Topic:"Return On Equity" in M12835

Nova Scotia Power Inc. Regulated Return on Equity As at December 31 millions of Canadian dollars 2025 Regulated Regulated Equity Capitalization December 31, 2024 $2,147.6 $5,391.0 March 31, 2025 1,918.5 5,526.7 June 30, 2025 1,931.2 5,709....

AI summary The document provides a summary of Nova Scotia Power Inc.'s regulated return on equity as of December 31, 2025, including regulated equity, capitalization, and net earnings. The five-quarter average regulated common equity is 34.8%, and the regulated return on equity is 8.31%.

5. REGULATORY MATTERS The Company is a public utility as defined in the Act and is subject to regulation under the Act by the NSEB. The Act gives the NSEB supervisory powers over NSPI's operations and expenditures. Electricity rates for NS...

AI summary NSPI operates as a regulated public utility under the NSEB, adhering to a cost-of-service model that recovers prudently incurred costs and provides an 8.75%-9.25% return on equity. Rates require NSEB approval and are not subject to annual reviews but may be adjusted via hearings.

2025 Annual Financial Statements Attachment 2 Page 35 of 48 REDACTED (CONFIDENTIAL INFORMATION REMOVED) The expected long-term rate of return on plan assets is based on projected real rates of return for the plan's current asset allocation...

AI summary The document outlines the methodology for calculating the long-term rate of return on pension plan assets, incorporating real rates of return, inflation assumptions, and expenses. Discount rates are derived from high-quality Canadian corporate bonds aligned with pension plan cash flow timelines.

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 fixed and floating rate debt, exposing it to interest rate risk. ROE adjustments align with interest rate trends but lag due to regulatory processes. 75% of NSPI's debt (as of December 31, 2025) is fixed-rate with a 17-year average maturity. Debt costs are recovered from customers, and credit ratings may influence interest rates.

25. INVESTMENTS SUBJECT TO SIGNIFICANT INFLUENCE Carrying Value as at December 31 December 31 Ownership (2) millions of dollars 2025 2024 2025 WTI (1) $ 9 $ - 50% (1) Equity earnings issued for the three months and year ended December 31,...

AI summary The section discusses investments subject to significant influence, specifically WTI with a 50% ownership stake as of December 31, 2025, and notes that equity earnings for the period were nil.

2025 Annual Financial Statements Attachment 3 Page 3 of 30 REDACTED (CONFIDENTIAL INFORMATION REMOVED) NSPI is working closely with the provincial government as the Province aims to transition off coal and reach 80 per cent renewable elect...

AI summary NSPI collaborates with the provincial government on renewable energy goals, operates under the Public Utilities Act, and uses a Fuel Adjustment Mechanism (FAM) to recover fuel costs. It is regulated by the NSEB with a cost-of-service model and ROE range of 8.75%-9.25%. NSPI is a subsidiary of Emera and holds interests in NSPEMI and WTI.

Operations NSPI's earnings are most directly impacted by the range of ROE and capital structure approved by the NSEB, the prudent management and approved recovery of operating costs, electric sales volumes, weather, the approved recovery o...

AI summary NSPI's 2026 earnings are projected to be higher than 2025, driven by approved ROE ranges, increased sales volumes, and capital investments of ~$720M. Earnings depend on NSEB-approved rates, cost recovery, and capital structure. Investments focus on power system reliability.

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 faces regulatory risks from frameworks governing rates, cost recovery, ROE, and capital investments. Regulatory delays or disallowed costs could lead to material adverse effects. Uncertainty around IESO Nova Scotia and environmental legislation changes adds further risk. Regulatory processes require approvals and public hearings, with uncertain outcomes.

Liquidity and Capital Market Risk Liquidity risk relates to NSPI's ability to ensure sufficient funds are available to meet its financial obligations. NSPI's access to capital and cost of borrowing is subject to several risk factors, inclu...

AI summary NSPI faces liquidity risks due to reliance on capital markets and sensitivity to credit ratings. Market disruptions, interest rate changes, and climate-related events could hinder access to cost-effective financing. Downgraded credit ratings may increase borrowing costs and require collateral for derivative instruments, impacting financial stability.

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's use of fixed and floating rate debt exposes it to interest rate risk, with allowed ROE adjustments lagging interest rate changes. Credit rating impacts and inflation risks further affect debt costs and operating expenses, potentially increasing costs beyond customer rate recoveries.

Q1 2025 compared to Q1 2024 Q1 2025 net income increased by $53 million compared to Q1 2024. The increase is due to decreased income tax expense due to recognition of clean technology investment tax credits in 2025 and increased operating...

AI summary Q1 2025 net income increased by $53 million compared to Q1 2024, driven by decreased income tax expense from clean technology investment tax credits and higher operating revenues due to increased sales volumes from favorable weather.

Regulatory Matters Electricity Rates & Return on Equity NSPI is regulated under a cost of service model, with rates set to recover prudently incurred costs of providing electricity service to customers, including a reasonable return to inv...

AI summary NSPI operates under a cost-of-service regulatory model, with approved ROE ranges of 8.75–9.25% for 2023–2025, based on a 40% common equity component. The ROE range remains unchanged for 2026 pending NSEB approval in the 2025 GRA.

Why Invest in Emera Emera is at the forefront of a transformative era in energy with robust opportunities to invest on behalf of customers across the portfolio. Our proven strategy and operational excellence enable us to capitalize on this...

AI summary Emera highlights its strategic position in the energy sector, emphasizing operational excellence and investment opportunities in Florida's regulated utilities. The company positions itself as a leader in capitalizing on growth through proven strategies.

2025 Financial Highlights $3.49 Annual adjusted EPS (1) 72% of adjusted net income (1), excluding Corporate costs, comes from Florida (2) $3.6B capital invested in 2025, leading to an 8% annual increase in rate base 4.3% dividend yield (3)...

AI summary The 2025 Financial Highlights report outlines key metrics including $3.49 annual adjusted EPS, 72% of adjusted net income from Florida, an 8% annual rate base increase due to $3.6B capital investment, and a 4.3% dividend yield. Non-GAAP measures are disclosed, with footnotes explaining adjustments and data sources.

Financial Results Emera made company history this year by reporting annual adjusted net income (1) in excess of $1 billion and adjusted EPS (1) of $3.49—a 19 per cent increase over 2024. This was supported by strong performance at Tampa El...

AI summary Emera achieved record financial results with adjusted net income exceeding $1 billion and adjusted EPS of $3.49, driven by strong performance in Tampa Electric and Emera Energy. The company extended its $20 billion capital plan through 2030, prioritizing reliability and renewables. Credit ratings were stable, and shareholder returns were strong, with a 31.9% TSR in 2025.

Introduction and Strategic Overview Emera (TSX/NYSE: EMA) is a North American provider of energy services, owning and operating a portfolio of cost-of-service, rate-regulated electric and gas utilities. Its largest operations are in Florid...

AI summary Emera, a North American energy services provider, focuses on regulated utilities and operational efficiency to deliver energy to 2.7 million customers. Earnings depend on rate base, equity structure, and ROE, with Florida utilities comprising 67% of average rate base. A $20 billion capital investment plan from 2026-2030 targets infrastructure modernization, reliability, and renewable integration, with 80% allocated to Florida due to growth and system needs.

Emera's capital investment plan will be funded primarily through internally generated cash flows, debt raised at the operating company level consistent with regulated capital structures, equity issuances, and proceeds from the anticipated...

AI summary Emera plans to fund its capital investment through internal cash flows, debt, equity, and the NMGC transaction. It prioritizes maintaining investment-grade credit ratings and has consistently increased dividends. The company expects adjusted EPS growth of 5-7% through 2030, supporting a reduction in the dividend payout ratio over time.

Florida Electric Utility The Florida Electric Utility segment consists of TEC, a vertically integrated regulated electric utility engaged in the generation, transmission and distribution of electricity, serving customers in West Central Fl...

AI summary TEC, a Florida utility with $14.5B USD assets and 866,000 customers, owns 6,771 MW of generating capacity (78% natural gas, 21% solar, 1% storage). It seeks a $88M USD rate increase approved by FPSC, with new rates effective January 1, 2026, and expects to meet its 9.5%-11.5% ROE range in 2026.

NSPI With $8.1 billion of assets and approximately 565,000 customers at December 31, 2025, NSPI owns 2,422 MW of generating capacity, of which 44 per cent is coal and/or oil-fired; 28 per cent is natural gas and/or oil; 19 per cent is hydr...

AI summary NSPI, with $8.1 billion in assets and 565,000 customers, operates a mix of fossil fuel and renewable generation, including 573 MW from IPPs and COMFIT participants. It has agreements with NLH for energy delivery and filed a GRA proposing 1.8% and 2.4% rate increases in 2026 and 2027, respectively. NSPI also announced a new transmission project with WTI and expects to earn near the low end of its ROE range in 2026.

NSPML Equity earnings from the Maritime Link are dependent on the approved ROE and operational performance of NSPML. NSPML's approved regulated ROE range is 8.75 per cent to 9.25 per cent, based on an actual five-quarter average regulated...

AI summary NSPML's equity earnings depend on its approved ROE (8.75%-9.25%) and operational performance. The Maritime Link, operational since 2018, enables energy transmission between Newfoundland and Nova Scotia. An interim NSEB order allows NSPML to collect $199M from NSPI in 2026, with a $4M monthly holdback. NSPML seeks termination of the holdback, pending a Q3 2026 decision. Capital investments are projected at $40M in 2026.

PGS With $3.3 billion USD of assets and approximately 523,000 customers, the PGS system includes approximately 25,600 kilometres of natural gas mains and 14,800 kilometres of service lines. Natural gas throughput (the amount of gas deliver...

AI summary PGS, with $3.3 billion USD in assets and 523,000 customers, anticipates 2026 earnings within its allowed ROE range (9.30%-11.30%) due to new base rates and customer growth. A $67 million USD rate increase was approved by FPSC, including adjustments for cast iron replacement and future years. Capital investment is projected at $445 million USD in 2026.

NMGC With $1.6 billion USD of assets and approximately 553,000 customers, NMGC's system includes approximately 2,300 kilometres of transmission pipelines and 18,200 kilometres of distribution pipelines. Annual natural gas throughput was ap...

AI summary NMGC, with $1.6 billion USD in assets and 553,000 customers, operates a pipeline network of 20,500 km. Its 2025 natural gas throughput was 1 billion therms. The approved ROE is 9.375%, but 2026 earnings for Emera are expected to decline due to NMGC's pending sale, anticipated to close in early 2026.

BLPC With $547 million USD of assets and approximately 137,000 customers, BLPC owns 243 MW of generating capacity, of which 96 per cent is oil-fired and 4 per cent is solar. BLPC owns approximately 200 kilometres of transmission facilities...

AI summary BLPC, with $547 million USD in assets and 137,000 customers, submitted a general rate review application to the FTC in 2021. The FTC granted interim rate relief in 2022, later issuing a decision in February 2023 that BLPC challenged. The FTC dismissed BLPC's Motion for Review in November 2023, with interim rates remaining in effect pending a final decision.

Financial Highlights

AI summary The document provides an overview of key financial highlights, including management's discussion and analysis, capital expenditures, and various regulatory and compliance considerations relevant to Nova Scotia Power Incorporated.

Regulatory and Political Risk The Company's rate-regulated utilities and certain investments are subject to complex legislative and regulatory frameworks that cover material aspects of their businesses. These frameworks influence key facto...

AI summary Emera's rate-regulated utilities face risks from complex regulatory frameworks affecting cost recovery, ROE, and capital investments. Failure to recover costs or obtain approvals could cause Material Adverse Effects, including valuation impairments. Regulatory lag between cost incurrence and rate approval further heightens these risks.

Liquidity and Capital Markets Risk Liquidity risk relates to Emera's ability to ensure sufficient funds are available to meet its financial obligations. Emera's access to capital and cost of borrowing is subject to several risk factors, in...

AI summary Emera faces liquidity risks due to capital market disruptions, credit rating fluctuations, and stock-based compensation impacts. Credit rating changes could increase borrowing costs, while stock-based compensation volatility affects earnings. The company's growth plan requires significant capital investments, with interest rate changes potentially increasing financing costs.

Interest Rate Risk: Emera utilizes a combination of fixed and floating rate debt financing for operations and capital expenditures, resulting in an exposure to interest rate risk. For Emera's rate-regulated utilities, the cost of debt is a...

AI summary Emera's use of fixed and floating rate debt exposes it to interest rate risk. Regulatory ROE correlates with interest rates, impacting utility rates and project viability. Rising rates may reduce economic feasibility of projects and affect share price performance.

Q2 2025 compared to Q2 2024 Q2 2025 net income attributable to common shareholders increased by $6 million primarily due to decreased MTM losses; increased earnings at TEC, EES, and NMGC; higher Corporate income tax recovery; and decreased...

AI summary Q2 2025 net income increased by $6 million due to reduced MTM losses, higher earnings from TEC, EES, and NMGC, tax recovery, and lower OM&G costs. Offsetting factors included the 2024 LIL sale gain, NMGC sale charges, lower NSPI earnings, reduced LIL equity earnings, and higher interest expenses. EPS remained consistent with Q2 2024.

Q1 2025 compared to Q1 2024 Q1 2025 net income attributable to common shareholders increased by $376 million and EPS – basic and diluted increased by $1.23 compared to Q1 2024. The increases were primarily due to decreased MTM losses; incr...

AI summary Q1 2025 net income and EPS increased by $376 million and $1.23, respectively, due to reduced MTM losses, higher earnings from TEC, NSPI, EES, and NMGC, a weaker CAD, and lower Corporate OM&G. These gains were partially offset by reduced equity investment income from LIL's sale and increased shares outstanding.

Consolidated Statements of Income For the Year ended December 31 millions of dollars (except per share amounts) 2025 2024 Operating revenues Regulated electric $ 6,858 $ 5,872 Regulated gas 1,713 1,575 Non-regulated 205 (247) Total operati...

AI summary The consolidated statements of income for Nova Scotia Power Incorporated show a significant increase in operating revenues and net income from 2024 to 2025, with regulated electric and gas revenues rising and operating expenses also increasing. Net income attributable to common shareholders rose from $494 million to $1,014 million.

Florida Electric Utility TEC is regulated by the FPSC and is also subject to regulation by the Federal Energy Regulatory Commission. The FPSC sets rates at a level that allows utilities such as TEC to collect total revenues or revenue requ...

AI summary Florida Electric Utility (TEC) is regulated by the Florida Public Service Commission (FPSC) and the Federal Energy Regulatory Commission (FERC). FPSC sets rates to ensure TEC recovers costs and earns an appropriate return on equity. TEC's 2025 approved ROE range is 9.50%-11.50% (equity structure 54%), with 10.50% used for investment calculations.

Base Rates: On April 2, 2024, TEC filed a rate case with the FPSC for new base rates. On December 3, 2024, the FPSC rendered a decision which included annual base rate increases of $185 million USD in 2025 and adjustments of $87 million US...

AI summary TEC filed a rate case with the FPSC in 2024, leading to base rate increases of $185 million USD in 2025 and adjustments in 2026-2027. The FPSC approved the decision in February 2025, but an intervening party appealed to the Florida Supreme Court. In 2025, TEC petitioned for an additional $88 million USD adjustment, which the FPSC approved. The appeal process remains unresolved.

NSPI NSPI is a public utility as defined in the Public Utilities Act of Nova Scotia ("Public Utilities Act") and is subject to regulation by the NSEB. The Public Utilities Act gives the NSEB supervisory powers over NSPI's operations and ex...

AI summary NSPI, a public utility under Nova Scotia's Public Utilities Act, is regulated by the NSEB using a cost-of-service model. Rates are set to recover prudently incurred costs and provide a reasonable return, with a 2024-2025 ROE range of 8.75% to 9.25%.

NSPML Equity earnings from the Maritime Link are dependent on the approved ROE and operational performance of NSPML. NSPML's approved regulated ROE range is 8.75 per cent to 9.25 per cent, based on an actual five-quarter average regulated...

AI summary NSPML's equity earnings depend on its approved ROE (8.75-9.25%) and operational performance. Key events include NSEB's 2025 interim order to collect $199M from NSPI for Maritime Link costs, NSPML's 2026 holdback termination application, and a $500M FLG debt agreement with Canada. NSPI approved $197M in 2025, including $158M for Maritime Link costs, with monthly holdbacks.

PGS PGS is regulated by the FPSC. The FPSC sets rates at a level that allows utilities such as PGS to collect total revenues or revenue requirements equal to their cost of providing service, plus an appropriate return on invested capital....

AI summary PGS is regulated by the FPSC, which sets rates to ensure utilities recover costs plus a return on capital. Base rates are determined through FPSC hearings, and PGS's approved ROE range for 2024-2025 is 9.15%-11.15% with a 10.15% midpoint, based on a 54.7% equity capital structure.

Base Rates: On March 31, 2025, PGS filed a rate case with the FPSC for new rates to become effective January 1, 2026. On August 13, 2025, PGS and the intervening parties filed a settlement agreement with the FPSC for a $67 million USD incr...

AI summary PGS filed a rate case with FPSC, leading to a $67 million USD base rate increase approved in October 2025, including specific riders and future adjustments, with a 10.30% ROE and 54.7% equity thickness.

NMGC NMGC is subject to regulation by the NMPRC. The NMPRC sets rates at a level that allows NMGC to collect total revenues or revenue requirements equal to its cost of providing service, plus an appropriate return on invested capital. NMG...

AI summary NMGC is regulated by the NMPRC, which sets rates to ensure revenue equals service costs plus a return on invested capital. The approved ROE for 2024 and 2025 is 9.375% on a 52% allowed equity capital structure.

Base Rates: On September 14, 2023, NMGC filed a rate case with the NMPRC for new base rates. On March 1, 2024, NMGC filed with the NMPRC a settlement with the support of all parties in the case for an increase of $30 million USD in annual...

AI summary NMGC filed a rate case with NMPRC, leading to a $30 million USD annual revenue increase and maintaining ROE at 9.375%. The settlement, approved on July 25, 2024, covers operating costs, capital investments, and a new billing system. NMGC withdrew its request for a regulatory asset related to a 2022 LNG storage application.

BLPC BLPC is regulated by the Fair Trading Commission ("FTC"), under the Utilities Regulation (Procedural) Rules 2003. BLPC is regulated under a cost-of-service model, with rates set to recover prudently incurred costs of providing electri...

AI summary BLPC is regulated by the Fair Trading Commission under the Utilities Regulation (Procedural) Rules 2003, operating under a cost-of-service model where rates recover prudently incurred costs plus a 10% return on capital for 2024 and 2025. This structure ensures cost recovery while providing a regulated return on investment.

Base Rates: In 2021, BLPC submitted a general rate review application to the FTC. In September 2022, the FTC granted BLPC interim rate relief, allowing an increase in base rates of approximately $1 million USD per month. On February 15, 20...

AI summary BLPC submitted a general rate review application to the FTC in 2021, leading to interim rate relief and a 2023 decision with adjustments to base rates, ROE, and regulatory liabilities. BLPC appealed the FTC's decisions to the Supreme Court of Barbados, seeking a stay, with the appeal ongoing as of December 2025.

GBPC GBPC is regulated by the GBPA. The GBPA has granted GBPC a licensed, regulated and exclusive franchise to produce, transmit and distribute electricity on the island until 2054. Rates are set to recover prudently incurred costs of prov...

AI summary GBPC operates under a 2054 franchise granted by GBPA, with rates set to recover prudently incurred costs plus an 8.52% return on rate base. The regulatory framework ensures cost recovery and appropriate returns for electricity service provision.

Regulatory and Political Risk The Company's rate-regulated utilities and certain investments are subject to complex legislative and regulatory frameworks that cover material aspects of their businesses. These frameworks influence key facto...

AI summary Emera's rate-regulated utilities face risks from complex regulatory frameworks affecting cost recovery, ROE, and capital investments. Delays in regulatory approvals, inability to recover costs, or policy changes could cause Material Adverse Effects, including valuation impairments and service reliability issues. Regulatory stability is also threatened by government interference or shifts in public policy.

Interest Rate Risk: Emera utilizes a combination of fixed and floating rate debt financing for operations and capital expenditures, resulting in an exposure to interest rate risk. For Emera's rate-regulated utilities, the cost of debt is a...

AI summary Emera uses fixed and floating rate debt, exposing it to interest rate risk. Regulatory ROE correlates with interest rates, lagging due to the regulatory process. Rising rates may harm project viability and share price, while credit rating changes could further impact interest rates. Share price may underperform in rising rate environments.

2025 Annual Financial Statements Attachment 16.2 Page 1 of 1 REDACTED (CONFIDENTIAL INFORMATION REMOVED) Application of Amounts Year Regulated Net Earnings Above Section 21 FAM Fixed Cost Income Approved ROE Amortization1 Deferral Range ($...

AI summary The table presents the application of amounts related to regulated net income and earnings above the approved ROE range from 2006 to 2025. It highlights the impact of Section 21 amortization on earnings, particularly in 2014 and 2015, where accelerated amortization reduced earnings above the approved ROE range.

2 Of the $24.8M earnings above NS Power's approved ROE range in 2010, $10.3M was expensed as accelerated amortization under the section 21 mechanism. The remaining $14.5M was tax benefits related to renewable energy projects, which was def...

AI summary This text discusses Nova Scotia Power's earnings above and below the approved return on equity (ROE) range across various years, including how certain amounts were expensed or deferred. It references the Electricity Plan Implementation (2015) Act and the NSUARB's directives regarding the application of revenue to the FAM balance.

Nova Scotia Power Inc. Regulated Return on Equity As at December 31 millions of Canadian dollars 2025 Regulated Regulated Equity Capitalization December 31, 2024 $2,147.6 $5,391.0 March 31, 2025 1,918.5 5,526.7 June 30, 2025 1,931.2 5,709....

AI summary The document provides financial data related to Nova Scotia Power Inc.'s regulated return on equity as of December 31, 2025, including equity capitalization, net earnings, and the calculated return on equity of 8.31%.

Allowance for Funds Used During Construction AFUDC represents the cost of financing regulated construction projects and is capitalized to the cost of PP&E until the asset is operational. The Company includes an equity cost component in AFU...

AI summary AFUDC represents the financing cost for regulated construction projects, capitalized as part of PP&E until operational. It includes equity and borrowed funds components, calculated via weighted average cost of capital approved by NSEB, and impacts financial statements through interest expense and other income adjustments.

2025 Annual Financial Statements Attachment 2 Page 16 of 48 REDACTED (CONFIDENTIAL INFORMATION REMOVED)

AI summary This document is a redacted page from the 2025 Annual Financial Statements Attachment 2, containing confidential information. It includes references to financial terms and acronyms relevant to regulatory proceedings in Nova Scotia.

5. REGULATORY MATTERS The Company is a public utility as defined in the Act and is subject to regulation under the Act by the NSEB. The Act gives the NSEB supervisory powers over NSPI's operations and expenditures. Electricity rates for NS...

AI summary NSPI operates as a regulated public utility under the Act, with the NSEB overseeing its operations and approving electricity rates. Rates are set via a cost-of-service model to recover prudently incurred costs and provide investor returns, with an approved ROE range of 8.75% to 9.25%.

2025 Annual Financial Statements Attachment 2 Page 35 of 48 REDACTED (CONFIDENTIAL INFORMATION REMOVED) The expected long-term rate of return on plan assets is based on projected real rates of return for the plan's current asset allocation...

AI summary The text outlines the methodology for determining the expected long-term rate of return on pension plan assets, incorporating real rates of return, inflation assumptions, and expenses. It also explains discount rates based on high-quality Canadian corporate bonds aligned with the pension plan's cash flow maturities.

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 complex regulatory frameworks affecting rates, cost recovery, and return on equity. Regulatory delays and decisions may hinder cost recovery, impact service reliability, and lead to material adverse effects. Government policy shifts and regulatory instability further amplify risks to NSPI's operations and investments.

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 fixed and floating rate debt, exposing it to interest rate risk. The allowed ROE range correlates with interest rates, with a regulatory lag. Debt costs are recovered from customers, and credit ratings influence interest rates. As of December 31, 2025, 75% of NSPI's debt is fixed-rate with a 17-year average term.

2025 Annual Financial Statements Attachment 3 Page 3 of 30 REDACTED (CONFIDENTIAL INFORMATION REMOVED) NSPI is working closely with the provincial government as the Province aims to transition off coal and reach 80 per cent renewable elect...

AI summary NSPI is transitioning to renewable energy under provincial and federal climate goals, operating under the Public Utilities Act and a cost-of-service model. It uses a Fuel Adjustment Mechanism (FAM) to recover fuel costs and is regulated by the Nova Scotia Energy Board (NSEB). NSPI's ROE range is 8.75-9.25%, with a 50% indirect stake in WTI and a 100% investment in NSPEMI. Seasonal energy demand and weather impacts are noted.

Operations NSPI's earnings are most directly impacted by the range of ROE and capital structure approved by the NSEB, the prudent management and approved recovery of operating costs, electric sales volumes, weather, the approved recovery o...

AI summary NSPI's 2026 earnings are projected to be at the low end of its allowed ROE range, with higher earnings than 2025 due to factors like approved base rates, sales volume growth, and capital investment. Capital spending is expected to reach $720M, focused on power system reliability. The GRA and settlement agreement are referenced for further details.

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 cost-of-service regulatory model requiring approvals for rate changes and capital investments. Regulatory delays, cost recovery risks, and government policy shifts could cause material adverse effects, including valuation impairments and service reliability issues. The IESO Nova Scotia's operational uncertainties and environmental legislation changes further complicate regulatory stability.

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 fixed and floating rate debt, exposing it to interest rate risk. ROE adjustments follow interest rates with a lag, and credit ratings affect interest rates. Inflation may increase operating and capital costs beyond customer rate revenues.

Market Competitiveness The Company's executive compensation program is designed to generally provide total target compensation at the median or 50th percentile of compensation paid by similarly sized companies in similar industries. Pay po...

AI summary The Company's executive compensation program aligns with the median or 50th percentile of compensation for similarly sized companies in the same industry, with some variations based on experience, responsibilities, and performance. Total direct compensation includes base salary, short-term incentives, and long-term incentives tied to shareholder value.

Pay-for-Performance A core principle of the Company's executive compensation philosophy is that a significant portion of executive compensation must be at risk and linked to the achievement of objectives that measure whether shareholders a...

AI summary The Company's executive compensation philosophy emphasizes linking a significant portion of executive pay to performance metrics that align with shareholder value. Incentive plans are structured to reward superior performance and penalize underperformance, with payouts determined by the NSPI Board, MRCC, and Emera Board based on measurable objectives.

Performance Share Unit Plan In addition to being affected by fluctuations in the Emera share price, the value of a PSU is dependent upon the achievement of pre-determined financial objectives that help measure the increase in value, and up...

AI summary The Performance Share Unit (PSU) Plan for Emera outlines how PSUs are awarded based on financial objectives and total shareholder return (TSR) relative to a comparator group. The value of PSUs depends on the achievement of EPS growth and relative TSR, with metrics weighted 75% and 25%, respectively. The MRCC approves PSU grants and changes to valuation methodologies, such as reducing the share price calculation window from 50 to 10 trading days.

Recovery of NEO Compensation in Electricity Rates No portion of the compensation or benefits paid or allocable to NEOs who are also executive officers of Emera are included in NSPI rates. The Nova Scotia Public Utilities Act and the Nova S...

AI summary The compensation of Named Executive Officers (NEOs) at Nova Scotia Power Inc. (NSPI) that is recoverable in electricity rates is limited by the Nova Scotia Public Utilities Act and NSPI Regulations. Only a portion of executive compensation, such as 27% of Mr. Gregg's total compensation, is included in NSPI rates, while compensation related to Emera-wide responsibilities is excluded.

Defined Benefit The following table shows years of credited service, estimated pension amounts and changes to accrued obligations from January 1, 2025 to December 31, 2025 for the NEOs who participated in the Pension Plan on a defined bene...

AI summary The text presents a table showing the estimated pension amounts and changes to accrued obligations for NEOs participating in the Pension Plan on a defined benefit basis from January 1, 2025, to December 31, 2025.

The following table shows the changes to accumulated value from January 1, 2025 to December 31, 2025 for the NEOs who participated in the Pension Plan on a defined contribution basis. Name Accumulated value at start of year ($) Compensator...

AI summary The table outlines the changes in accumulated value for named executive officers (NEOs) in the Pension Plan on a defined contribution basis from January 1, 2025, to December 31, 2025, showing contributions and accumulated values for each individual.

Deferred Share Unit Plan The Deferred Share Unit (DSU) Plan is another component of Emera's long-term incentive program that is made available to senior leaders of the Company. A DSU is a notional share unit that is based on the value of a...

AI summary The Deferred Share Unit (DSU) Plan is a long-term incentive program for senior leaders of Emera, allowing them to defer short-term incentives into DSUs, which are notional shares tied to Emera's common shares. DSUs earn dividend equivalents and are not paid out until the participant leaves the company. The plan aims to achieve share ownership guidelines without diluting shareholders.

2025 Annual Financial Statements Attachment 5 Page 1 of 26 REDACTED (CONFIDENTIAL INFORMATION REMOVED)

AI summary The document is a redacted page from the 2025 Annual Financial Statements Attachment 5, which contains confidential information. It appears to be part of a regulatory or financial disclosure process involving Nova Scotia Power or a related entity.

2025 Annual Financial Statements Attachment 5 Page 4 of 26 REDACTED (CONFIDENTIAL INFORMATION REMOVED) generation; no severe and/or prolonged downturn in economic conditions; sufficient liquidity and capital resources; the continued abilit...

AI summary The document outlines forward-looking information for NSPI, highlighting key assumptions and risks affecting its operations, including regulatory, economic, environmental, and market-related factors. It emphasizes uncertainties such as changes in laws, commodity prices, credit ratings, and technological developments that could impact performance.

Regulatory Matters Electricity Rates & Return on Equity NSPI is regulated under a cost of service model, with rates set to recover prudently incurred costs of providing electricity service to customers, including a reasonable return to inv...

AI summary NSPI operates under a cost of service model, with rates set to recover prudently incurred costs and provide a reasonable return to investors. The approved regulated return on equity (ROE) range for NSPI remained between 8.75% and 9.25% for 2023 to 2025, and is unchanged for 2026 pending approval by the NSEB in the 2025 GRA.

RETURN OF CAPITAL NSPI returned $340 million of capital (2024 — nil and in 2023 — nil) to Emera without a reduction in the amount of common shares outstanding.

AI summary NSPI returned $340 million of capital to Emera in 2024, with no reduction in the number of common shares outstanding, and no such return occurred in 2023.

Financial Results Emera made company history this year by reporting annual adjusted net income (1) in excess of $1 billion and adjusted EPS (1) of $3.49—a 19 per cent increase over 2024. This was supported by strong performance at Tampa El...

AI summary Emera reported significant financial growth in 2025, including adjusted net income exceeding $1 billion and a 19% increase in adjusted EPS compared to 2024. Strong performance from Tampa Electric and Emera Energy, along with a $3.6 billion capital program, supported this growth. The company also extended its EPS growth target through 2030 and achieved strong shareholder returns.

FLI is based on reasonable assumptions and is subject to risks, uncertainties and other factors that could cause actual results to differ materially from historical results or results anticipated by the FLI. Factors that could cause result...

AI summary Forward-looking information (FLI) is subject to various risks and uncertainties that could cause actual results to differ significantly from expectations. These include regulatory, economic, environmental, technological, and operational risks, among others.

Introduction and Strategic Overview Emera (TSX/NYSE: EMA) is a North American provider of energy services, owning and operating a portfolio of cost-of-service, rate-regulated electric and gas utilities. Its largest operations are in Florid...

AI summary Emera is a North American energy services provider with regulated utilities in Florida, Atlantic Canada, New Mexico, and the Caribbean. It focuses on operational efficiency and capital investments to support earnings and dividends. Its capital investment plan from 2026 to 2030 is expected to be around $20 billion, with 80% allocated to Florida due to customer growth and system needs.

Net Income and Adjusted Net Income Net income attributable to common shareholders for Q4 2025, compared to Q4 2024, was favourably impacted by the $47 million decrease in MTM losses, the $26 million charges related to wind-down costs and c...

AI summary Net income for Q4 2025 was positively impacted by reduced MTM losses and wind-down costs from 2024, but negatively affected by tax benefits and valuation allowances. Adjusted net income decreased due to lower earnings at NSPI and NMGC, but increased earnings at EES partially offset this. For the full year 2025, net income was positively impacted by significant decreases in MTM losses and charges related to the sale of NMGC, but negatively affected by gains on the sale of LIL and tax benefits. Adjusted net income increased due to higher earnings at TEC, EES, and NMGC, partially offset by lower equity earnings from LIL and higher corporate costs.

Florida Electric Utility The Florida Electric Utility segment consists of TEC, a vertically integrated regulated electric utility engaged in the generation, transmission and distribution of electricity, serving customers in West Central Fl...

AI summary The Florida Electric Utility segment, including Tampa Electric Company (TEC), serves 866,000 customers with $14.5 billion USD in assets. TEC owns 6,771 MW of generating capacity, primarily natural gas and solar. TEC petitioned the Florida Public Service Commission (FPSC) to increase base revenue by $88 million USD in 2025, which was approved with new rates effective January 1, 2026.

NSPML Equity earnings from the Maritime Link are dependent on the approved ROE and operational performance of NSPML. NSPML's approved regulated ROE range is 8.75 per cent to 9.25 per cent, based on an actual five-quarter average regulated...

AI summary NSPML's equity earnings depend on its approved ROE and operational performance. The Maritime Link, operational since 2018, enables energy transmission between Newfoundland and Nova Scotia. In 2026, NSPML requested the termination of a $4 million monthly holdback on cost recovery, with a final decision pending. Capital investment is projected to be around $40 million in 2026.

PGS With $3.3 billion USD of assets and approximately 523,000 customers, the PGS system includes approximately 25,600 kilometres of natural gas mains and 14,800 kilometres of service lines. Natural gas throughput (the amount of gas deliver...

AI summary PGS anticipates earning within its allowed ROE range in 2026, with USD earnings expected to be higher than 2025 due to new base rates and customer growth. A rate case was filed with the FPSC, leading to a $67 million USD increase in 2026 annual base rates, with additional adjustments in 2027 and 2028. Capital investment is expected to be approximately $445 million USD in 2026.

NMGC With $1.6 billion USD of assets and approximately 553,000 customers, NMGC's system includes approximately 2,300 kilometres of transmission pipelines and 18,200 kilometres of distribution pipelines. Annual natural gas throughput was ap...

AI summary NMGC, with $1.6 billion USD in assets and 553,000 customers, reported one billion therms of annual natural gas throughput in 2025. Its approved ROE is 9.375%, and earnings contributions to Emera in 2026 are expected to decrease due to the pending sale of NMGC, expected to close in the first half of 2026.

BLPC With $547 million USD of assets and approximately 137,000 customers, BLPC owns 243 MW of generating capacity, of which 96 per cent is oil-fired and 4 per cent is solar. BLPC owns approximately 200 kilometres of transmission facilities...

AI summary BLPC, a Barbados utility with $547 million USD in assets and 137,000 customers, submitted a general rate review application in 2021. The FTC granted interim rate relief in 2022 and issued a decision in February 2023, which BLPC challenged. The FTC dismissed the challenge in November 2023, and interim rates remain in effect until a final decision is issued.

Highlights of net income (loss) changes are summarized in the following table: For the millions of dollars Three months ended December 31 Year ended December 31 Contribution to consolidated net (loss) income – 2024 $ (146) $ (686) Increase...

AI summary The table highlights changes in net income (loss) for the periods indicated, with key factors including increased marketing and trading margins due to favorable weather conditions, decreased equity earnings due to an unplanned outage, increased interest expenses, and various charges and gains related to asset sales and wind-down costs.

Regulatory and Political Risk The Company's rate-regulated utilities and certain investments are subject to complex legislative and regulatory frameworks that cover material aspects of their businesses. These frameworks influence key facto...

AI summary Emera's rate-regulated utilities face regulatory and political risks due to complex legislative and regulatory frameworks. These frameworks affect rates, cost recovery, capital investments, and service reliability. Delays in regulatory approvals or disallowance of cost recovery could lead to material adverse effects.

Interest Rate Risk: Emera utilizes a combination of fixed and floating rate debt financing for operations and capital expenditures, resulting in an exposure to interest rate risk. For Emera's rate-regulated utilities, the cost of debt is a...

AI summary Emera uses a mix of fixed and floating rate debt, exposing it to interest rate risk. Regulatory ROE is influenced by interest rates, with potential impacts on project viability and share price performance, especially in rising rate environments. Credit ratings also affect interest rates.

Pension and Other Post-Retirement Employee Benefits The Company provides post-retirement benefits to employees, including defined benefit pension plans. The cost of providing these benefits is dependent upon many factors that result from a...

AI summary The Company provides post-retirement benefits to employees, including defined benefit pension plans. Accounting for these benefits is a critical estimate, with factors such as employee demographics and actuarial assumptions significantly impacting financial statements. Pension plan assets are primarily equity and fixed income investments, and fluctuations in market returns and interest rates affect future pension costs. The Company uses smoothed asset values to reduce volatility in reported pension costs, with the discount rate being the main source of volatility.

Q1 2025 compared to Q1 2024 Q1 2025 net income attributable to common shareholders increased by $376 million and EPS – basic and diluted increased by $1.23 compared to Q1 2024. The increases were primarily due to decreased MTM losses; incr...

AI summary Q1 2025 net income attributable to common shareholders increased by $376 million and EPS increased by $1.23 compared to Q1 2024, driven by decreased MTM losses, higher earnings at various subsidiaries, a weaker CAD, and reduced Corporate OM&G, partially offset by the sale of LIL and increased shares outstanding.

Regulatory Matters Regulatory accounting applies where rates are established by, or subject to approval by, an independent third-party regulator. Rates are designed to recover prudently incurred costs of providing regulated products or ser...

AI summary Regulatory accounting is used in situations where rates are set by or require approval from an independent third-party regulator. Its purpose is to recover prudently incurred costs and allow for a reasonable rate of return on invested capital.

Goodwill Goodwill is calculated as the excess of the purchase price of an acquired entity over the estimated FV of identifiable assets acquired and liabilities assumed at the acquisition date. Goodwill is carried at initial cost less any w...

AI summary Goodwill is calculated as the excess of purchase price over the fair value of identifiable assets and liabilities. It is carried at initial cost less impairment and adjusted for foreign exchange. Goodwill is tested for impairment annually or when circumstances indicate a potential decline in fair value. The income approach and market approach are used to estimate fair value, with significant assumptions impacting the valuation.

2025 Annual Financial Statements Attachment 6 Page 88 of 138 REDACTED (CONFIDENTIAL INFORMATION REMOVED) Strategic Overview Management's Discussion and Analysis Consolidated Financial Statements Emera Leadership and Board Shareholder infor...

AI summary This document contains the 2025 Annual Financial Statements of Emera, including Management's Discussion and Analysis, Consolidated Financial Statements, and other related sections such as leadership information and shareholder details.

Environmental Remediations This asset is primarily related to PGS costs associated with environmental remediation at Manufactured Gas Plant sites. The balance is included in rate base, partially offsetting the related liability, and earns...

AI summary This asset is related to PGS costs for environmental remediation at Manufactured Gas Plant sites. It is included in the rate base, partially offsetting the liability, and earns a rate of return permitted by the FPSC. The timing of recovery is based on a settlement agreement approved by the FPSC.

Florida Electric Utility TEC is regulated by the FPSC and is also subject to regulation by the Federal Energy Regulatory Commission. The FPSC sets rates at a level that allows utilities such as TEC to collect total revenues or revenue requ...

AI summary Florida Electric Utility (TEC) is regulated by the FPSC and the Federal Energy Regulatory Commission. The FPSC sets rates to ensure TEC can recover its costs and earn an appropriate return on invested capital. The approved ROE range for 2025 is 9.50% to 11.50%, with a 10.50% ROE used for investment calculations.

Base Rates: On April 2, 2024, TEC filed a rate case with the FPSC for new base rates. On December 3, 2024, the FPSC rendered a decision which included annual base rate increases of $185 million USD in 2025 and adjustments of $87 million US...

AI summary TEC filed a rate case in 2024 with the FPSC, resulting in base rate increases and adjustments over several years. An intervening party filed a motion for reconsideration, which was denied, and two parties appealed to the Florida Supreme Court. TEC later petitioned for an additional base revenue increase, which was approved in 2025.

NSPI NSPI is a public utility as defined in the Public Utilities Act of Nova Scotia ("Public Utilities Act") and is subject to regulation by the NSEB. The Public Utilities Act gives the NSEB supervisory powers over NSPI's operations and ex...

AI summary NSPI operates as a regulated public utility under the Public Utilities Act, with the NSEB overseeing its operations and setting electricity rates. NSPI's regulated return on equity (ROE) for 2024 and 2025 is set between 8.75% and 9.25%, based on a 40% common equity component of the approved rate base.

NSPML Equity earnings from the Maritime Link are dependent on the approved ROE and operational performance of NSPML. NSPML's approved regulated ROE range is 8.75 per cent to 9.25 per cent, based on an actual five-quarter average regulated...

AI summary Equity earnings from the Maritime Link depend on NSPML's approved ROE and operational performance. NSPML has received orders from NSEB to collect funds from NSPI for cost recovery, with holdbacks in place. A FLG agreement was finalized in 2024, and the holdback mechanism was requested to be terminated in 2026.

PGS PGS is regulated by the FPSC. The FPSC sets rates at a level that allows utilities such as PGS to collect total revenues or revenue requirements equal to their cost of providing service, plus an appropriate return on invested capital....

AI summary PGS is regulated by the FPSC, which sets rates to ensure utilities can recover their costs and earn a return on invested capital. The approved ROE range for 2024 and 2025 is 9.15% to 11.15%, with a midpoint of 10.15%, based on an allowed equity capital structure of 54.7%.

Base Rates: On March 31, 2025, PGS filed a rate case with the FPSC for new rates to become effective January 1, 2026. On August 13, 2025, PGS and the intervening parties filed a settlement agreement with the FPSC for a $67 million USD incr...

AI summary PGS filed a rate case with the FPSC on March 31, 2025, proposing a $67 million USD increase in 2026 base rates, including adjustments for 2027 and 2028. The FPSC approved the settlement on October 31, 2025, with a 10.30% midpoint ROE and 54.7% equity thickness.

NMGC NMGC is subject to regulation by the NMPRC. The NMPRC sets rates at a level that allows NMGC to collect total revenues or revenue requirements equal to its cost of providing service, plus an appropriate return on invested capital. NMG...

AI summary NMGC operates under the regulation of the NMPRC, which sets rates to ensure NMGC can recover its costs and earn a return on invested capital. The approved return on equity for 2024 and 2025 is 9.375%, based on an allowed equity capital structure of 52%.

Base Rates: On September 14, 2023, NMGC filed a rate case with the NMPRC for new base rates. On March 1, 2024, NMGC filed with the NMPRC a settlement with the support of all parties in the case for an increase of $30 million USD in annual...

AI summary NMGC filed a rate case with the NMPRC in 2023, leading to a $30 million annual base revenue increase and maintaining a 9.375% ROE. The new rates reflect increased operating costs, capital investments, and a new billing system. NMGC agreed to withdraw its request for a regulatory asset related to a 2022 LNG storage facility application. The NMPRC approved the settlement in July 2024, with new rates effective October 1, 2024.

BLPC BLPC is regulated by the Fair Trading Commission ("FTC"), under the Utilities Regulation (Procedural) Rules 2003. BLPC is regulated under a cost-of-service model, with rates set to recover prudently incurred costs of providing electri...

AI summary BLPC is regulated by the Fair Trading Commission under the Utilities Regulation (Procedural) Rules 2003, using a cost-of-service model. Rates are set to recover prudently incurred costs plus a 10 per cent return on capital invested for 2024 and 2025.

Base Rates: In 2021, BLPC submitted a general rate review application to the FTC. In September 2022, the FTC granted BLPC interim rate relief, allowing an increase in base rates of approximately $1 million USD per month. On February 15, 20...

AI summary BLPC submitted a rate review application in 2021, leading to interim rate increases and a decision by the FTC in February 2023. BLPC appealed the decision, and the Supreme Court of Barbados granted a stay. The appeal was heard in late 2025 and will continue into 2026. BLPC claims the FTC made errors of law and jurisdiction.

GBPC GBPC is regulated by the GBPA. The GBPA has granted GBPC a licensed, regulated and exclusive franchise to produce, transmit and distribute electricity on the island until 2054. Rates are set to recover prudently incurred costs of prov...

AI summary GBPC operates under the GBPA's regulation, holding an exclusive franchise until 2054. Rates are determined to recover prudently incurred costs and provide an 8.52% return on the rate base.

The expected long-term rate of return on plan assets is based on historical and projected real rates of return for the plan's current asset allocation, and assumed inflation. A real rate of return is determined for each asset class. Based...

AI summary The document discusses the calculation of the expected long-term rate of return on pension plan assets, which is based on historical and projected real rates of return for the plan's asset allocation and assumed inflation. The discount rate is determined using high-quality long-term corporate bonds that match the estimated cash flows from the pension plan.

Regulatory and Political Risk The Company's rate-regulated utilities and certain investments are subject to complex legislative and regulatory frameworks that cover material aspects of their businesses. These frameworks influence key facto...

AI summary Emera's rate-regulated utilities face regulatory and political risks due to complex legislative frameworks influencing rates, cost recovery, and capital investments. Failure to obtain regulatory approvals or changes in government policy could result in material adverse effects, including valuation impairments and service reliability issues.

Interest Rate Risk: Emera utilizes a combination of fixed and floating rate debt financing for operations and capital expenditures, resulting in an exposure to interest rate risk. For Emera's rate-regulated utilities, the cost of debt is a...

AI summary Emera uses a mix of fixed and floating rate debt, exposing it to interest rate risk. Regulatory ROE is influenced by interest rates, with potential impacts on project viability and share price performance, especially during rising rate environments. Credit ratings also play a role in interest rate fluctuations.

30. Non-Controlling Interest in Subsidiaries As at millions of dollars December 31 2025 December 31 2024 Preferred shares of GBPC $ 14 $ 14 Preferred shares of GBPC

AI summary The document presents a table showing the preferred shares of GBPC as of December 31, 2025, and December 31, 2024, with no change in value between the two periods.

32. Stock-Based Compensation

AI summary This section discusses stock-based compensation, which is a method of compensating employees with company stock instead of cash. It outlines the accounting treatment and disclosure requirements for such compensation, ensuring transparency and compliance with regulatory standards.

ACCOUNT SEGMENT Account Segment Value Account Segment Description 180810 LT REG ASSET DERIV INSTR TREASURY 180850 LT REG ASSET FCR DEFERRAL 181550 LT REG ASSET UARB TAX DEFERRAL 181700 LT REG ASSET STORM RIDER 181800 LT REG ASSET STORM RES...

AI summary The text provides a list of account segments with their corresponding descriptions, including long-term assets, liabilities, and various financial categories related to regulated and non-regulated assets, receivables, and accrued liabilities.

2 Of the $24.8M earnings above NS Power's approved ROE range in 2010, $10.3M was expensed as accelerated amortization under the section 21 mechanism. The remaining $14.5M was tax benefits related to renewable energy projects, which was def...

AI summary The text discusses Nova Scotia Power's earnings relative to its approved ROE range, noting that in 2010, earnings above the range were partially expensed and partially deferred. It also explains that earnings exceeding the ROE range in 2015-2019 are deemed over recovery of fuel costs under the Electricity Plan Implementation (2015) Act. Regulated earnings were below the ROE range in several years, with adjustments made to the FAM balance.

ova Scotia Power Incorporated 11931 4938 RC0001 1 2 3 4 5 6 Row Name of CFA Amounts determined for variable A in the definition of IFE for the affiliate Proportion determined under subsection 18.2(2) Amount G in Part 2K % Denied amount und...

AI summary The text provides a table with various financial and tax-related calculations, including amounts determined for variable A in the definition of IFE, proportions under subsection 18.2(2), denied amounts, and the corporation's share of denied amounts. The table includes references to tax years, percentages, and specific tax-related clauses.

March 2, 2026 This report does not constitute a rating action. What's new: Nova Scotia Power Inc. (NSPI) ended fiscal year 2025 with funds from operations (FFO) to debt of 8.5%, which was materially below our 10.0% downgrade threshold. The...

AI summary Nova Scotia Power Inc. (NSPI) ended fiscal year 2025 with a funds from operations to debt ratio of 8.5%, below the downgrade threshold. The company faces challenges from a delay in securitizing thermal assets and a cyber-incident. NSPI is seeking rate increases and regulatory approval to securitize C$700 million of thermal assets.

Earnings Outlook Earnings for NSPI have generally been very stable, reflecting the regulated nature of its operations and were relatively flat in 2024 and in year-to-date 2025 compared with 2023. NSPI achieved a return on equity (ROE) of 8...

AI summary NSPI's earnings have remained stable due to its regulated operations, with a ROE of 8.70% in 2024, slightly below the approved ROE band. If the GRA application is approved, revenues are expected to rise by $62 million in 2026 and $108 million in 2027.

Low-Risk Regulated Electricity Business The Company's current regulatory framework is based on a cost-of-service (COS) methodology, under which NSPI can recover all prudently estimated operating expenses and earn a reasonable return on app...

AI summary NSPI operates under a cost-of-service regulatory framework that allows recovery of prudently estimated operating expenses and a reasonable return on capital investments. The company's target ROE range is considered reasonable. The FAM helps manage fuel price fluctuations by deferring and collecting differences between actual fuel costs and those recovered from customers, with recent regulatory decisions favoring the company and reducing FAM balances.

Good Franchise Strength NSPI is the primary electricity supplier for the Province, providing more than 95% of its electricity generation, transmission, and distribution. Although the Electricity Reform (2013) Act permits licensed retail su...

AI summary NSPI is the primary electricity supplier in Nova Scotia, with no material competition from renewable-to-retail tariffs as of September 30, 2025. Only one licensed retail supplier, Renewall Energy Inc., exists but has not yet commenced operations.

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, excludi...

AI summary In November 2022, Bill 212 amended the Public Utilities Act to cap NSPI's base rate increase at 1.8% and limit ROE and deemed equity. Political interference in the ratemaking process is viewed as credit negative due to instability and impaired regulatory independence.

Unfavorable Generation Mix As a result of the current generation mix, NSPI is dependent on international suppliers for its fuel supply, exposing the Company to volatile global pricing. This exposure, combined with continued investment in r...

AI summary NSPI faces challenges due to its reliance on international fuel suppliers, leading to higher electricity rates. The Muskrat Falls project will reduce coal dependency, but coal plants will remain until 2030. Compliance with the Canada-Nova Scotia Equivalency Agreement allows compliance until 2029, but coal plants must close by 2030, requiring significant investment.

Comprehensive Financial Risk Assessment (CFRA) NSPI's CFRA score of BBB is expected to remain relatively stable within the current credit rating category, despite some volatility and medium-term pressure on the key credit metrics given the...

AI summary NSPI's Comprehensive Financial Risk Assessment (CFRA) score of BBB is expected to remain stable, despite medium-term pressure from high capital expenditures and energy transition risks related to coal-based generation assets.

Intrinsic Assessment (IA) The IA of BBBH is the midpoint of the IA range and is based on the CBRA score having a higher weight in line with the methodology. The IA assignment considers peer comparisons, among other factors.

AI summary The Intrinsic Assessment (IA) of BBBH is determined as the midpoint of the IA range, with the Comprehensive Business Risk Assessment (CBRA) score carrying higher weight according to the methodology. Peer comparisons and other factors are also considered in the IA assignment.

Appendix B— Regulatory Overview - NSPI operates under the NSEB's regulatory environment using a COS methodology that allows the Company to recover all prudently estimated operating expenses and earn a reasonable return on approved capital...

AI summary NSPI operates under the NSEB's regulatory framework with a target ROE range of 8.75% to 9.25%. In 2022, the Public Utilities Act was amended to cap base-rate increases at 1.8% and limit ROE and deemed equity. A negotiated settlement in 2023 approved a 6.9% average rate increase for 2023 and 2024, including components for base-rate, DSM, and fuel adjustments. The amendment was viewed as a negative political intervention.

Criteria Score Analysis 1. Deemed Equity Excellent Good Satisfactory Below Average Poor NSPI's target-regulated ROE is based on an actual five-quarter average-regulated common equity component of up to 40.0%. 2. Allowed ROE Excellent Good...

AI summary The document evaluates NSPI's regulatory criteria, including deemed equity, allowed ROE, energy cost recovery, and rate freeze. It highlights the impact of Bill 212 on NSPI's regulatory environment, the use of the FAM for fuel cost recovery, and the cap on rate increases for the 2022 to 2024 GRA.

NON-CONFIDENTIAL 1 Request IR-7: 2 3 (a) Please explain the circumstances and considerations that led to NS Power's $340 4 million return of capital to Emera in 2025. In the response, please describe the 5 business purpose of the transacti...

AI summary NS Power returned $340 million in capital to Emera in 2025 as part of its capital structure management. The transaction was based on projected equity balance requirements and financing strategy. The company's regulated equity thickness was 34.8% in 2025, below the approved 40%, due to insufficient revenue from approved rates to support higher equity.

1. NS Power Annual Financial Statement Filings In the Nova Scotia Energy Board's (NSEB, Board) letter dated August 6, 2014, regarding NS Power's 2013 Annual Financial Statement filings, the Board directed that the following items are to be...

AI summary The Nova Scotia Energy Board (NSEB) directed NS Power to submit specific financial filings, including audited statements and management reports, while modifying reporting formats for deferred tax and rate base continuity. The Board also approved changes to non-fuel cost reporting and accepted revised attachment formats for future filings. NS Power's return on equity figures for 2025 were highlighted.

2. Details of Variances in the Non-Fuel Costs Details of variances in the non-fuel costs between 2025 actuals compared to the 2024 test year forecast are provided below: - Increased Operating, Maintenance and General ("OM&G") Expenses OM&G...

AI summary The document details variances in non-fuel costs for 2025 compared to 2024 forecasts, including increases in OM&G expenses, depreciation, fixed cost recoveries, and demand-side management costs, alongside decreases in other income. NS Power's achieved ROE fell below the NSEB-approved range for the fourth consecutive year.

Request IR-7: - a) Please explain the circumstances and considerations that led to NS Power's $340 million return of capital to Emera in 2025. In the response, please describe the business purpose of the transaction, the determination of t...

AI summary The request seeks an explanation of NS Power's $340 million return of capital to Emera in 2025, including the business rationale, financial considerations, and how it fits into NS Power's financial position. It also asks for an explanation of why NS Power's actual equity thickness of 34.8% as of December 31, 2025, is below the approved 40%.