Topic:"Securitization" in M12451

Working with Government on Solutions for Nova Scotia - NS Power has been working collaboratively with the Provincial and Federal Governments to find - ways to reduce costs and alleviate rate pressure on customers. These efforts to create s...

AI summary NS Power collaborates with provincial and federal governments to reduce costs and rate pressure for customers. Key initiatives include a $117 million receivable from Invest Nova Scotia, a $500 million federal loan guarantee, sulphur emission regulation adjustments saving $160 million, and a securitization approach under the Public Utilities Act potentially saving $90 million.

Nova Scotia Power's Request - In this GRA, Nova Scotia Power is seeking an order from the Board approving the following: - 1. The 2026 and 2027 revenue requirements as described in Section 11 to enable NS Power to recover the prudent and r...

AI summary Nova Scotia Power is requesting regulatory approval for various items, including revenue requirements for 2026 and 2027, adjustments to the Fuel Adjustment Mechanism, amendments to the FAM Plan of Administration, and deferrals related to securitization and depreciation. It also seeks approval for specific deferrals, updated studies, and continuation of a Storm Cost Recovery Rider pilot.

1 9 Applying the proposed depreciation rates to forecast monthly balances of depreciable plant 10 throughout the test period results in forecast depreciation and accretion expense of $309.0 million 11 in 2026 and $327.4 million in 2027. Ho...

AI summary The document discusses the application of proposed depreciation rates to forecast monthly balances of depreciable plant, resulting in forecast depreciation and accretion expenses of $309.0 million in 2026 and $327.4 million in 2027. These figures are adjusted by $26.6 million annually due to the securitization of certain asset pools retiring before 2030.

Overview - Rate base is the investment made by NS Power in assets required to provide service to customers. - Included in rate base are physical assets like power plants, wind turbines, power lines, vehicles, - buildings and inventories of...

AI summary The rate base includes physical and financial assets, with regulatory assets and liabilities. The method for calculating the rate base is consistent with previous GRA. Forecast changes include decreased FAM asset balance due to securitization and capital investment.

- investment during the test period includes investment in system reliability, investment to meet anticipated customer growth and major re-investment and life extension in the Company's hydro facilities. Transformational capital included i...

AI summary NS Power's capital investments focus on reliability, growth, and renewable energy, including battery sites and synchronous condensers. The Reliability Tie project is excluded from the rate base as it's handled by Wasoqonatl Transmission Company. The Five-Year Reliability Plan includes $1.3 billion in projects by 2030. Securitization of DDA assets is anticipated, with credit metrics excluding related debt.

Figure 10-1 – S&P Global North American Regulated Utilities Ratings Distribution[20](#page-67-1) Credit ratings are determined based on an assessment of both business risk and financial risk. The key metric considered from a financial risk...

AI summary NS Power must maintain cash flow to debt above 10% to preserve its credit ratings. The company forecasts that with rate relief and thermal asset securitization, metrics will reach BBB+ (S&P) and A (low) (DBRS) by 2027. Without these measures, metrics would fall below 10%, risking credit downgrades and higher borrowing costs.

These risks are not generally faced by other Canadian investor-owned utilities, many of which own little, if any, generation. Further, as discussed in more detail later in this section, while the companies in the U.S. Electric proxy group...

AI summary NSPI faces substantial carbon transition risk compared to other utilities, particularly due to its higher coal-fired generation and shorter carbon reduction targets. NSPI proposed a decarbonization plan involving a deferral account (DDA) and seeks to securitize approximately $700 million of DDA assets by 2025, with potential deferral of costs if securitization is not completed by 2026.

2026-2027 Financial Outlook (1) (2) (3) (4) (5) (7) 1 Forecast Proposed Proposed Average Average 2 2025 Rates 2026 Rates 2027 2025/2026 2026/2027 Reference 3 Net Regulated Plant in Service 4 Net Regulated Plant in Service, beginning balanc...

AI summary The document presents a financial outlook for 2026-2027, focusing on changes in Net Regulated Plant in Service and Construction work in progress. It includes figures for asset additions, depreciation, salvage costs, and securitization proceeds, with references to various filings and line items.

26 1) Figures presented reflect whole numbers which may cause rounding differences on some line items. 27 2) Securitization proceeds are forecast to be received in two tranches with $500M in December 2025 and $216.7M in December 2026. The...

AI summary The text discusses securitization proceeds forecasted to be received in two tranches, with amounts and timing specified. It explains that the second tranche securitizes the remaining net book value and deferred financing costs, which have been removed from 2026 revenue requirement and deferred to property, plant, and equipment.

Year-to-date Achievements - 1. Closed $1.2B CAD Labrador Island Link transaction with proceeds used to reduce corporate debt and fund investments in our regulated utility businesses - 2. Replaced Holdco debt with $500M USD of hybrid notes,...

AI summary The year-to-date achievements include closing a significant Labrador Island Link transaction, replacing debt with hybrid notes, adjusting dividend growth, and announcing the sale of NMGC. Additionally, $117M CAD of unrecovered fuel costs from NSPI were securitized by the NS government in April 2024.

In Progress - Continued discussions on further securitizations of unrecovered fuel costs at NSPI - New rates at Peoples Gas and New Mexico Gas and a rate case underway at Tampa Electric - Continued strong performance of our regulated opera...

AI summary The document highlights ongoing discussions about securitization of unrecovered fuel costs at NSPI, new rates at Peoples Gas and New Mexico Gas, and a rate case at Tampa Electric, along with continued strong performance of regulated operations.

Additional Drivers of Cash Flow and Credit Metric Improvement - $117M CAD securitization of NSPI's unrecovered fuel costs, by the NS government in April 2024 discussions on further securitizations continue - 6.9% rate increase at NSPI effe...

AI summary The text outlines additional drivers of cash flow and credit metric improvements, including a $117M CAD securitization of NSPI's unrecovered fuel costs, a 6.9% rate increase at NSPI effective January 1, 2024, and new base rates at various utilities. It also mentions continued strong performance of regulated operations.

Confident in our portfolio of premium assets to deliver reliable earnings, cash flow and dividend growth - 8% increase in adjusted earnings per share1 ("adjusted EPS") in Q3 2024 compared to Q3 2023 - Continued balance sheet strengthening...

AI summary The document highlights a 8% increase in adjusted EPS for Q3 2024, balance sheet strengthening through the securitization of $500M in fuel costs at Nova Scotia Power, and growth guidance of 5%-7% adjusted EPS through 2027 and 7%-8% rate base growth through 2029.

Net Storm & Fuel Cost Regulatory Asset Balances ($millions CAD) Collected ~ $650M USD of fuel and storm underrecoveries at Tampa Electric over 21 months (beginning April 1, 2023) 1 $ US Balances translated at 1.35 in 2022, 1.32 in 2023 and...

AI summary The document discusses collected fuel and storm underrecoveries totaling ~$650M USD at Tampa Electric over 21 months starting April 1, 2023, and mentions a pro-forma $500M fuel securitization at NSPI, with currency balances translated using exchange rates from 2022 to 2024.

Delivering Meaningful Progress Towards Strengthening Balance Sheet Replaced Holdco debt with $500M USD of hybrid notes, treated as 50% equity Announced adjustment to Dividend Growth rate Closed $1.2B CAD Labrador Island Link transaction Fi...

AI summary The document outlines financial and capital strategies, including debt replacement with hybrid notes, dividend adjustments, and major transactions like the Labrador Island Link and NMGC sale. It also highlights capital spending plans and rate base growth projections.

2026-2027 GRA OP-12 Attachment 1 Page 403 of 684 REDACTED (CONFIDENTIAL INFORMATION REMOVED) - Closed $1.2B CAD Labrador Island Link transaction - Finalizing the sale of NMGC for net proceeds of $750M USD , set to close in late 2025 - Issu...

AI summary The document outlines several financial transactions, including the closure of a CAD 1.2B Labrador Island Link deal, the finalization of a USD 750M NMGC sale, the issuance of USD 500M hybrid notes, and securitization efforts for NSPI's deferred fuel costs totaling CAD 500M, with CAD 117M already securitized.

Decisive Actions Have Delivered Improvement in Credit Metrics - Closed $1.2B CAD Labrador Island Link transaction - Finalizing the sale of NMGC for net proceeds of $750M USD , set to close in late 2025 - Issued $500M USD of hybrid notes, t...

AI summary The document outlines significant financial actions taken to improve credit metrics, including the closure of a major transaction, the sale of an asset, the issuance of hybrid notes, and the securitization of deferred fuel costs by NSPI.

100bps Improvement in 2024 Driven By: - $1.2B CAD Labrador Island Link transaction - $500M USD of hybrid notes, treated as 50% equity - $617M CAD securitization of NSPI deferred fuel costs - New base rates at all US utilities

AI summary The 100bps improvement in 2024 is attributed to several financial transactions, including a $1.2B CAD Labrador Island Link deal, $500M USD in hybrid notes treated as 50% equity, a $617M CAD securitization of deferred fuel costs, and new base rates at all US utilities.

General Rate Application Rate application expected this spring Application anticipated to include 2026 and 2027 and include total incremental base revenues of $240M 1 Average annual rate increase expected to be ~3.7% Application expected t...

AI summary A general rate application is anticipated this spring, covering 2026 and 2027 with total incremental base revenues of $240M. The average annual rate increase is expected to be ~3.7%, incorporating $724M of thermal asset securitization. The application will request a 9.0% ROE midpoint and 40% equity thickness, with new rates effective January 1, 2026.

FAM Securitization Sold $117M of deferred costs to the Provincial Government in Q2 2024 and used the proceeds to reduce consolidated debt Securitized a further $500M of deferred fuel costs via a second federal loan guarantee and used the p...

AI summary The entity sold $117M of deferred costs to the Provincial Government in Q2 2024 and used the proceeds to reduce consolidated debt. A further $500M of deferred fuel costs was securitized through a second federal loan guarantee, also used to reduce consolidated debt.

FX NORMALIZED TRAILING 12 MONTHS FFO ADJUSTED LEVERAGE 1 + HOLDCO/TOTAL DEBT FX normalized FFO adjusted leverage - ✓ Sale of LIL 2 investment delivered $1.2B of proceeds 3 for Holdco deleveraging - ✓ Raised $0.9B of common equity content 4...

AI summary The document outlines various financial actions taken to manage leverage and debt, including the sale of an investment, raising equity, securitization of fuel costs, and revenue collection. These actions aim to deleverage Holdco and manage financial obligations related to storms and new revenue streams.

FX NORMALIZED FFO ADJUSTED LEVERAGE 1 TRANSITION $185M USD of new base revenues at TEC , partially offset by rate base investment $700M USD of proceeds from NMGC sale used to retire Holdco debt $500M of thermal asset securitization reduces...

AI summary The text discusses financial strategies involving new base revenues, proceeds from the sale of NMGC, and thermal asset securitization, all aimed at strengthening credit metrics and supporting an investment grade rating.

FFO ADJUSTED LEVERAGE TRANSITION $87M USD of new base revenues at TEC , partially offset by rate base investment $80M CAD of new base revenues at NSPI and a further $200M of thermal asset securitization $104M USD of new base revenues at PG...

AI summary The FFO Adjusted Leverage Transition section outlines new base revenue figures for TEC, NSPI, and PGS, including USD and CAD amounts, partially offset by rate base investments and thermal asset securitization.

FX NORMALIZED TRAILING 12 MONTHS CFO PRE-WC / DEBT 1 + HOLDCO / TOTAL DEBT - ✓ Sale of LIL 2 investment delivered $1.2B of proceeds 3 for Holdco deleveraging - ✓ Raised $0.9B of common equity content 4 - ✓ Securitized $617M of NSPI fuel co...

AI summary The text outlines financial activities and strategies related to debt management, including the sale of an investment, equity raises, securitization of fuel costs, and revenue collection from various projects. These actions are aimed at deleveraging and financial stability.

FX NORMALIZED CFO PRE-WC / DEBT 1 TRANSITION $185M USD of new base revenues at TEC , partially offset by rate base investment $700M USD of proceeds from NMGC sale used to retire Holdco debt $500M of thermal asset securitization reduces con...

AI summary The document discusses financial strategies including $185M USD in new base revenues at TEC, $700M USD from the NMGC sale to retire debt, and $500M from thermal asset securitization, which are expected to strengthen credit metrics and support the investment grade rating.

General Rate Application Rate application expected this spring Application anticipated to include 2026 and 2027 and include total incremental base revenues of $240M 1 Average annual rate increase expected to be ~3.7% Application expected t...

AI summary The General Rate Application is expected this spring, covering 2026 and 2027, with a total incremental base revenue of $240M and an average annual rate increase of ~3.7%. The application will include $724M in thermal asset securitization, request a 9.0% ROE midpoint and 40% equity thickness, with new rates effective January 1, 2026.

FAM Securitization Sold $117M of deferred costs to the Provincial Government in Q2 2024 and used the proceeds to reduce consolidated debt Securitized a further $500M of deferred fuel costs via a second federal loan guarantee and used the p...

AI summary The document outlines the securitization of deferred costs, including the sale of $117M in Q2 2024 and an additional $500M of deferred fuel costs through a federal loan guarantee, both used to reduce consolidated debt.

2025 – 2027 Consolidated Funding Plan (in CAD billions) Capital Investment1 $11.1 Reinvested Cash Flow2 $4.1 Utility Debt Issuance $2.3 Corporate Debt Issuance $1.6 ATM and DRIP $1.4 Net Proceeds from NMGC $0.9 Thermal Asset Securitization...

AI summary The 2025–2027 Consolidated Funding Plan outlines various funding sources for capital investment, including reinvested cash flow, debt issuance, and securitization, totaling CAD 11.1 billion.

FX NORMALIZED TRAILING 12 MONTHS FFO / DEBT 1 + HOLDCO / TOTAL DEBT - ✓ Sale of LIL 3 investment delivered $1.2B of proceeds 4 for Holdco deleveraging - ✓ Raised $0.9B of common equity content 5 - ✓ Securitized $617M of NSPI fuel costs, an...

AI summary The text outlines financial activities and strategies related to debt management, including the sale of the Labrador Island Link investment, equity raises, securitization of fuel costs, and revenue collection from Tampa Electric and New Mexico Gas. These actions aim to deleverage Holdco and manage financial obligations from storms.

FX NORMALIZED FFO / DEBT1,2 TRANSITION $185M USD of new base revenues at TEC , partially offset by rate base investment $700M USD of proceeds from NMGC sale used to retire Holdco debt $500M of thermal asset securitization reduces consolida...

AI summary The document outlines financial transitions involving $185M USD in new base revenues at TEC, $700M USD from the NMGC sale used to retire debt, and $500M from thermal asset securitization, which are expected to strengthen credit metrics and support the investment grade rating.

2024 Board and Committee membership Attendance Total • Board 9 of 9 100% • Health, Safety and Environment Committee (Chair) 3 of 3 100% • Management Resources and Compensation Committee 5 of 5 100% Total Attendance 17 of 17 100% Total comp...

AI summary The document outlines the 2024 attendance rates for various boards and committees, along with total compensation, DSU awards, and holdings of Emera Securities. All committees and the board achieved 100% attendance. Total compensation for 2024 was $320,500, with no additional compensation. DSUs awarded and held increased significantly in 2024, and the value of shares and DSUs held by Mr. Bertram exceeded the ownership guideline.

Nova Scotia Power Inc. Continuity Schedules for 2024A, 2024C, 2025, 2026, 2027 (Numbers in $ thousands) RATE BASE TABLE 1- Continuity of Property, Plant and Equipment 1 2 3 2024A Function Beginning Balance Gross Plant - 2024A Additions - 2...

AI summary The document presents Nova Scotia Power Inc.'s continuity schedules for multiple years, focusing on the rate base table for Property, Plant, and Equipment. It includes details on additions, retirements, securitization proceeds, and depreciation for 2024A and 2024C.

TABLE 1- Continuity of Property, Plant and Equipment (Numbers in $ thousands) General Property 920,543 74,555 -8,217 - - 122 987,003 465,614 61,515 -10,148 - - - 516,981 470,022 79 Totals 8,312,518 671,348 -95,100 -204,073 - -124 8,684,569...

AI summary The text presents a table titled 'Continuity of Property, Plant and Equipment' with various financial figures and categories related to asset management, depreciation, and retirements. The table includes details on gross plant balances, accumulated depreciation, and other related financial metrics for the year 2027.

January 28, 2025 What's new: Nova Scotia Power Inc. (NSPI) recently received a Canadian federal loan guarantee to securitize C$500 million of current and future fuel balances at NSPI; the company used proceeds toward reducing debt at NSPI....

AI summary Nova Scotia Power Inc. (NSPI) received a C$500 million loan guarantee from the Canadian federal government to securitize deferred fuel costs, helping reduce debt and regulatory lag. This, along with provincial support, is expected to improve NSPI's credit measures and reduce rate impacts on customers. S&P Global Ratings revised Emera Inc.'s outlook to stable from negative due to these developments and other initiatives.

Outlook The stable outlook on NSPI reflects the stable outlook of its parent Emera, as well as our expectation that NSPI's FFO to debt will average about 10%-11% through 2026. The improvement in credit measures from recent years is largely...

AI summary The stable outlook for NSPI is based on its parent company Emera's stability and expected FFO to debt ratio of 10%-11% through 2026. Credit improvements are attributed to the securitization of deferred fuel costs and reduced debt.

2026-2027 General Rate Application (M12451) NSPI Responses to GT Information Requests 1 Request IR-61: 2 3 Reference: N-3 page 74. 4 5 In reference to figure 11-1 in direct evidence N-3, page 74, please explain assumptions used 6 in foreca...

AI summary NSPI responds to GT Information Request IR-61 regarding assumptions used in forecasting interest charges under 'interest and other expenses' for 2026 and 2027. The increase is attributed to deferred financing costs from the securitization of thermal assets. References are made to other IRs and documents for detailed calculations and explanations.

NON-CONFIDENTIAL 1 Request IR-72: 2 3 Reference: RB-01 and FO-12 4 - 5 Please provide a reconciliation for line 7 (Salvage and cost of removal), line 8 (reclassified to - 6 COR and ARO liabilities), and line 9 (deferred financing costs on...

AI summary The document requests a reconciliation of specific line items in FO-12 to RB-01, including salvage and cost of removal, reclassified COR and ARO liabilities, and deferred financing costs on assets to be securitized, for all years.

16 securitized) to RB-01: ($ million) 2026 Securitization Proceeds per RB-1 -204.073 ($ million) 2026 Deferred Financing Costs on Assets to be Securitized 12.647 Securitization Proceeds -216.721 Total FO-12 -204.073 17

AI summary The text presents financial data related to securitization proceeds and deferred financing costs for 2026. It includes figures such as securitization proceeds per RB-1 and total FO-12, indicating financial transactions and accounting considerations associated with securitization.

- 13 Please refer to GT IR-75 for additional detail on how AFUDC is calculated. - 14 Please refer to GT IR-77 for a detailed calculation of FAM interest. - 15 Please refer to GT IR-78 for a detailed calculation of DSM rider deferral intere...

AI summary The text provides references to various regulatory guidelines and documents related to financial calculations, including AFUDC, FAM interest, DSM rider deferral interest, and deferred interest on assets to be securitized.

NON-CONFIDENTIAL 1 Request IR-25: 6 depreciable plant throughout the test period results in forecast depreciation 7 and accretion expense of $309.0 million in 2026 and $327.4 million in 2027. 8 However, as NS Power intends to securitize ce...

AI summary NS Power plans to securitize certain asset pools retiring before 2030, reducing annual depreciation and accretion expenses by $26.6 million in 2026 and 2027. The request asks for an Excel spreadsheet with calculations and assumptions, including expected retirement dates. NS Power's response explains that the reduction is based on the capital recovery portion of depreciation expense as of December 2025.

- 6 which may be years away, when preparing the GRA budget for the upcoming test period. 1 Request IR-38: 2 3 Regarding the Deferred Decarbonization Asset (DDA), NS Power states that it plans to 4 securitize the net book value of all asset...

AI summary The document discusses NS Power's plan to securitize the net book value of Deferred Decarbonization Assets (DDA) by December 31, 2025, and the impact on depreciation and revenue requirements. It also outlines the expected timing of the securitization and the anticipated decrease in revenue requirement by approximately $70 million annually.

- 2 be collected through a rider. The revenue requirement of the rider will depend primarily on the - 3 interest rate, repayment term, and repayment structure of securitized debt. - 4 This net savings could be as much as approximately $90...

AI summary The text discusses a potential revenue requirement reduction of up to $90 million over a two-year period through securitization of thermal assets, assuming interest-only repayments at a 4% interest rate. This would reduce the revenue requirement from $140 million to $50 million under the current setup.

- 11 financing cost to the benefit of customers. 1 Request IR-40: 2 3 Considering NS Power's proposal to securitize the costs of assets that were previously 4 proposed to be added to the DDA, please fully explain the continued purpose of t...

AI summary NS Power explains that securitization of DDA assets will reduce the DDA balance but that sustaining capital investments and decommissioning costs will still need to be recovered. NS Power also notes that the Cost of Removal regulatory account has been tracked since 2016, though full reconciliation by project is limited due to a cyber incident.

CONFIDENTIAL (Attachment only) 1 Request IR-1: 2 3 References: PARTIALLY CONFIDENTIAL 2026-2027 GRA CS-01-CS-03 Attachment 1 4 5 Question: 6 7 (a) Please provide all source information, formulas and (if necessary) models used to 8 calculat...

AI summary The document contains a response to an information request regarding the calculation of financial results and ratios for the 2026-2027 General Rate Application. It references various attachments and filings, including the Regulated Rate Base, Net Income attributable to Common Shareholders, and Average Regulated Equity. The response also includes an alternate version of the attachment assuming the securitization of DDA assets does not proceed.

II. SUBMISSIONS - 12. Subject to receiving the Exemption Sought, NSPI proposes to issue Notes in Canada in a manner which provides potential purchasers with an appropriate level of investor protection, while being consistent with the expec...

AI summary NSPI proposes to issue Notes in Canada under specific conditions, including a maximum maturity of 365 days, minimum denomination of $250,000, and exclusion from being a securitized product, in line with Canadian commercial paper market practices.

Applicable Legislative Provisions Securities Act , R.S.N.S. 1989, c. 418 and Securities Act , R.S.O 1990, c. S.5 ⚫ , 2023 IN THE MATTER OF THE SECURITIES LEGISLATION OF NOVA SCOTIA AND ONTARIO (the Jurisdictions) AND IN THE MATTER OF THE P...

AI summary This section outlines the applicable legislative provisions related to the securities legislation of Nova Scotia and Ontario, and the process for exemptive relief applications in multiple jurisdictions involving Nova Scotia Power Incorporated.

Decision Each of the Decision Makers is satisfied that the decision satisfies the test set out in the Legislation for the Decision Maker to make the decision. - 1. The decision of the Decision Makers is that the Exemption Sought is granted...

AI summary The Decision Makers have granted the Exemption Sought for the distribution of Notes, subject to specific conditions including non-convertibility, non-securitization, and minimum credit ratings as defined in NI 45-106.

Applicable Legislative Provisions Securities Act, R.S.N.S. 1989, c. 418 and Securities Act, R.S.O 1990, c. S.5 February 9, 2023 IN THE MATTER OF THE SECURITIES LEGISLATION OF NOVA SCOTIA AND ONTARIO (the Jurisdictions) AND IN THE MATTER OF...

AI summary The document outlines the applicable securities legislation in Nova Scotia and Ontario, referencing the Securities Act of each province. It involves Nova Scotia Power Incorporated and relates to the process for exemptive relief applications in multiple jurisdictions.

Decision Each of the Decision Makers is satisfied that the decision satisfies the test set out in the Legislation for the Decision Maker to make the decision. - 1. The decision of the Decision Makers is that the Exemption Sought is granted...

AI summary The decision makers have granted the exemption for the distribution of Notes, subject to specific conditions, including non-convertibility, non-securitization, and minimum credit ratings as defined in N1 45-106.

2026-2027 General Rate Application (M12451) NSPI Responses to MPA Information Requests 1 Request IR-5: securitization. NS Power's view is that providing the annual average year-end ratio is not 26 27 relevant, as it is highly dependent on...

AI summary NS Power argues that providing the annual average year-end ratio is not relevant due to timing factors. The company expects continued access to a revolving credit facility and will issue long-term debt as needed. The success of the rate application and securitization of thermal assets is critical to maintaining credit ratings and avoiding negative financial implications.

Appendix "A" GRA Element Settlement Terms Securitization a) NS Power will make best efforts to finalize and apply prior to January 1, 2026 for approval of its proposed securitization of assets, cost of service treatment and the Securitizat...

AI summary The document outlines settlement terms related to securitization, ML transmission assets, and the EIFEL exemption. NS Power is to finalize securitization by 2026, ML transmission assets may be included in the rate base if certain conditions are met, and the EIFEL exemption's absence would lead to deferring a tax expense.

As at December 31, 2024, future minimum lease payments to be received for each of the next five years and in aggregate thereafter are as follows: millions of dollars 2025 2026 2027 2028 2029 Thereafter Total Minimum lease payments to be re...

AI summary The text presents a table showing future minimum lease payments to be received by the company for each of the next five years and in aggregate thereafter, as of December 31, 2024. The section title 'RELATED PARTY TRANSACTIONS' suggests that the following content will discuss transactions involving related parties.

2026-2027 GRA NSEB IR-85 Confidential Attachment 1 has been removed due to confidentiality. 1 Request IR-86: 8 securitization will be in place for these assets by January 1, 2026, and requests that its 9 recovery of depreciation and its re...

AI summary Nova Scotia Power is requesting the Board to defer the recovery of depreciation and return on assets if securitization is delayed beyond January 1, 2026. The request includes inquiries about the timing of securitization, outstanding issues, estimated deferral costs, and the rationale for splitting the securitization into two debt issuances.

January 28, 2025 What's new: Nova Scotia Power Inc. (NSPI) recently received a Canadian federal loan guarantee to securitize C$500 million of current and future fuel balances at NSPI; the company used proceeds toward reducing debt at NSPI....

AI summary Nova Scotia Power Inc. (NSPI) received a Canadian federal loan guarantee to securitize C$500 million in fuel balances, reducing debt and regulatory lag. This, along with provincial support, will improve NSPI's credit measures and reduce rate impacts on customers. S&P Global Ratings revised Emera and its subsidiaries' outlook to stable from negative due to these developments.

Outlook The stable outlook on NSPI reflects the stable outlook of its parent Emera, as well as our expectation that NSPI's FFO to debt will average about 10%-11% through 2026. The improvement in credit measures from recent years is largely...

AI summary The stable outlook for Nova Scotia Power Inc. (NSPI) is tied to its parent company Emera and expected FFO to debt ratios of 10%-11% through 2026. Credit improvements are attributed to the securitization of deferred fuel costs and reduced debt.

Request IR-122: Reference: Exhibit N-3, GRA Direct Evidence - On pages 68-69 of the application, NS Power states that it forecasts to be above the 10% - FFO-to-Debt requirement to maintain its current credit ratings, assuming approval of t...

AI summary NS Power forecasts that its FFO-to-Debt ratio would fall below 10% by 2027 if securitization does not occur, impacting its credit ratings. The response provides estimated FFO-to-Debt percentages for S&P and DBRS for both test years under the assumption of no securitization.

2026 2027 (Percent) (Percent) S&P Credit Metrics GRA Forecast 12.3 12.8 S&P Credit Metrics without Securitization 10.7 11.2 DBRS Credit Metrics GRA Forecast 12.1 12.7 DBRS Credit Metrics without Securitization 10.7 11.1 1 Request IR-123: 2...

AI summary The document discusses significant developments affecting Nova Scotia Power (NS Power) since the 2023-2024 GRA, including the approval of a Fuel Adjustment Mechanism (FAM) Rider, a Supplemental Assessment, changes in the Bank of Canada's overnight rate, the creation of the Nova Scotia Independent Energy System Operator (NSIESO), and NS Power's intention to securitize about $704 million of thermal assets by the end of 2025. It also requests confirmation of the impact of these factors on NS Power's risk profile.

1 NSPI's responsibilities so it can focus on its operations as an integrated 2 utility. Importantly, while the Company will still be required to adhere to 3 climate change regulations and, as the dominant utility in the Province, be 4 invo...

AI summary NSPI's responsibilities are shifting as renewable energy procurement moves to the NSIESO, potentially reducing uncertainty under the RER. NS Power plans to securitize $704 million in thermal assets, which could save customers $90 million over 2026-2027 but may reduce NS Power's earnings by removing a significant portion of its rate base.

26 portion of NS Power's rate base (approximately 12% of ending 2025 rate base). On 27 balance, Concentric views the securitization plan as a mechanism that will improve 28 NS Power's credit metrics, provide a benefit to customers through...

AI summary Concentric discusses its securitization plan, which it believes will improve NS Power's credit metrics, lower customer rates, and support the Province's energy transition. The plan addresses risks and impacts related to FAM, Bank of Canada actions, and the Energy Reform (2024) Act in its cost of capital analysis.

NON-CONFIDENTIAL 1 • Thermal asset securitization – pp. 62-63 2

AI summary The text references a section on thermal asset securitization, specifically pages 62-63 of the document. No further details or arguments are provided in the excerpt.

NON-CONFIDENTIAL 1 Request IR-1: 2 3 Reference: Exhibit N-3, GRA Direct Evidence, Page 13 4 (a) At page 13, NS Power states that securitization could save customers as much as $90 5 million over 2026-2027. Please provide the calculation of...

AI summary The document contains requests and responses related to securitization by NS Power. Request IR-1 asks for the calculation of potential customer savings from securitization, while Request IR-2 inquires about the timeline and feasibility of securitization by January 1, 2026. NS Power refers to MPA IR-7 for detailed calculations and confirms no obstacles to securitization.

NON-CONFIDENTIAL 1 Request IR-25: 26 and do not reflect the adjustments made per the consensus approach to the GRA. ($ Millions) Per GRA Settlement Agreement Per Depreciation Rates calculated under ALG 2026 2027 2026 2027 Steam 48.0 49.9 4...

AI summary The document discusses the depreciation rates calculated under the ALG and the adjustments made to the GRA, including the impact of asset securitization on depreciation and accretion expenses for 2026 and 2027. It requests an Excel spreadsheet with supporting calculations and assumptions for the annual adjustment of $26.6 million.

- 6 which may be years away, when preparing the GRA budget for the upcoming test period. 1 Request IR-38: 2 3 Regarding the Deferred Decarbonization Asset (DDA), NS Power states that it plans to 4 securitize the net book value of all asset...

AI summary NS Power plans to securitize the net book value of assets within the Deferred Decarbonization Asset (DDA) by December 31, 2025, which would reduce depreciation expenses by $26.6 million annually. The securitization is expected to occur in Q1 2026, pending regulatory approval and credit rating agency feedback. This will lead to a $70 million annual reduction in revenue requirements, primarily due to lower depreciation and financing costs.

- 2 be collected through a rider. The revenue requirement of the rider will depend primarily on the - 3 interest rate, repayment term, and repayment structure of securitized debt. - 4 This net savings could be as much as approximately $90...

AI summary The document discusses the potential revenue savings from securitizing unrecovered net book value of thermal assets, estimating up to $90 million in savings over a two-year period if initial repayments are interest-only at a 4% rate, compared to the current $140 million revenue requirement.

- 11 financing cost to the benefit of customers. 1 Request IR-40: 2 3 Considering NS Power's proposal to securitize the costs of assets that were previously 4 proposed to be added to the DDA, please fully explain the continued purpose of t...

AI summary NS Power explains that securitization of DDA assets will reduce the DDA balance but not eliminate future costs, including sustaining capital and decommissioning. It also notes that the Cost of Removal account has been tracked since 2016, though full reconciliation is hindered by a cyber incident.

4 Figure 1 – Summary of findings, observations and conclusions # Report section Findings, observations, and conclusions 6. Interest and other expenses We have reviewed interest and other expenses included in NS Power's 2024 Actuals and 202...

AI summary The report reviews interest and other expenses for NS Power's 2024 Actuals and 2025 Budget, as well as 2024C, 2026 Forecast, and 2027 Forecast. Interest and other expenses are forecast to be approximately $118.5 million in 2026 and $130.0 million in 2027, driven largely by interest expenses, partially offset by AFUDC, FAM, and DSM rider deferral interest.

6 - 8 AFUDC Per the Company, AFUDC is calculated in accordance with NS Power's Board-approved 9 accounting policy 6240- Allowance for Funds Used During Construction. The Company further explained 10 that AFUDC is calculated by applying NS...

AI summary The text discusses how AFUDC, FAM interest, and deferred interest on assets to be securitized are calculated by Nova Scotia Power, using its Board-approved WACC. The Company also outlines its forecast for securitization of thermal assets and notes that recalculations of these interest calculations revealed no exceptions.

28 6.4 Conclusion We have reviewed interest and other expenses included in NS Power's 2024 Actuals and 2025 Budget, as well as 2024C, 2026 Forecast, and 2027 Forecast. Our procedures included recalculating interest and other expenses based...

AI summary The review of NS Power's financial forecasts for interest and other expenses indicates that these are expected to increase from 2026 to 2027, primarily due to deferred interest on assets to be securitized in 2026. The review found no unreasonable aspects in the 2026 and 2027 forecasts.

the next GRA filing. 1 Q: Should the Board approve the Company's requested relief in relation to deferral 2 amortization and securitization? 3 A: I have no proposed changes to NS Power's requested deferral amortization. For 4 securitizatio...

AI summary The text discusses the Board's consideration of NS Power's request for relief related to deferral amortization and securitization. The respondent does not oppose securitization in principle but recommends denying the recovery of weighted average cost of capital on delayed securitization balances. It also explains depreciation expense as an accounting concept.

For this reason, no depreciation estimate will ever be perfect, including any estimate derived using the ELG or ALG procedures. The test that the Board should employ is whether the result provides for a reasonable estimate of the recovery...

AI summary The text discusses the limitations of depreciation estimation methods, specifically the ELG and ALG procedures, and argues that neither method can perfectly predict asset service life. It highlights concerns about intergenerational equity and volatility in depreciation expenses, particularly with NS Power's future investment growth. Frequent updates to depreciation studies are recommended as best practice.

5 Under both the ALG and ELG procedures, most of the reserve deficiency rests in the 6 Steam Production Plant accounts. Comparatively, most of the reserve surplus rests in the 7 Distribution Plant accounts. Regarding the Steam Production P...

AI summary The document discusses reserve deficiencies and surpluses in the Steam Production Plant and Distribution Plant accounts under ALG and ELG procedures. NS Power applied for a lower depreciation rate than recommended and plans to securitize certain assets, which would significantly impact reserve deficiencies and surpluses.

NS Power GRA, page 41, lines 9 to 13. 1 ALG procedure to a large reserve surplus. For clarity, the reserve deficiency for these 2 assets does not go away. It must still be addressed by future customers through 3 securitization, the context...

AI summary The text discusses the need to address reserve surpluses and deficiencies in NS Power's GRA, emphasizing the importance of an updated depreciation study. It highlights that reserve deficiencies will persist and must be addressed through securitization. The Board is recommended to direct NS Power to file updated balances and consider alternative means of recovering surplus in the future.

A few points are important from this figure. First, under both procedures the same amount of depreciation is recovered over the years. Second, if new assets were added under this scenario, then the ELG procedure curve would continue to be...

AI summary The text discusses depreciation recovery under two procedures, ALG and ELG, noting that depreciation amounts are the same initially. The ELG procedure would result in higher accruals over time if new assets are added, with a crossover point at 29 years. Securitized costs would be fully recovered by year 26, reducing future customer burden. The ALG procedure aligns depreciation with asset lifespans, benefiting future customers.

1 Additionally, the shift allows for some moderation in rates for customers that will be 2 required to repay the securitized costs. Finally, the ALG procedure may allow for quicker 3 recovery of the securitized costs than would be possible...

AI summary The text discusses the advantages of the ALG procedure over the ELG procedure in terms of rate moderation and quicker recovery of securitized costs. It also outlines the process used by depreciation experts to select a service life and survivor curve for an asset, including visual and mathematical fitting methods.

• Unusual events in prior years. • Changes in technology or the resilience of certain assets. • Changes in other relevant causes of retirement. I requested copies of the management notes and discussions as part of Emrydia IR-12, and those...

AI summary NS Power is proposing to securitize a significant portion of its production plant assets, including Point Aconi and others, as part of the securitization proposal. This would remove the need to study changes to the service lives of these assets, with the final depreciation recovery to be addressed in a future proceeding after the costs are securitized.

consider all relevant factors to determine the best approach for cost recovery of these decommissioning activities. Q: Do you have any other items regarding this proposal that you want to bring to the Board's attention? A: Yes. I note that...

AI summary The text discusses the need for NS Power to reconcile net salvage costs for decommissioning activities and the implications for cost recovery. It also mentions the potential securitization of costs as an alternative approach.

11 Q: What is securitization in the context of utility rate setting? A: Securitization is the process of setting up either a special purpose entity or other financing vehicle that is used to hold and allow for lower cost recovery of costs...

AI summary Securitization in utility rate setting involves using a special purpose entity to recover costs through low-cost debt financing, avoiding rate shocks. While it benefits current customers by spreading costs over time, it may burden future customers who do not benefit from the deferred costs.

23 Q: Is securitization a common tool used in other jurisdictions? 24 A: Yes. Securitization is commonly used in the United States for various costs, including 25 extraordinary storm costs and costs related to the early retirement of gener...

AI summary Securitization is a common tool in the United States for managing costs like storm damage and early retirement of generation assets. It has not been previously used in Canada, though its use has been recommended in other jurisdictions for various reasons.

Q: What is NS Power's current proposal in this case? A: NS Power outlined its proposal regarding securitization at pages 52 and 53 of its GRA, as follows: The increase in NS Power's average capital assets due to capital investment is parti...

AI summary NS Power proposes to securitize approximately $700 million of DDA assets by December 2025, contingent on regulatory approval and credit rating agency processes. If securitization is delayed, NS Power requests deferral of depreciation and financing costs. Otherwise, the assets will be included in the rate base and revenue requirement to recover prudently incurred costs.

Q: Is NS Power requesting any specific relief in regards to its securitization proposal at this time? A: No, except for its request to be permitted to recover its weighted average cost of capital (WACC) on any depreciation and financing co...

AI summary NS Power is not requesting specific relief for its securitization proposal, except for the ability to recover its weighted average cost of capital (WACC) on depreciation and financing costs if the securitization is delayed beyond December 31, 2025.

Q: What is the current status of the securitization? A: NS Power provided the following update in response to Emrydia IR-39: NS Power continues to have discussions with third-party advisors and credit rating agencies. The form of the secur...

AI summary NS Power is updating the status of the securitization, noting that discussions with advisors and credit rating agencies are ongoing. The securitization is expected to occur in Q1 2026, depending on regulatory approval and credit rating processes.

Q: Do you recommend approval of NS Power's proposed securitization? A: Yes, in principle I have no issues with the proposal to securitize the costs in question for the reasons stated earlier. However, I am unable to review the results of t...

AI summary The respondent supports the principle of approving NS Power's securitization proposal but recommends a full review of the final transaction details. They oppose deferring depreciation and financing costs at WACC if the securitization is delayed, emphasizing the need for timely completion to ensure rate certainty for customers. They also recommend the Board assess the reasons for delays as a condition of approval.

- Nova Scotia Power Inc. ("NSPI") has requested approval from the Nova Scotia Energy Board for - electricity rate increases for 2026 and 2027. Among many reasons for the requests, NSPI asserted that it - is critical for the utility to meet...

AI summary Nova Scotia Power Inc. (NSPI) is requesting rate increases for 2026 and 2027 to meet a financial target (FFO:Debt of 10%) necessary for maintaining its current investment-grade credit rating. The rate increases also aim to potentially improve the rating. Failure to secure the rate increases or complete a securitization transaction could lead to a credit downgrade and financial risks for NSPI.

Credit-related Issues Raised in the Application - Like all utilities, NSPI makes use of both debt and equity in its capital structure. Several issues were - raised relevant to debt in the Application: - A. NSPI's credit rating is currently...

AI summary NSPI argues that approval of its requested Revenue Requirements for 2026 and 2027 and average rate increases is essential to improving its credit ratings, which are currently at the low end for North American utilities. It also claims that resolving the proposed securitization of the Decarbonization Deferral Account will contribute to this improvement.

Issues Addressed in this Report - The cost of debt is an important component of Revenue Requirement, representing over 5% of the total - for both 2026 and 2027. - NSPI argued in its application that a significant driver of the cost of its...

AI summary The report discusses the importance of the cost of debt in the Revenue Requirement for NSPI, highlighting credit ratings and securitization of DDA assets as key factors. NSPI argues that its credit rating, influenced by the GRA and financial performance, affects its cost of debt, and that securitization is necessary to improve finances. The report will examine these claims and their impact on ratepayers.

4. NSPI's Requests and Associated Costs - NSPI has claimed that approval of its requests is required to prevent a credit downgrade and a - consequent increase in the utility's cost of debt. - S&P has indicated that if FFO:Debt is consisten...

AI summary NSPI has requested regulatory approval for changes in revenue requirements and rates for 2026 and 2027 to prevent a credit downgrade. A downgrade could increase the utility's cost of debt, which would be passed on to ratepayers. NSPI's proposed changes, along with a securitization transaction for the DDA, are expected to achieve FFO:Debt ratios of 12.3% and 12.8% in 2026 and 2027, respectively, potentially avoiding a downgrade.

Securitization - NSPI has identified $704 million in the DDA as of the end of 2025 that may be securitized. The current - intention is to give effect to the transaction in two parts: $500 million prior to year end of 2025, and the - remain...

AI summary NSPI plans to securitize $704 million in the DDA, with $500 million to be settled by the end of 2025 and the remaining $204 million by 2026. If the securitization is delayed, it could lead to higher cash interest payments and financial distress for NSPI. However, failure to complete the securitization would not immediately jeopardize NSPI's credit rating.

Increase in Customer Rates - 3 In response to MPA IR-001 and Cleary IR-001, NSPI presented information that allows for a like-for-like - 4 comparison of the calculation of FFO:Debt in the alternative cases of all requests granted, or not....

AI summary The document discusses the response to MPA and Cleary's requests, presenting information on FFO:Debt calculations under different scenarios, assuming the securitization transaction proceeds.

Neither Rate Increases nor Securitization - 14 Given the magnitude of the impacts of each of the two initiatives separately, should NSPI's rate requests - be rejected and its securitization plan not bear fruit, then it would be a certainty...

AI summary The text discusses the potential consequences of rejecting NSPI's rate requests and the failure of its securitization plan, highlighting that both could lead to missing the 10% FFO:Debt target in two consecutive years.

next phase of Nova Scotia's energy transformation will be complex and is made even more challenging given the current inflationary pressures and the affordability challenge facing many Nova Scotians. The cyber attack also presents a challe...

AI summary Nova Scotia's energy transformation faces challenges due to inflation and affordability issues, compounded by a recent cyber attack. Nova Scotia Power assures the Board that the GRA does not include cyber attack costs and emphasizes efforts to avoid rate increases, including financial arrangements and projects like the Maritime Link and Battery Energy Storage System.

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AI summary Nova Scotia Power has reached a settlement with customer representatives regarding an upcoming General Rate Application (GRA). The GRA includes rate increases for 2026 and 2027, supported by reliability investments. The settlement includes the continuation of a 9% Return on Equity target and a 40% maximum equity thickness. The NSEB will evaluate the GRA and determine future rates.

UTILITY RATE PROCEEDINGS IN WHICH TESTIMONY HAS BEEN PRESENTED BY JACOB POUS ALASKA Southern Union Gas Company 2738, 2958, 3002, 3018, 3019 Cons. Cost of Service, Rate Design, Depreciation Southern Union Gas Company 6968 Interim & Cons. Af...

AI summary Jacob Pous has provided testimony in multiple utility rate proceedings involving Southern Union Gas Company, covering topics such as cost of service, rate design, depreciation, affiliate transactions, and rate base. These proceedings include various consolidated and interim cases with different focus areas.

January 14, 2026 Crystal Henwood Clerk of the Board Nova Scotia Energy Board 1601 Lower Water Street, 3rd Floor Halifax, NS B3J 3S3 Re: M12451 NS Power 2026-2027 General Rate Application – January 13, 2026 Confidential Session Dear Ms. Hen...

AI summary NS Power confirms its belief in the eventual securitization of costs as part of the 2026-2027 General Rate Application, despite uncertainty around the timeline. This position was communicated during a confidential session of the hearing for matter M12451.

- 4. Deferral of costs for the completed Cost of Service Study, Line Loss Study, and Climate Change Adaptation Plan to be collected as a regulatory asset as previously approved in the 2023-2024 General Rate Application decision. - 5. NS Po...

AI summary NS Power is proposing several deferrals and adjustments, including deferring costs from studies and plans, developing a securitization approach for thermal generation assets, and updating depreciation studies. It also seeks approval for an updated Cost-of-Service Study and continuation of a Storm Cost Recovery Rider pilot with refunds for unspent storm costs.

The Board held its public hearing from January 7 to 9, 12 and 13, 2026. Written closing submissions were completed on February 6, 2026. The Board also received many letters of comment from customers. [7] The general rate application contem...

AI summary The Board held a public hearing in January 2026 and received written closing submissions in February 2026. NS Power proposed securitization of $704 million in coal-related assets as the centerpiece of its general rate application, aiming to reduce financing costs and mitigate rate increases. Because securitization did not occur by year-end 2025, NS Power requested a securitization deferral to defer financing costs and depreciation expenses from January 1, 2026, onwards.

[37] The terms of the settlement agreement are set out in a schedule to the agreement and provide as follows: GRA Element Settlement Terms Securitization a) NS Power will make best efforts to finalize and apply prior to January 1, 2026 for...

AI summary The settlement agreement outlines terms related to securitization, ML transmission assets, and the EIFEL exemption. NS Power is required to finalize securitization by 2026, and the inclusion of certain transmission assets in the rate base depends on meeting specific criteria. If the EIFEL exemption is not enacted, a tax expense deferral is agreed upon for the 2026-2027 period.

[135] The figures in the table above include annual accruals calculated for all thermal assets, including those within the scope of the DDA. However, NS Power is not proposing to increase the depreciation rates for the assets included with...

AI summary NS Power is including annual accruals for all thermal assets, including those within the DDA, but is not proposing to increase depreciation rates for these assets as they plan to securitize them.

[136] Applying the proposed depreciation rates in the preceding Table to forecast monthly balances of depreciable Plant throughout the test period results in a forecast depreciation and accretion expense of $282.4 million in 2026 and $300....

AI summary The document discusses the forecast depreciation and accretion expenses for NS Power in 2026 and 2027, noting the impact of securitization and capital additions. It also mentions the expert analysis provided by Dustin Madsen from Emrydia Consulting Corporation on NS Power's depreciation practices.

at the expense of future customers. The self-interest of some parties to the agreement in deferring costs to future customers is understandable, but it does create intergenerational inequity concerns. [185] As identified in NS Power's resp...

AI summary The text discusses adjustments to net salvage rates affecting NS Power's revenue requirement and potential rate increases. It highlights intergenerational inequity concerns and the impact of depreciation adjustments on credit ratings and ratepayer costs. The uncertainty surrounding asset securitization within the DDA is also mentioned.

y risks associated with ELG accelerated recovery in earlier periods. Mr. Wiedmayer characterized these effects as neutral timing differences that can be addressed through ongoing depreciation studies. [226] The Board does not necessarily d...

AI summary The Board weighs ELG vs. ALG depreciation methods for NS Power, favoring ALG for rate stability and fairness despite Mr. Wiedmayer's neutral timing difference claim. Mr. Madsen argues ALG reduces volatility, while the Board notes potential credit rating risks from ALG changes impacting FFO:Debt metrics and securitization under DDA.

the effect of decreasing the company's cash flow. It would also reduce recovery of capital investment thereby increasing debt. These factors would negatively impact NS Power's FFO:Debt credit metrics. [274] In Undertaking U-7, NS Power pro...

AI summary NS Power's FFO:Debt credit metrics are projected to decrease under ALG depreciation compared to ELG, with securitization of DDA assets influencing outcomes. If ALG is mandated without securitization, metrics may fall below 10% by 2026-2027. Adjustments recommended by Mr. Madsen would cause minor further degradation.

3.5.1.1 Background [281] Securitization was described by NS Power as the "centrepiece" of its general rate application and the settlement agreement. The practical impact of securitization in this matter is that it would result in ratepayer...

AI summary NS Power proposes securitization as a key element of its rate application, aiming to reduce financing costs for retiring coal plants under decarbonization policies. This process would lower customer financing rates by $90M over 2026-2027, restructure assets into debt, and improve credit metrics, though shareholders would lose returns on securitized assets.

3.5.1.2 Present Application [291] In this application, NS Power indicated its future intent to ask for the securitization of $704 million of the unrecovered net book value of thermal assets within the scope of the DDA ($500 million in 2025...

AI summary NS Power is seeking a securitization deferral to defer depreciation and financing costs of thermal assets until securitization legislation is enacted. It plans to securitize $704 million in unrecovered net book value over 2025 and 2026, with estimated savings of $85 million for ratepayers. The application does not currently request approval for securitization itself.

- Finally, the MEUs would also like to take the opportunity provided by the closing submissions to reiterate their support for NS Power's efforts to securitize approximately $700 million of assets in the Decarbonization Deferral Account ("...

AI summary Multiple stakeholders, including the MEUs, Small Business Advocate, Consumer Advocate, and PHP, support the securitization of approximately $700 million in thermal assets held in the DDA. They argue that securitization will reduce costs for ratepayers and significantly lower the revenue requirement for NS Power. The GRA and Settlement Agreement highlight securitization as a critical component for achieving cost savings.

- Maintaining NS Power's current return on equity of 9.0%, with an earnings band of 8.75% to 9.25%. The equity thickness for rate setting purposes remains at 40.0%; - The establishment of the securitization deferral to defer depreciation e...

AI summary The summary outlines key directives and findings related to NS Power's return on equity, depreciation rates, cost-of-service methodology, and various deferral accounts. It includes the establishment of a securitization deferral, adjustments to depreciation studies, and the handling of revenue variances and tax expenses.

The Board orders that: - 1. The application is approved, except where inconsistent with the Board's findings and directions in its decision. - 2. A return on equity of 9.0% and an equity ratio of 40% are approved for rate setting purposes,...

AI summary The Board approves the application with specific conditions, including a 9.0% return on equity, a 40% equity ratio, and a securitization deferral for depreciation and financing costs related to coal plants and thermal assets starting May 1, 2026.

the entirety of this process, customer representatives have been aided by their expert consultants. Relevant components of the GRA to which all Parties noted above have agreed include the following: • An overall average rate increase acros...

AI summary The document outlines agreed-upon components of the GRA, including rate increases, updated studies, retention of financial parameters, continuation of a storm cost recovery rider, amendments to the DSM rider, and plans for securitization of thermal assets. These measures are expected to impact customer rates and savings over the 2026-2027 period.

- 4. Deferral of costs for the completed Cost of Service Study, Line Loss Study, and Climate Change Adaptation Plan to be collected as a regulatory asset as previously approved in the 2023-2024 General Rate Application decision. - 5. NS Po...

AI summary NS Power proposes deferring various costs including those from completed studies and a securitization approach to finance thermal generation assets. It also outlines potential deferrals related to tax rules, revenue variances, and depreciation studies, along with the continuation of a storm cost recovery rider pilot.

PRELIMINARY ISSUES LIST The following issues will be dealt with in the public hearing on Nova Scotia Power Incorporated's (NS Power) 2026-2027 General Rate Application (Matter M12451) which is set to begin Wednesday, January 7, 2026: - 1....

AI summary The preliminary issues list outlines key topics for the public hearing on NS Power's 2026-2027 General Rate Application. These include fuel and purchased power costs, capital structure, rate design, depreciation studies, cybersecurity impacts, and climate change adaptation. The proceeding will address regulatory compliance, cost recovery, and the impact of various operational and financial factors on rate-setting.

Comment These four transmission assets were part of the 2023-2024 GRA process and were agreed by the parties to the 2023-2024 GRA Settlement Agreement to be included in rate base. However, the Board determined that the assets must meet the...

AI summary NS Power argues that four transmission assets included in the 2023-2024 GRA Settlement Agreement meet the threshold test for rate base inclusion, as demonstrated in the GRA. They submit that the issue does not require further evidence in the hearing, pending the Board's confirmation of meeting the threshold test. The comment also references securitization and credit rating issues.

Not Submitted for Approval in this Proceeding NS Power notes that, in this proceeding, it is not seeking approval of the AA and BA rider rates or final approval of fuel costs; a financing order to facilitate securitization; or its Climate...

AI summary NS Power is not seeking approval for AA/BA riders, fuel costs, securitization financing, or its climate plans in this proceeding. The Board emphasizes the need for a just base fuel cost and considers the smoothing mechanism. Securitization forecasts and climate plans are relevant to future rate applications and equity concerns, while NS Power's plans are kept on the Final Issues List for future review.

- 4. Deferral of costs for the completed Cost of Service Study, Line Loss Study, and Climate Change Adaptation Plan to be collected as a regulatory asset as previously approved in the 2023-2024 General Rate Application decision. - 5. NS Po...

AI summary NS Power is proposing several deferrals and adjustments, including deferring costs from studies and plans, developing a securitization approach for thermal generation assets, addressing potential changes in federal tax rules, and updating depreciation studies. These proposals aim to manage financial impacts and align with regulatory decisions.

Request IR-28: - At page 41, lines 9 to 13 of the GRA Application, NS Power states: - Applying the proposed depreciation rates to forecast monthly balances of depreciable plant throughout the test period results in forecast depreciation an...

AI summary NS Power has proposed depreciation rates that result in forecast depreciation and accretion expenses of $309.0 million in 2026 and $327.4 million in 2027. However, due to the securitization of certain asset pools retiring before 2030, these figures are reduced by $26.6 million annually. The request asks for an Excel spreadsheet with supporting calculations and assumptions, including retirement dates.

Request IR-31: - Referring to the potential decommissioning costs of Wreck Cove, Mersey, and Tusket, would NS - Power be opposed to future securitization of these amounts if they were required to be incurred - in the future? Please fully e...

AI summary The document asks whether NS Power would oppose future securitization of decommissioning costs for Wreck Cove, Mersey, and Tusket if they become necessary. The inquiry seeks clarification on NS Power's stance regarding potential financial strategies for managing these costs.

Request IR-38: - Regarding the Deferred Decarbonization Asset (DDA), NS Power states that it plans to securitize - the net book value of all assets within the scope of the DDA by December 31, 2025. Please - confirm that these assets relate...

AI summary The document contains several requests related to the Deferred Decarbonization Asset (DDA) and its securitization by NS Power. It asks for confirmation of asset scope, updates on securitization plans, the continued purpose of the DDA, and a reconciliation of the Cost of Removal regulatory account balance.

Request IR-89: - Reference: Exhibit N-3 GRA Direct Evidence, Section 9.2.1 Average Capital Assets - On pages 52-53 of its application, NS Power notes that it has removed approximately $700 million - from its rate base for the DDA assets (P...

AI summary NS Power removed $700 million from its rate base for DDA assets, citing securitization by 2026, and seeks to defer depreciation and return if delayed. Requests include documentation on securitization timelines, deferral costs, debt issuance breakdowns, and updates on retired assets, customer deposits, and unapproved capital items. The proceeding involves GRA, FAM, and RTR programs.

Request IR-122: - Reference: Exhibit N-3, GRA Direct Evidence - On pages 68-69 of the application, NS Power states that it forecasts to be above the 10% FFO- - to-Debt requirement to maintain its current credit ratings, assuming approval o...

AI summary NS Power claims its FFO-to-Debt ratio will remain above 10% if the proposed rates and thermal asset securitization are approved, but projects it would fall below 10% by 2027 without securitization, citing figures 10-2 and 10-3.

Request IR-123: - Reference: GRA Direct Evidence, Appendix 10A - Since the 2023-2024 GRA was conducted, a number of significant developments have occurred or are planned: - In April 2024 in Matter M11393, the Board approved a Fuel Adjustme...

AI summary The text discusses significant developments affecting Nova Scotia Power (NSP) since the 2023-2024 GRA, including the approval of a Fuel Adjustment Mechanism (FAM) Rider, a Supplemental Assessment, and the creation of the Nova Scotia Independent Energy System Operator (NSIESO). NSP also plans to securitize thermal assets. Questions are raised about the impact of these factors on NSP's risk profile and ROE analysis.

amount NS Power will be applying to recover in the FAM AA/BA? If not, 1 2025 M12451 2 3 NOVA SCOTIA ENERGY BOARD 4 IN THE MATTER OF: The Public Utilities Act 5 6 7 IN THE MATTER OF: A General Rate Application by Nova Scotia Power Incorpora...

AI summary Renewall Energy Inc. has submitted information requests to Nova Scotia Power Incorporated regarding the calculation of potential customer savings from securitization and the assumptions made about the cost of servicing securitized debt. The requests are part of a regulatory proceeding under the Public Utilities Act.

December 22, 2025 Crystal Henwood Clerk of the Board Nova Scotia Energy Board 1601 Lower Water Street, 3rd Floor Halifax, NS B3J 3S3 Re: M12451 – Securitization Deferral Dear Ms. Henwood: NS Power's 2026-2027 General Rate Application (GRA)...

AI summary NS Power requests approval to defer depreciation and financing costs of $700 million in thermal assets until securitization is completed by Q1 2026. This is part of their 2026-2027 General Rate Application (GRA), with deferral to occur at WACC on an interim basis. Customer representatives have not yet confirmed positions on the matter.

12 GRA Issues 13 14 The Consumer Advocate proposes to review the following issues that arise in the Settlement 15 Agreement and the GRA: 16 - 17 Proposed rates and the Cost of Service Study - 18 Depreciation - 19 Securitization - 20 Treatm...

AI summary The Consumer Advocate proposes reviewing four GRA issues: proposed rates and cost-of-service study, depreciation, securitization, and treatment of PHP. These issues arise in the Settlement Agreement and GRA, requiring NSUARB evaluation.

13 C. Securitization 14 15 A key feature of the GRA and the Settlement Agreement is the securitization of the thermal assets 16 of the Utility, which it values at approximately $700 million dollars. Securitization would remove 17 the net b...

AI summary The document discusses the securitization of Nova Scotia Power's thermal assets valued at $700 million, which would reduce its rate base and revenue requirements. However, securitization depends on provincial regulations yet to be issued. Nova Scotia Power seeks to defer costs until securitization is approved, but Premier Tim Houston has raised concerns about asset valuation. Failure to secure securitization could lead to revising the GRA and higher rates.

22 Conclusion 23 24 As has been noted several times in these submissions, the Consumer Advocate supports the 25 outcomes of the GRA, which are based on the Settlement Agreement to which the Consumer 26 Advocate is a party. However, it must...

AI summary The Consumer Advocate supports the GRA outcomes based on the Settlement Agreement but highlights uncertainties around securitization of Nova Scotia Power's thermal assets and Port Hawkesbury Paper's inclusion as an above-the-line customer. These uncertainties could affect revenue requirements and future rate approvals.

of existing rates. 14 To the extent that existing rates are not sufficient to meet NS Power's revenue requirements, it remains NS Power's obligation to bring forward GRAs in a timely manner. The use of securitization to achieve cost saving...

AI summary The document discusses the importance of securitization as a cost-saving measure in the General Rate Application (GRA), noting its significance in the Consensus Agreement. It emphasizes that securitization should be pursued to achieve cost savings for ratepayers, and that deferring new rates until securitization is completed is necessary to avoid undermining these efforts.

- on what Nova Scotians see on their power bills and is therefore relevant to this hearing, the subject matter of which being power rates. - 18. The Department supports the Board's oversight role to ensure that the proposal established thr...

AI summary The Department supports the UARB's oversight role in ensuring fair power rates, advocating for a 7.6% ROE for NSPI, asset write-downs for coal plants, disallowing Lingan 2 spending, and cautioning against securitization. It emphasizes transparency and public interest in rate decisions.

Securitization - 89. It is not possible to discuss asset valuations without addressing NS Power's hopes around securitization. - 90. The Department is always open to any opportunity to deliver relief to ratepayers. The Province has repeate...

AI summary The Department supports securitization only if it demonstrably benefits ratepayers, citing past initiatives like debt buybacks and emissions savings that reduced rates by 19%. However, uncertainty around coal asset valuations and risks of future ratepayer costs prevent approval. The Province has not committed to regulatory changes for securitization and rejects NS Power's proposal until proven cost-effective.

Summary - 124. In summary, the Department of Energy respectfully requests as follows: - a. That the Board reject the requested rate changes. - b. That NS Power's ROE be set at 7.6%. - c. That the Board take steps to ensure that NS Power's...

AI summary The Department of Energy requests the Board to reject NS Power's rate changes, set ROE at 7.6%, write down coal assets, deny Lingan 2 investment, avoid securitization, reject labour cost increases, maintain deferred liability calculations, address cyber-attack costs, and delay rate hikes until ratepayer liability is confirmed. It also urges mitigation of ratepayer impacts.

SECURITIZATION OF THERMAL ASSETS

AI summary The document addresses the securitization of thermal assets, a process involving the restructuring of energy infrastructure financing. Key entities include Nova Scotia Power Inc. (NSPI) and regulatory bodies like the Nova Scotia Utility and Review Board (NSUARB). The discussion likely involves cost-of-service studies (COSS) and rate adjustment mechanisms.

1) Support for proposed Securitization The Industrial Group has consistently supported securitization of NSPI's thermal assets, now contained within the Decarbonization Deferral Account (" DDA "). The evidence filed to date confirms that t...

AI summary The Industrial Group supports the securitization of NSPI's thermal assets within the Decarbonization Deferral Account (DDA), citing potential ratepayer savings of approximately $85 million over 2026–2027. This approach was also supported by customer representatives during the GRA negotiation process, as it aligns with decarbonization objectives and addresses the impracticality of traditional depreciation methods.

CONCLUSION The Industrial Group respectfully requests that the Board: - 1. Endorse and approve the Consensus Agreement as drafted, recognizing it as a principled and balanced framework reached through substantial negotiation and informed r...

AI summary The Industrial Group requests the NSUARB to approve the Consensus Agreement without modifications, consider full rate impacts on Large Industrial customers, define PHP Deferral Account parameters, declare securitization as public interest, and reject retroactive deferrals. Key considerations include ratepayer impacts, COSS allocations, and regulatory frameworks.

1 SECURITIZATION - 2 The concept of securitization has been before this Board on a number of occasions, usually as a - 3 recommendation to NSPI to explore. In this GRA, NSPI is proposing that it will undertake - 4 securitization of the ass...

AI summary NSPI proposes securitization of $700 million in DDA assets, pending regulations. The SBA argues this benefits current ratepayers (including small businesses) at future cost, aligning with utility rate-making practices. Securitization's approval is not before the Board but is critical to the GRA, with potential financial impacts if unapproved.

6. In fact, this is precisely what Ms. Palmer ultimately recommends in both her evidence and her testimony. 10 & lt;sup>6 Transcript, page 185, line 15 to page 188, line 15. & lt;sup>7 Exhibit N-37, Synapse evidence, page 13, lines 4-11. &...

AI summary The MEUs argue that rejecting the Consensus Agreement would not be just and reasonable, as it already increases rates and faces existing cost pressures from prior Board decisions. They support NS Power's plan to securitize $700 million in the Decarbonization Deferral Account (DDA) to lower customer costs. Ms. Palmer's recommendations align with the Consensus Agreement terms.

rting the outstanding balances owed to debt, which carries a lower cost of capital and does not provide NS Power with the opportunity to earn any further return on equity in relation to those amounts. It is worth noting that NS Power was i...

AI summary NS Power initially opposed securitization in its 2022-2024 GRA, citing lower cost of capital and no return on equity. The Board directed an investigation into securitization after NS Power failed to address it in its DDA application (M11220). The Energy Reform Act (2024) and subsequent Board decisions prompted NS Power to engage in securitization to reduce costs below WACC.

gan meaningful engagement to facilitate the securitization of costs at a lower cost than would otherwise be the case if the financing was done at WACC, which includes an equity component for NS Power. The financial benefits of securitizati...

AI summary NS Power argues that securitization of costs would reduce expenses compared to WACC, benefiting ratepayers. The 2026-27 GRA shows depreciation and accretion expenses reduced by $26.6M annually due to securitization. References to regulatory decisions and exhibits support the analysis.

ion in 2027." 11 See 2025 NSUARB 33 at paras. 30-38 and 2025 NSUARB 2 at paras. 67-69. 12 M10431, Exhibit N-41, NSPI (NSUARB) IR-151(b). MCINNES COOPER Page 5 January 30, 2026 In response to IR-7 from the Board's consultant, Morrison Park...

AI summary The MEUs argue against deferring depreciation and financing costs for securitization until January 1, 2026, suggesting that deferral should begin only after new rates are approved without these costs. They emphasize the value of moving securitization forward quickly for ratepayers.

DATE FILED: January 30, 2026 Page 17 of 55 Exhibit N- 7(i). 1 (8) Reducing the Net Salvage Rate for Account 365.00 - Distribution Overhead 2 percent).28 Conductors and Devices from (30 percent) to (26 3 4 This reduction is a departure from...

AI summary The document discusses a reduction in the Net Salvage Rate for Distribution Overhead, agreed upon by the parties to achieve a comprehensive settlement and reduce customer costs. This adjustment impacts NS Power's depreciation expense, revenue requirement, and credit metrics. Expert evidence from Dustin Madsen of Emrydia Consulting highlights the use of ALG and ELG procedures for depreciation calculations and recommends revisions to service lives of certain accounts.

3.4.5 Revisions to Service Lives - In Undertaking 8, NS Power provided the calculation of the dollar effect of implementing the - changes recommended at Table 8 of the Emrydia evidence.[42](#page-21-3) NS Power performed the analysis - usi...

AI summary The document discusses revisions to service lives for capital assets, comparing the ALG and ELG methods, and argues that the ELG approach is more appropriate. It also outlines NS Power's proposal to securitize coal assets, which would reduce customer costs by allowing 100% debt financing and is supported by customer representatives and consultants.

DATE FILED: January 30, 2026 Page 23 of 55 1 3.5.1 Background 2 3 In the summer of 2021, the Provincial Government enacted the Environmental Goals and Climate 4 Change Reduction Act, which legislates the goal of phasing out coal-fired elec...

AI summary The Provincial Government enacted the Environmental Goals and Climate Change Reduction Act in 2021, aiming to phase out coal-fired electricity by 2030 and increase renewable energy supply to 80% by 2030. In response, Nova Scotia Power proposed the Decarbonization Deferral Account (DDA) to manage the financial impact of accelerated decarbonization on customers, which was approved by the NSEB in April 2024 (M11220).

depreciation expenses and decommissioning costs to match the remaining useful lives of the assets, doing so would cause a substantial increase in rates. [44](#page-24-1) Also included in the Board's decision, in section 3.4.4, was a discus...

AI summary The document discusses the impact of aligning depreciation expenses and decommissioning costs with the remaining useful lives of assets, noting it would increase rates. It also highlights the Board's decision on securitization, acknowledging its potential for customer savings and directing NS Power to explore its future use within the GRA.

NS Power's annual financial statements are prepared in accordance with applicable accounting standards and are independently audited, and the Company's Management's Discussion and Analysis (MD&A) is filed quarterly and publicly disclosed....

AI summary NS Power's financial statements comply with accounting standards and Board policies, with external audits and NSEB reviews. The DDA (Matter M11220) allows cost recovery via alternative mechanisms. The Energy Reform (2024) Act (Bill 404) enables securitization through amendments to the Public Utilities Act, signaling legislative intent. The Province remains committed to developing the regulatory framework.

DATE FILED: January 30, 2026 Page 27 of 55 1 2 3 change…Ultimately though, it is likely fair to conclude that out of all the options available, securitization would be the "least-bad" option.48 4 The evidence of Board Counsel Consultant, P...

AI summary The text discusses the potential consequences of not approving NSPI's rate increases and securitization plan, highlighting risks such as failing financial tests, credit downgrades, and missing financial targets. Testimony from Pelino Colaiacovo of MPA emphasizes the importance of securitization to avoid these outcomes.

ervice methodology that was applied in the GRA. The Consumer Advocate submits this review is the appropriate way to deal with the Cost of Service issue that was identified in the Consensus Agreement. Several parties emphasized in their clo...

AI summary The Consumer Advocate emphasizes reviewing the GRA's methodology to address the Cost of Service issue from the Consensus Agreement. Parties highlight the need for certainty in unresolved GRA elements, particularly securitizing Nova Scotia Power's thermal assets. Securitization could reduce rates by removing $700M from the rate base, with hopes for provincial agreement on implementation.

to address the remaining costs. Again, as stated in NS Power's Closing Submissions, in the Board's 13 process to consider the DDA, securitization was recognized by parties as potentially the ultimate 14 solution where the most savings coul...

AI summary The Department of Energy (DOE) references historical legal decisions, including Smyth v. Ames and Alberta's UAD cases, to argue that coal assets are stranded assets that should be written down, with the cost borne by NS Power shareholders. The discussion also mentions securitization as a potential solution for cost savings, requiring enabling legislation.

1 costs and operating costs associated with continuing to run Lingan 2 as a system resource given 2 current and foreseeable constraints. 3 On this issue, it is important to note two central facts: (1) as discussed at pages 926-929 of the 4...

AI summary NS Power argues Lingan 2 remains essential for system reliability due to uncertain replacement timelines and rising peak demand. The DOE supports securitization initiatives but expresses reservations about cost savings and coal asset valuation. NS Power hopes the Board will address these concerns.

1 5.2 Securitization 2 - 3 As noted above, all Parties are supportive of the securitization of NS Power's thermal assets as - 4 contemplated under the DDA and a deferral to take effect on the effective date of the 2026 - 5 requested rate a...

AI summary The document discusses the support for securitization of NS Power's thermal assets under the DDA, with the expectation of benefits to ratepayers. NS Power and the IG recommend that the Board confirm the benefits of securitization before a formal application is filed, citing Section 21 of the PUA, which grants the Board authority to make recommendations on changes affecting public utilities.

21 Timing of Securitization - 22 The CA notes that it is unclear, based on the comment of the Minister of Energy, whether - 23 securitization has been delayed or if it's in fact unlikely to proceed, and refers to NS Power's prior - 24 stat...

AI summary The Consumer Advocate (CA) raises concerns about the uncertainty surrounding the timing of securitization, based on the Minister of Energy's comments, and references NS Power's previous statement about amending the GRA and returning thermal assets to the rate base if securitization is not possible.

25 CA Closing submissions, page 10, lines 9-10. 1 amendment and reserves its position on any further application to amend the GRA before the 2 Board.26 When NS Power made that statement, it did so on the expectation that clarity on the 3 a...

AI summary NS Power argues that a Securitization Deferral is the appropriate tool to address uncertainty around securitization, avoiding changes to the current GRA application. The SBA and IG express concerns about the timing of the deferral, suggesting it should not begin until new rates are in place to prevent overcollection and ensure retroactive deferrals are avoided.

The Board held its public hearing from January 7 to 9, 12 and 13, 2026. Written closing submissions were completed on February 6, 2026. The Board also received many letters of comment from customers. [7] The general rate application contem...

AI summary The Nova Scotia Utility and Review Board held a public hearing for a general rate application, which included a proposal for securitization of coal plant and thermal-related assets. NS Power requested a securitization deferral to defer financing costs and depreciation expenses related to retiring these assets, estimating potential customer savings of about $90 million over 2026 and 2027 if securitization had occurred earlier.

[37] The terms of the settlement agreement are set out in a schedule to the agreement and provide as follows: GRA Element Settlement Terms Securitization a) NS Power will make best efforts to finalize and apply prior to January 1, 2026 for...

AI summary The settlement agreement outlines terms related to securitization, ML transmission assets, and EIFEL. NS Power is required to finalize securitization efforts by January 1, 2026. The inclusion of specific CI numbers in the rate base is conditional on meeting a threshold test. If the EIFEL exemption is not enacted, parties agree to defer tax expenses over the 2026-2027 GRA period.

[135] The figures in the table above include annual accruals calculated for all thermal assets, including those within the scope of the DDA. However, NS Power is not proposing to increase the depreciation rates for the assets included with...

AI summary The figures include annual accruals for all thermal assets, including those under the DDA. NS Power is not proposing to increase depreciation rates for these assets as they plan to securitize them.

[136] Applying the proposed depreciation rates in the preceding Table to forecast monthly balances of depreciable Plant throughout the test period results in a forecast depreciation and accretion expense of $282.4 million in 2026 and $300....

AI summary The text discusses the forecasted depreciation and accretion expenses for NS Power in 2026 and 2027, noting increases due to updated depreciation rates and capital additions. It also mentions the impact of securitization of DDA assets and the involvement of Dustin Madsen from Emrydia Consulting Corporation in analyzing NS Power's depreciation practices.

at the expense of future customers. The self-interest of some parties to the agreement in deferring costs to future customers is understandable, but it does create intergenerational inequity concerns. [185] As identified in NS Power's resp...

AI summary The adjustment to net salvage rates results in a revenue requirement reduction for NS Power, but may lead to a small rate increase if not approved. The Board acknowledges potential intergenerational inequity concerns and notes that other depreciation-related issues and the uncertainty of securitization could impact NS Power's credit rating and increase costs for ratepayers.

e installed but did not know when the related retirements occurred. Then, based on the addition and retirement pattern, simulation was used to place a reasonable age on the retirements that did occur. [251] In general, the Board agrees wit...

AI summary The NSUARB acknowledges NS Power's use of professional judgment in depreciation calculations but finds Mr. Madsen's evidence on shorter asset service lives more compelling. However, the Board declines to mandate changes to NS Power's GRA due to potential negative impacts on securitization and credit ratings, citing risks of downgrades to 'junk' status and increased ratepayer costs.

the effect of decreasing the company's cash flow. It would also reduce recovery of capital investment thereby increasing debt. These factors would negatively impact NS Power's FFO:Debt credit metrics. [274] In Undertaking U-7, NS Power pro...

AI summary The text discusses the financial impact of depreciation methods (ALG vs. ELG) on NS Power's FFO:Debt metrics, showing ALG would reduce the metric by ~1.2% in 2026-2027. It also highlights risks if securitization of DDA assets fails, potentially lowering the metric below 10%. Mr. Madsen's adjustments would slightly worsen metrics.

3.5.1.1 Background [281] Securitization was described by NS Power as the "centrepiece" of its general rate application and the settlement agreement. The practical impact of securitization in this matter is that it would result in ratepayer...

AI summary NS Power's general rate application includes securitization, which would lower financing rates for ratepayers by restructuring coal plant assets into debt, saving $90M over 2026-2027. Securitization improves credit metrics but removes assets from the balance sheet, ending shareholder returns on those assets.

3.5.1.2 Present Application [291] In this application, NS Power indicated its future intent to ask for the securitization of $704 million of the unrecovered net book value of thermal assets within the scope of the DDA ($500 million in 2025...

AI summary NS Power seeks a securitization deferral to defer depreciation and financing costs of thermal assets until securitization legislation is enacted. The application does not request immediate securitization approval, but aims to defer costs until the process can proceed. Initial savings estimates were reduced from $90 million to $85 million.

- Finally, the MEUs would also like to take the opportunity provided by the closing submissions to reiterate their support for NS Power's efforts to securitize approximately $700 million of assets in the Decarbonization Deferral Account ("...

AI summary Multiple stakeholders, including MEUs, the Small Business Advocate, the Consumer Advocate, and the Industrial Group, support the securitization of approximately $700 million in thermal assets held in the Decarbonization Deferral Account (DDA) as part of the General Rate Application (GRA). This approach is expected to yield significant cost savings for ratepayers, with estimates of $85 million over 2026–2027.

- Maintaining NS Power's current return on equity of 9.0%, with an earnings band of 8.75% to 9.25%. The equity thickness for rate setting purposes remains at 40.0%; - The establishment of the securitization deferral to defer depreciation e...

AI summary The proceeding outlines key directives for NS Power, including maintaining a 9.0% return on equity, establishing a securitization deferral for depreciation and financing costs related to coal plants, approving depreciation rates, and adjusting cost-of-service methodology. It also discusses the PHP Deferral account and the EIFEL deferral for potential tax expenses.

The Board orders that: - 1. The application is approved, except where inconsistent with the Board's findings and directions in its decision. - 2. A return on equity of 9.0% and an equity ratio of 40% are approved for rate setting purposes,...

AI summary The Board approves the application with specific conditions, including a return on equity of 9.0%, an equity ratio of 40%, and a securitization deferral for depreciation expenses and financing costs related to coal plants and thermal-related assets starting May 1, 2026.

OPENING STATEMENT 59 NSP COST OF SERVICE PANEL 1 We know that there is never a good 2 time to request an increase in electricity rates and that 3 even small increases can have big impact on families and 4 businesses. We continue to work wi...

AI summary Nova Scotia Power Inc. acknowledges the difficulty of requesting electricity rate increases and outlines recent efforts with the Province to avoid them, including financial arrangements and projects such as the fuel cost receivable and the Maritime Link Federal Loan Guarantee. The company emphasizes a robust and transparent process involving customer representatives in the General Rate Application.

1 costs associated with the DDA to the weighted average of 2 Nova Scotia Power's rate base and allocate those 3 classified costs by a weighted average of the allocation 4 of rate base. Is that correct? 5 A. (Blair) Yes, that's correct. 6 Q...

AI summary The discussion centers on the allocation of costs associated with the DDA (Demand-side Management Program) to Nova Scotia Power's rate base. The witness confirms the current allocation method and notes that the DDA's impact on rates is minimal due to securitization, which is expected to reduce the amount allocated to the DDA.

2 proposing to do securitization based on either the DDA 3 approach or by generation. So that's something that the 4 company is considering right now. 5 Q. So that would come forward with 6 the securitization rider? 7 (Willett) That's corr...

AI summary The discussion involves Nova Scotia Power (NSP) considering securitization based on the DDA approach or by generation, and the allocation of the DSM rider, with 75% allocated to program costs and 25% to system benefits.

NSP DEPRECIATION PANEL 205 In-ch, (Clarke) 1 been conducting depreciation studies for utility companies 18 The Depreciation Panel is available for questions. 19 THE CHAIR: Consumer Advocate? INTERNATIONAL REPORTING INC. CERTIFIED COURT REP...

AI summary The text discusses the NSP Depreciation Panel 205 In-ch, (Clarke), where the Depreciation Panel is available for questions. It includes a cross-examination by Ms. MacAdam regarding securitization referenced in the Application.

NSP DEPRECIATION PANEL 215 Cr-ex, (MacAdam) 1 costs and that those costs would be included in a deferral 2 as of that date and carried forward. 3 [2:19:54] Q. So how would NSPI account for any 4 of the financing and depreciation costs that...

AI summary The discussion revolves around Nova Scotia Power's (NSPI) accounting for financing and depreciation costs related to securitization, with concerns about potential double charging to ratepayers. NSPI is seeking to defer these costs, acknowledging the debate over whether they are already included in current rates.

NSP DEPRECIATION PANEL 217 Cr-ex, (MacAdam) 1 rates. 2 Nova Scotia Power's view, though, is 3 that it has made assumptions, made concessions in the 4 Settlement Agreement to reduce costs on the assumption, 5 though, that securitization wou...

AI summary Nova Scotia Power Inc. (NSPI) states that the delay in securitization has caused a significant financial impact, with an estimated $18 million cost in the first quarter of 2026. There is uncertainty about whether this cost accounts for depreciation and financing costs collected through 2025 rates.

NSP DEPRECIATION PANEL 227 Cr-ex, (MacAdam) 1 us at this point, but it's not not trying to dance 2 around the question. It's just a matter of the fact that 3 those are true costs, and if we had an approved revenue 4 requirement that includ...

AI summary The speaker discusses the challenges of providing definitive figures for financing and depreciation due to the current rate cap and delayed securitization. They emphasize the need to fully fund the '26 and '27 test period, acknowledging limitations in control over rate timing and securitization.

NSP DEPRECIATION PANEL 229 Cr-ex, (MacAdam) 1 would have been taken out of the rate as a result of the 2 securitization for this Application. Is there something 3 you can give us that provides a range of what we're 4 talking about? Because...

AI summary The discussion revolves around the difficulty of providing a specific range for the impact of securitization on the rate application, as the rate caps are overall and not tied to specific line items or areas of cost.

1 treating your return on equity with respect to that amount 2 differently as well because you're getting the benefit of 3 allowing those costs to be put into a deferred account for 4 later recovery. Otherwise, you'd just be absorbing them...

AI summary The discussion revolves around deferring financing costs related to securitization due to delays, with the aim of keeping rates lower for customers. These costs will be recovered over time through securitization bonds rather than being included in the current rate application.

NSP DEPRECIATION PANEL 235 Cr-ex, (MacAdam) 1 THE CHAIR: Right. You're asking the 2 Board to once it approves the deferral, to 3 retroactively include costs that you've already incurred. 4 MR. FLEMMING: Asking the Board, yes, 5 to let us d...

AI summary The discussion revolves around the deferral of financing costs for Nova Scotia Power, with concerns about retroactively including these costs after they have already been incurred. There is a focus on the timing of rate approvals and securitization, and how these factors impact the recovery of costs over time.

NSP DEPRECIATION PANEL 247 Cr-ex, (Rudderham) 1 A. (Flemming) Ms. Rudderham, I'd 3 information, more actual data and, you know, more up-to 4 date estimates is always useful, Ms. Rudderham. 5 Those are all my questions. Q. 6 Thank you so mu...

AI summary The text is a transcript from a regulatory proceeding involving the NSP Depreciation Panel. It includes questioning and responses from various entities, with some entities indicating they have no questions. The discussion briefly mentions securitization as a topic raised by Port Hawkesbury Paper.

NSP DEPRECIATION PANEL 345 Questions, (Chair) book value of balances of all the individual asset classes monthly throughout that period as part of our forecasting process, and that would provide us with depreciation and accretion expense o...

AI summary The discussion revolves around the depreciation and accretion expenses related to the securitization of DDA assets, with a focus on how removing these assets from Nova Scotia Power's rate base would reduce depreciation expenses by $26.6 million annually.

NSP DEPRECIATION PANEL 349 Questions, (Chair) 1 Just one moment, please, Mr. Chair. 19 revision to Undertaking 7. INTERNATIONAL REPORTING INC. CERTIFIED COURT REPORTERS 1 MR. WILLIAMS: Thank you, sir. 2 UNDERTAKING U-7 - To also show 3 the...

AI summary The Chair of the NSP Depreciation Panel 349 is questioning Mr. Wiedmayer about a response given by Mr. Madsen regarding the Average Life Group procedure and its impact on securitized assets removed from the rate base. Mr. Wiedmayer indicates disagreement with the logic presented in the response.

NSP COST OF CAPITAL PANEL 419 Cr-ex, (Mahody) 1 report? 2 Q. It's the most recent report 3 that's been filed. And Mr. Flemming's about to tell me in 4 a few minutes when I ask him if it's the most recent 5 report that the company has. 6 So...

AI summary The document discusses Nova Scotia Power Inc.'s recent actions, including receiving a Canadian federal loan guarantee to securitize C$500 million in fuel balances and using proceeds to reduce debt. It also mentions a C$117 million provincial government grant for deferred fuel cost recovery, which S&P Global Ratings views as favorable for reducing debt and regulatory lag.

1 integrated. And each of these vertically integrated 2 utilities rely, to varying degrees, on a mixture of their 3 own generation and purchase power resources. So I didn't 4 really have a basis for making an adjustment specifically, 5 or...

AI summary The text discusses the utilization of the Maritime Link by a utility company, highlighting its role in reducing risk by substituting its own generation resources. It also references a board staff response (IR-23) and mentions a specific exhibit (Exhibit N-27) related to risk factors associated with DDA and securitization.

NSP COST OF CAPITAL PANEL 481 Questions, (Murphy) 1 Q. The concern I guess the way I 2 read it was the concern you're expressing was perhaps, you 3 know, the more the company may not get its equity 4 return on the 700 million that would be...

AI summary The discussion centers on the securitization of $700 million and its impact on equity returns. Concerns are raised about the lack of equity return on securitized assets, but it is argued that this may be viewed positively by investors due to the benefits of transitioning the company's fleet and the public good.

NSP COST OF CAPITAL PANEL 495 Questions, (Murphy) 1 Q. Sure. 2 Good afternoon, panel. Mr. Q. 3 Coyne, you'll be happy to know I have no more questions on 4 the Fuel Adjustment Mechanism. 5 Yeah, Mr. Murphy had asked you just 6 now why, giv...

AI summary The discussion revolves around the Fuel Adjustment Mechanism and securitization, with questions raised about why there wouldn't be a positive risk adjustment for Nova Scotia Power due to its integrated utility status and the need to securitize thermal assets.

1 what you're suggesting? 2 A. (Coyne) Most have not, no. I'd 3 say securitization is the exception. There are four or 4 five companies I know of in the U.S. that have worked with 5 their legislatures or governments to adopt securitization...

AI summary The discussion revolves around the use of securitization in the U.S. and the inclusion of Canadian utilities in comparator groups by American regulators. The speaker mentions that securitization is rare but has been used in some U.S. states, and references Enbridge as an example of a Canadian company with a significant U.S. presence.

1 Q. Yeah. And I agree with you. I 2 agree with you, and my point in asking questions is just 3 to confirm the fact because this I don't think it's on 4 the record. There's not in terms of your report. 5 There are positive developments tha...

AI summary The discussion highlights the benefits of securitization for Nova Scotia Power, including lowering rates for customers, reducing debt on the balance sheet, and enabling the deployment of capital for new infrastructure. The conversation also notes that legislative amendments in Nova Scotia support securitization as a beneficial approach.

picture so that if things were to be taken out of the 1 Settlement Agreement, it would show a full picture as to 14 for PHP? 15 MR. MacDOUGALL: I do, Mr. Chair 16 (SHORT PAUSE) 17 18 19 1 CROSS-EXAMINATION BY MR. MacDOUGALL 2 Good afternoo...

AI summary The text references a settlement agreement and discusses the securitization approach under section 35G of the Public Utilities Act, which could save customers up to $90 million by removing thermal assets from NS Power's rate base and financing them through lower-cost debt.

- securitization was in place by January 1, 2026, your - expectation was savings over the years 2026-2027 of - approximately $90 million; correct? - A. (Flemming) Correct. - [4:10:09] Q. Thank you. - MR. MacDOUGALL: Mr. Goodine, are you -...

AI summary The discussion references securitization being in place by January 1, 2026, with expected savings of approximately $90 million between 2026 and 2027. The witness confirms this expectation. The conversation then shifts to retrieving references from a previous transcript.

BY MR. MacDOUGALL: - Q. My notes, Mr. Williams, suggest - that yesterday when you were asked by one of my friends a - question on when you anticipated securitization could now - be in place you anticipated that under current - circumstance...

AI summary Mr. MacDougal is referencing a previous discussion with Mr. Williams about the anticipated timeline for securitization, noting that it was expected to occur in the first half of 2026, with clarification that it would be close to the middle of that period.

- of the year. Do you recall that? 1 A. (Williams) I recall a discussion. 2 I wasn't intending to clarify or change it. It was the 3 first half of 2026. 4 The first half. Q. 5 A. (Williams) Middle of the year. 6 No, that's fine. Q. 7 So if...

AI summary The discussion revolves around the securitization of deferred depreciation and financing costs by Nova Scotia Power during the 2026-2027 period. The timing of securitization, potentially starting in July 2026, is being considered, with implications for customer benefits and rate structures.

ling requirements is Nova Scotia Power's view of a record, but the record in one of these proceedings, you appreciate, there is all of the IRs that Intervenors would normally ask, there's the evidence 1 that Intervenors would normally put...

AI summary The discussion focuses on the regulatory process for securitization, with Nova Scotia Power outlining tasks completed and those remaining to advance the process. The dialogue also touches on the nature of the record in regulatory proceedings and the role of intervenors.

1 terms of being able to move forward with an Application to 2 the Board, it's just as you had indicated, the 3 regulations. Obviously, then, there would need to be an 4 Application, as we've indicated to the Board, for what's 5 referred t...

AI summary The text discusses the regulatory process for moving forward with securitization, highlighting the need for an application to the Board once regulations are in place. It also references Exhibit N-33 and mentions Grant Thornton as one of the Board counsel consultants.

- of the opt-out fee that's being proposed for '26-27. So 1 it's not included in general rates. 2 MEMBER DEVEAU: Okay. I have a few 3 more questions after the break, Chair. 4 THE CHAIR: Thanks, Mr. Deveau. 5 So it's 3:35 now, so we'll come...

AI summary The text refers to an opt-out fee proposed for '26-27 and mentions that it is not included in general rates. It includes dialogue from a proceeding with members and participants, including a brief mention of securitization and a letter sent to Mr. Goodine.

In-ch, (Mahody) 1 you outlined there over approximately seven or eight pages 2 a listing of your various appearances before regulatory 3 bodies in North America? 4 A. Yes, I did. 5 Q. And have you been accepted as an 6 expert in the times...

AI summary The witness, Mr. Madsen, has testified before various regulatory bodies in Canada and the United States. He is being requested to be accepted as an expert on depreciation and securitization. The chair confirms his qualification.

ts greatly, well beyond their physical useful lives, and then you're depreciating an asset, so covering costs in rates, when the asset has long since been replaced and retired. Questions, (Chair) That's what I meant to say. it swings both...

AI summary The discussion revolves around the differences between ELG and ALG depreciation methods, noting that ELG accelerates depreciation initially but extends it over a longer period at a lower rate. There is also mention of the potential short-term benefits of switching methods for securitization, followed by higher overall costs.

1 terminology, where you say: 2 3 4 5 Approval of the requested increases would result in NSPI comfortably exceeding this metric. 6 When you say, "comfortably exceeding 7 this metric," and assuming the metric is the 10 percent, 8 and I rea...

AI summary The discussion revolves around the potential approval of rate increases and their impact on the debt-to-free cash flow (FFO) ratio. Nova Scotia Power (NSP) estimates that approval of the requested increases would result in NSP comfortably exceeding the 10% threshold for the FFO to debt ratio, though it would be at the upper end of the 10-13% range. The analysis is based on S&P calculations and assumes securitization proceeds as planned.

1 guarantee, it's a contingent liability of the federal 2 government. They are both reliant on the credit of the 3 government, in a sense. In the loan guarantee, it's an 4 actual financial credit. In the case of securitization, 5 it's a le...

AI summary The discussion revolves around the financial implications of loan guarantees and securitization, highlighting their reliance on government credit and the impact on a company's balance sheet. The conversation also references a report to the Nova Scotia Power panel.

INTERNATIONAL REPORTING INC. CERTIFIED COURT REPORTERS proposed during the Cost-of-Service Study process in 2024. I can I would like to quote from my own evidence. I don't know if we need to call it up, but I say that the company has not e...

AI summary The speaker, Mr. MacDuff, raises concerns about the lack of clarity in how the company addressed stakeholder concerns during the Cost-of-Service Study process in 2024. He also mentions new information related to securitization that is commercially sensitive and should be discussed in a confidential module.

NOVA SCOTIA POWER 1 THE CHAIR: When? 2 MR. WILLIAMS: Yesterday afternoon, at 3 approximately 4 o'clock. 4 THE CHAIR: Why is it material? 5 MR. WILLIAMS: I believe it's 6 material, sir, because as I said, it relates to the timing 7 of secur...

AI summary Nova Scotia Power is discussing the materiality of the timing of securitization in the General Rate Application and its impact on the Consensus Agreement. The discussion centers on the confidentiality of the information and how it should be handled in the proceeding, with consideration given to the interests of both the company and the public.

INTERNATIONAL REPORTING INC. CERTIFIED COURT REPORTERS have participated in this proceeding, the parties that are signatories to the CUs, those are the parties that are representing stakeholders to this proceeding that have the greatest po...

AI summary The discussion focuses on the participation of stakeholders in the proceeding, particularly those who have signed Confidential Undertakings (CUs) and are directly impacted by the Board's decisions. The Chair references the timing of securitization and the lack of a specific date for the enactment of regulations at the time of the evidence.

INTERNATIONAL REPORTING INC. CERTIFIED COURT REPORTERS not being asked to approve securitization as part of this proceeding, but I think MEMBER DEVEAU: You've asked us to create the deferral? MR. WILLIAMS: Correct. MEMBER DEVEAU: Right. MR...

AI summary The discussion revolves around the deferral of securitization and its implications on revenue requirements. The speaker explains that a determination is needed regarding the deferral and the assumptions related to securitization being appropriate and reasonable.

NOVA SCOTIA POWER 1 of securitization. Maybe it's more certain or less 2 certain now, you know, whatever it is. You seem to have 3 accommodated that already in your Application and it 4 seemed to me, from hearing the evidence, that what wa...

AI summary The discussion revolves around the deferral of securitization costs, with the Board considering whether to start the deferral from January 1st or when new rates take effect. The speaker indicates that new evidence does not affect the decision on when the deferral should begin.

INTERNATIONAL REPORTING INC. CERTIFIED COURT REPORTERS impact relates to, as I said, the timing of it. I take your point that the deferral addresses concerns related to timing. And if the Board is satisfied that the deferral can and does a...

AI summary The discussion centers on the use of a deferral mechanism to address timing concerns related to securitization, with the speaker agreeing that it is appropriate and ensures customer benefits are retained. The Chair mentions the test for reopening is materiality, not relevance, and asks for further input from other parties.

MOTION NOVA SCOTIA POWER 1 MEMBER DEVEAU: Okay. That's 15 And just to add to that, the 16 securitization is fundamental and it's one of the pillars 17 of this General Rate Application, in terms of the costs 18 being put forward, and it was...

AI summary The discussion centers on the importance of securitization as a pillar of the General Rate Application and its role in the Settlement Agreement. The Chair raises concerns about the public interest in non-confidential disclosure of material information, while Ms. Rubin argues that decisions can be made without publicly revealing specific details.