part of IR-2 Attachment 1. The document includes a redacted table detailing NSP's capital structure and financial ratios for the year ended December 31.

REDACTED 2025 WACC and AFUDC Rates NSUARB IR-2 Attachment 1 Page 4 of 6 REDACTED (CONFIDENTIAL INFORMATION REMOVED) Nova Scotia Power Inc. Details of Long-Term Debt Interest Calculation Year Ended December 31st Millions of Dollars

AI summary The document is part of a Nova Scotia regulatory proceeding involving Nova Scotia Power Inc.'s 2025 Weighted Average Cost of Capital (WACC) and Allowance for Funds Used During Construction (AFUDC) rates. It includes a table detailing long-term debt interest calculations for the year ended December 31, 2025, as part of the NSUARB IR-2 Attachment 1.

REDACTED 2025 WACC and AFUDC Rates NSUARB IR-2 Attachment 1 Page 5 of 6 REDACTED (CONFIDENTIAL INFORMATION REMOVED) Nova Scotia Power Inc. Details of Short-Term Debt Interest Calculation Year Ended December 31st Thousands of Dollars

AI summary The document details Nova Scotia Power Inc.'s short-term debt interest calculations for the year ended December 31, 2025, as part of the NSUARB IR-2 proceeding. It focuses on WACC and AFUDC rate determinations, though specific figures are redacted due to confidentiality.

REDACTED 2025 WACC and AFUDC Rates NSUARB IR-2 Attachment 1 Page 6 of 6 REDACTED (CONFIDENTIAL INFORMATION REMOVED) Nova Scotia Power Inc. Details of CIB Debt Interest Calculation Year Ended December 31st Thousands of Dollars

AI summary The document details Nova Scotia Power Inc.'s 2025 Weighted Average Cost of Capital (WACC) and Allowance for Funds Used During Construction (AFUDC) rates under a Nova Scotia Utility and Review Board (NSUARB) proceeding. It includes a table outlining CIB Debt Interest Calculations for the year ended December 31, though confidential information is redacted.

PARTIALLY CONFIDENTIAL (Attachment Only) 1 Request IR-6: 2 3 (a) Please provide a schedule detailing the projected opening and closing balances of 4 construction work in progress for 2025, to which the proposed AFUDC rate is 5 expected to...

AI summary The document outlines a request for information regarding NS Power's projected construction work in progress balances and AFUDC charges for 2025, as well as its equity ratios for 2024 and 2025. NS Power provides some details but notes it cannot disclose actual capital structure data until its 2024 Regulated Financial Statements are completed.

PARTIALLY CONFIDENTIAL (Attachment Only) 1 Confidential Attachment 1 showing the Company's cost of capital and forecast capital 2 structure using the unadjusted equity ratio as per the 2025 Budget. Date Filed: January 30, 2025 NSPI (NSUARB...

AI summary Confidential attachment from NSPI (Nova Scotia Power Inc.) detailing cost of capital and forecast capital structure using the 2025 Budget's unadjusted equity ratio, filed with NSUARB on January 30, 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 discusses the use of the Canadian Treasury Bill estimate sourced from Bloomberg for NS Power's cost of borrowing. It highlights that incorporating the consensus of 11 banks' analysts provides a more accurate and efficient forecast compared to sourcing from individual institutions.

2. Political intervention in the ratemaking process In November 2022, the Province passed Bill 212, which amended the Public Utilities Act to cap the baserate increase for NSPI's most recent GRA at 1.8% during the 2022 to 2024 period, excl...

AI summary In November 2022, the Province passed Bill 212, amending the Public Utilities Act to cap NSPI's GRA baserate increase at 1.8% (excluding DSM and fuel costs) and limit ROE and deemed equity. The text argues political interference in ratemaking introduces instability and undermines regulator independence, negatively impacting credit.

Page 12 of 13 Assessment of Regulatory Framework Page 12 of 13 Criteria Score Analysis Page 12 of 13 1. Deemed Equity Page 12 of 13 Page 12 of 13 Excellent Good Satisfactory Below Average Poor NSPI's target-regulated ROE is based on an act...

AI summary The document evaluates the regulatory framework for NSPI, highlighting aspects such as deemed equity, allowed ROE, fuel cost recovery, and political interference. Bill 212 is noted for capping equity and ROE, introducing volatility, and limiting rate increases. The NSUARB's role in auditing fuel costs and disallowing some recovery is also discussed.

1 Timing of Debt Rate Forecasts 2 3 The CA acknowledges NS Power is compliant with the Board's decision requiring rates to be 4 collected no more than four months from the date of application, however the CA indicates that 5 while the use...

AI summary The Consumer Advocate (CA) acknowledges NSP's compliance with NSUARB's rate collection timeline but recommends using more recent data for WACC/AFUDC calculations. NSP's new methodology simplifies short-term debt rate forecasting, enabling updated forecasts. The CA proposes a 6.64% rate based on recent data.

17 NS Power Response: 18 - 19 The Company must prepare the application using the best available information at a point in time. - 20 Given the frequent fluctuations in the forecasted interest rate, the Company must establish a cut- - 21 of...

AI summary NS Power uses its annual Budget (prepared in September with August interest rate forecasts) to calculate WACC and AFUDC, aligning with NSUARB's directive (M11563) requiring forecasts within four months of application submission. NS Power asserts that more recent data would have a negligible impact (2 basis points) on these rates.

1 3.0 SMALL BUSINESS ADVOCATE 2 3 Credit Rating 4 - 5 The SBA expresses that it is pleased to see NS Power's proposed 2025 WACC rate is lower than - 6 the approved rate for 2024, however raises concern that there is some risk that based on...

AI summary The Small Business Advocate (SBA) acknowledges NS Power's lower 2025 WACC rate but warns that credit rating factors may reverse, risking NSPI's operations. The SBA urges quarterly reporting on metrics and immediate disclosure of failures to protect ratepayers and NSPI's access to capital.

1 5.0 CONCLUSION 2 3 NS Power has calculated the annual WACC and AFUDC rate in accordance with the Board 4 approved methodology. The Company has estimated the cost of short-term and new long-term 5 debt using the forecasts of major financi...

AI summary NS Power calculated its annual WACC and AFUDC using the Board's methodology, leveraging Bloomberg for Treasury Bill data per the 2016 decision. It transitioned from CDOR to Term CORRA for interest rate forecasts, aligning with industry standards, and seeks approval for its 6.66% rate.

2025 Budget 1 (1) (2) (3) (4) (5) (6) (7) (8) 2 2025 Cost Cost Weighted Weighted Average Capital Pre-tax After-tax Pre-tax After-tax 3 Opening Closing Capital Ratio Factor Factor Cost Cost 4 5 Estimated Cost of Capital 6 7 Short-term debt...

AI summary The 2025 Budget outlines the estimated cost of capital for short-term and long-term debt, as well as common equity, with details on pre-tax and after-tax costs, weighted averages, and capital ratios. This information is critical for evaluating financial strategies and capital structure.

REDACTED WACC and AFUDC Rates Application 2025 Compliance Filing Attachment 1 Page 2 of 6 REDACTED (CONFIDENTIAL INFORMATION REMOVED) Nova Scotia Power Inc. CS-1-3 Capital Structure and Ratios Year Ended December 31st Millions of Dollars

AI summary Nova Scotia Power Inc. (NS Power) submitted a 2025 compliance filing related to its Weighted Average Cost of Capital (WACC) and Allowance for Funds Used During Construction (AFUDC) rates. The document is part of a regulatory proceeding before the Nova Scotia Utility and Review Board (NSUARB), with confidential information redacted.

REDACTED WACC and AFUDC Rates Application 2025 Compliance Filing Attachment 1 Page 3 of 6 REDACTED (CONFIDENTIAL INFORMATION REMOVED) Nova Scotia Power Inc. FOR-11 Details of Interest and Other Expenses Year Ended December 31st Millions of...

AI summary Nova Scotia Power Inc. (NS Power) submitted a compliance filing for 2025 WACC and AFUDC rates, including Attachment 1 detailing interest and other expenses for the year ended December 31. The filing is part of a regulatory proceeding under the Nova Scotia Utility and Review Board (NSUARB).

REDACTED WACC and AFUDC Rates Application 2025 Compliance Filing Attachment 1 Page 5 of 6 REDACTED (CONFIDENTIAL INFORMATION REMOVED) Nova Scotia Power Inc. Details of Short-Term Debt Interest Calculation Year Ended December 31st Thousands...

AI summary The document is part of Nova Scotia Power Inc.'s 2025 compliance filing for WACC and AFUDC rates, detailing short-term debt interest calculations for the year ended December 31. Confidential information has been redacted, focusing on financial data related to the utility's debt structure.

IN THE MATTER OF THE PUBLIC UTILITIES ACT - and – IN THE MATTER OF AN APPLICATION by NOVA SCOTIA POWER INCORPORATED (NS Power) for approval of Weighted Average Cost of Capital and Allowance for Funds Used During Constructions Rates for 202...

AI summary Nova Scotia Power Inc. (NS Power) seeks approval for 2025 Weighted Average Cost of Capital and Allowance for Funds Used During Construction Rates under the Public Utilities Act. The proceeding is before Bruce H. Fisher, a regulatory board member.

M11990 – Nova Scotia Power Inc. – WACC and AFUDC Rates Application 2025 On November 28, 2024, Nova Scotia Power Inc. (NS Power) filed an application with the Nova Scotia Utility and Review Board (Board) requesting approval of its Weighted...

AI summary Nova Scotia Power Inc. (NS Power) applied for 2025 WACC and AFUDC rates, with the Board approving a paper hearing and confidentiality undertaking. Intervenors including the Small Business Advocate and Consumer Advocate submitted responses. NS Power’s proposed 2025 WACC rate of 6.66% reflects a slight decrease from 2024, using a 40% equity ratio and 9% return on equity, with low-cost debt from the Canadian Infrastructure Bank expected to reduce financing costs by $2 million.

Findings The Board previously noted in matter M11563 that the difference between using the Bloomberg forecast and the approved forecasting method for short-term interest rates was negligible. Using external data could increase efficiency a...

AI summary The Board evaluates NS Power's use of Bloomberg forecasts for short-term interest rates, finding no significant accuracy advantage over other methods. It directs NS Power to use a 4.86% rate for WACC/AFUDC calculations and mandates a methodology review by 2026. The Board also requires compliance filings and ongoing updates on credit rating changes affecting borrowing costs.

NOVA SCOTIA UTILITY AND REVIEW BOARD IN THE MATTER OF: The Public Utilities Act , R.S.N.S. 1989, c.380 as amended - and - IN THE MATTER OF: NS Power's Application for 2025 WACC and AFUDC

AI summary The Nova Scotia Utility and Review Board is conducting a proceeding under the Public Utilities Act, addressing NS Power's application for 2025 WACC (Weighted Average Cost of Capital) and AFUDC (Allowance for Funds Used During Construction) calculations.

IN THE MATTER OF THE PUBLIC UTILITIES ACT - and – IN THE MATTER OF AN APPLICATION by NOVA SCOTIA POWER INCORPORATED (NS Power) for approval of Weighted Average Cost of Capital and Allowance for Funds Used During Constructions Rates for 202...

AI summary Nova Scotia Power Inc. (NS Power) seeks approval for Weighted Average Cost of Capital and Allowance for Funds Used During Constructions Rates for 2025 under the Public Utilities Act. The proceeding is before Bruce H. Fisher, a regulatory board member.

NOVA SCOTIA UTILITY AND REVIEW BOARD IN THE MATTER OF: The Public Utilities Act, RSNS 1989, c.380, as amended - and - IN THE MATTER OF: An application by Nova Scotia Power Incorporated (NS Power) for approval of Weighted Average Cost of Ca...

AI summary Nova Scotia Power Incorporated (NS Power) has applied for approval of Weighted Average Cost of Capital and Allowance for Funds Used During Construction Rates for 2025 under the Public Utilities Act, RSNS 1989, c.380, as amended.

NOVA SCOTIA UTILITY AND REVIEW BOARD IN THE MATTER OF: The Public Utilities Act - and - IN THE MATTER OF: An application by Nova Scotia Power Incorporated (NS Power) for approval of Weighted Average Cost of Capital and Allowance for Funds...

AI summary Nova Scotia Power Incorporated (NS Power) has applied for approval of Weighted Average Cost of Capital and Allowance for Funds Used During Construction Rates for 2025 under the Public Utilities Act. The Nova Scotia Utility and Review Board is overseeing the proceeding.

NOVA SCOTIA UTILITY AND REVIEW BOARD IN THE MATTER OF: The PUBLIC UTILITIES ACT -and- 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 C...

AI summary The Nova Scotia Utility and Review Board is considering an application by Nova Scotia Power Incorporated under the Public Utilities Act for approval of Weighted Average Cost of Capital and Allowance for Funds Used During Construction Rates for 2025.

IN THE MATTER OF AN APPLICATION by NOVA SCOTIA POWER INCORPORATED (NS Power) for approval of Weighted Average Cost of Capital and Allowance for Funds Used During Constructions Rates for 2025.

AI summary Nova Scotia Power Incorporated (NS Power) is seeking approval for its 2025 Weighted Average Cost of Capital and Allowance for Funds Used During Constructions Rates. The application aims to establish these financial metrics for regulatory oversight.

Request IR-4: - How does NS Power determine and manage the credit spread in its WACC calculation, specifically: - a) What specific methodology or approach did NS Power use to determine the credit spread included in the WACC calculation? -...

AI summary Request IR-4 seeks details on NS Power's methodology for determining and managing credit spreads in its WACC calculations, including data sources, factors influencing decisions, frequency of reviews, adjustments due to CDOR-CORRA transition, and impacts of credit ratings. Questions focus on internal/external benchmarks, competitor comparisons, and rating agency influences.

Request IR-6: - a) Please provide a schedule detailing the projected opening and closing balances of construction work in progress for 2025, to which the proposed AFUDC rate is expected to be applied, along with an estimate of the total AF...

AI summary Request IR-6 seeks detailed financial information from NS Power, including projected construction work-in-progress balances, 2024 and 2025 equity ratios, and capital structure calculations. The regulator requests specific schedules, Excel formulas, and actual equity ratio data for 2024/2025, excluding deemed equity ratios.

Change in Methodology NSPI stated that the methodology employed to calculate WACC/AFUDC is consistent with that used in prior GRAs and WACC Applications.[1](#page-0-0) At the same time, NSPI acknowledged that it "updated" its short-term in...

AI summary NSPI updated its methodology for calculating WACC/AFUDC by switching from T-Bill data from five Canadian banks to Bloomberg rates and adopting CORRA as the benchmark. NSPI argues this doesn't alter the core methodology, but the Board previously confirmed a methodology change in M11563. The Board now considers these updates for approval.

ate nor benchmarking an investment strategy in that regard. The switch to Term CORRA is not as simple and straightforward as suggested by NSPI, and it is not clear how NSPI has approached this change. The NSUARB specifically asked NSPI, at...

AI summary The NSUARB questioned NSPI about adjustments to credit spreads following the transition to Term CORRA, with NSPI's responses deemed confusing. NSPI claims the transition did not impact its credit spread, but later explanations suggest additional steps were taken, possibly addressing CARR's concerns about the risk-free CORRA.

2. Timing of Debt Rate Forecasts NS Power's debt rate forecasts were prepared in late August, 2024[.](#page-2-0) 7 Since that time there have been three reductions to the Bank of Canada's overnight policy rate totalling 1.5%, including the...

AI summary NS Power submitted debt rate forecasts in August 2024, but the Bank of Canada reduced its overnight policy rate by 1.5% since then. NS Power complied with NSUARB's directive (M11563) requiring data collection within four months of application submission. Using updated January 2025 rates would lower WACC to 6.64%. The Consumer Advocate acknowledges compliance but suggests using recent data may be prudent.

Findings The Board previously noted in matter M11563 that the difference between using the Bloomberg forecast and the approved forecasting method for short-term interest rates was negligible. Using external data could increase efficiency a...

AI summary The Board acknowledges the negligible difference between Bloomberg and approved forecasting methods for short-term interest rates but directs NSP to use 4.86% for WACC/AFUDC calculations. NSP must continue submitting forecasts via the Board-approved method and file a compliance filing by March 2025. A broader methodology review is required for the 2026 application, with potential discussions on forecasting alternatives and calculation approaches.