Topic:"Securitization" in M12833

NON-CONFIDENTIAL 1 TABLE OF CONTENTS 2 3 1.0 Introduction 3 4 1.1 Filing Requirements 3 5 2.0 Annual DDA Reporting Requirements 5 6 2.1 Continuity Schedule of Amounts Reclassified to the DDA 5 7 8 2.2-2.4 Supporting Schedules for Actual an...

AI summary The document outlines the structure and content of a regulatory filing related to the 2023-2024 General Rate Application by Nova Scotia Power Inc. It includes sections on reporting requirements, asset management, amortization, and securitization, with figures and appendices providing detailed financial and operational data.

The forecast for 2026-2029 incorporates the use of the securitization deferral of the thermal assets within the scope of the DDA, as directed by the Board in the 2026-2027 GRA decision, whereby the depreciation and cost of financing associ...

AI summary The forecast for 2026-2029 includes the securitization deferral of thermal assets within the DDA, as directed by the Board in the 2026-27 GRA decision. NS Power has prepared figures under two assumptions, considering the uncertainty around securitization and the potential unrecovered costs by 2029.

10 11 Figure 2 – Unrecovered Costs Associated with the DDA in 2029, assuming 2026 12 Securitization Unit/Plant Remaining NBV ($ million) Unrecovered Forecast Decommissioning Costs ($ million) Total Unrecovered at December 31, 2029 ($ milli...

AI summary The text presents a table showing the unrecovered costs associated with the DDA in 2029, including remaining net book value and forecasted decommissioning costs for various units and plants. The total unrecovered costs at the end of 2029 are estimated at $156.0 million.

14 The second scenario assumes securitization does not occur by the end of the 2026-2027 GRA test period, and as such, the depreciation and financing costs deferred in accordance with the securitization deferral remain on NS Power's balanc...

AI summary This text discusses a scenario where securitization does not occur by the end of the 2026-2027 GRA test period, leading to deferred depreciation and financing costs remaining on NS Power's balance sheet as a regulatory asset. These costs are included in the forecast unrecovered costs for assets within the scope of the DDA, with details provided in Appendix B(2) – No Securitization.

1 Figure 3 – Unrecovered Costs Associated with Assets within DDA in 2029, assuming No 2 Securitization Unit/Plant Remaining NBV ($ million) Unrecovered Forecast Decommissioning Costs ($ million) Securitization Deferral - Deferred Financing...

AI summary Figure 3 shows the unrecovered costs associated with assets within the Decarbonization Deferral Account (DDA) in 2029, assuming no securitization. The table lists the remaining net book value, unrecovered decommissioning costs, deferred financing costs, and total unrecovered costs for various units and plants.

4 In a scenario where future securitization does not occur, amounts included in the Securitization 5 Deferral account will be an unrecovered cost associated with the assets within the scope of the 6 DDA. While NS Power is not proposing the...

AI summary The text discusses the potential future recovery of unrecovered costs, including those in the Decarbonization Deferral Account and Net Book Value, through a General Rate Application or other regulatory proceeding if securitization does not occur.

The above excerpt is consistent with NS Power's position on the future amortization periods and amounts associated with costs within the DDA. NS Power believes the amortization schedule for these costs is best determined at a future date,...

AI summary NS Power advocates deferring decisions on future amortization periods for DDA costs until more data is available. It emphasizes securitization for coal asset recovery, citing the 2024 Energy Reform Act's amendments to the Public Utilities Act, which enable securitization under new section 35G. NS Power argues securitization benefits customers and aligns with legislative intent, though implementation remains pending.

Figure 5 – Revenue Requirement for Securitization vs DDA (28-year DDA Amortization) Revenue Requirement ($ Million) Securitization DDA Cost (Benefit) Principal Payments 713 713 - Financing Costs – Debt & Equity 671 699 (28) Income taxes 29...

AI summary Figure 5 compares the revenue requirements for securitization and the Decarbonization Deferral Account (DDA) over a 28-year amortization period. The table shows that securitization has lower principal payments, financing costs, and income taxes compared to DDA, resulting in a lower overall revenue requirement and net present value.

3.0 CONCLUSION The DDA is a regulatory mechanism intended to provide flexibility for recovering the costs of thermal assets being retired by 2030 in accordance with Federal and Provincial requirements. As NS Power continues to refine its p...

AI summary The DDA provides flexibility for recovering costs of retiring thermal assets by 2030. NS Power will update the Board and stakeholders on evolving inputs like retirement dates, unrecovered costs, and potential securitization timing through Annual DDA reports and regulatory filings.

Unrecovered Cost for DDA Assets at December 31, 2025 ($ Millions) Unrecovered Forecast Total Unrecovered (including Cost of Removal) Jan Depreciation Expense and (including Cost of Removal) Remaining NBV Dec. Unit/Plant GBV Jan 1, 2025 Add...

AI summary The document presents a table detailing the unrecovered costs for DDA assets at December 31, 2025, including net book value, depreciation expenses, and securitization proceeds for various units and plants, such as Point Aconi and Trenton 5.

2026 Pre-Tax WACC 6.59% Securitization Bond Interest Rate 5.00% NSPI Return on Equity Embedded in 2026 WACC 9.00% NSPI Equity Thickness Embedded in 2026 WACC 40.00% Tax Rate 29.00% NBV to be recovered 713,000,000 Mortgage style bond amorti...

AI summary The text outlines financial parameters for a 2026 pre-tax WACC of 6.59%, a securitization bond interest rate of 5.00%, and NSPI's return on equity of 9.00% with an equity thickness of 40.00%. A tax rate of 29.00% and a NBV of 713,000,000 to be recovered through mortgage-style bond amortization is also mentioned.

DDA Period 28 Revenue Requirement Without Securitization Revenue Requirement With Securitization Year 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Opening balance 713,000,000 702,382,983 691,228,480 679,509,280 667,196,795 654,260,991 640,...

AI summary The document presents a table outlining the revenue requirements with and without securitization for DDA Period 28, detailing opening and ending balances, principal payments, and interest expenses over multiple years.

Change vs 28Y Change vs 28Y 17,858,194 16,305,308 14,752,421 13,199,535 11,646,648 10,093,762 8,540,875 6,987,989 5,435,102 3,882,216 2,329,330 776,443 - - - 699,199,000 13,609,537 13,263,042 12,916,547 12,570,053 12,223,558 11,877,064 11,...

AI summary The document presents a table comparing changes against a baseline (28Y) with numerical values across multiple years, including revenue requirement, securitization, DDA, and cost (benefit) figures. It likely relates to financial planning or regulatory proceedings involving Nova Scotia Power and the Nova Scotia Utility and Review Board.

2026 Pre-Tax WACC 6.59% Securitization Bond Interest Rate 5.00% NSPI Return on Equity Embedded in 2026 WACC 9.00% NSPI Equity Thickness Embedded in 2026 WACC 40.00% Tax Rate 29.00% NBV to be recovered 713,000,000 Mortgage style bond amorti...

AI summary The text provides financial details related to Nova Scotia Power Inc. (NSPI), including the 2026 Pre-Tax WACC, securitization bond interest rate, return on equity, equity thickness, tax rate, and the net book value (NBV) to be recovered through mortgage-style bond amortization.

DDA Period 10 Revenue Requirement Without Securitization - - - - - - - - - - - - - - - 168,184,800 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 Total 412,570,339 386,744,071 359,610,348 331,102,980 301,152,426 269,685,626 236,625,819 201,8...

AI summary The text presents a table showing revenue requirements and securitization details for DDA Period 10, including figures for different years and total amounts, with a focus on principal payments and the DDA.

NON-CONFIDENTIAL 1 Request IR-1: 2 3 Reference: Figure 2 – Unrecovered DDA costs in 2029 assuming 2026 Securitization. 4 5 1. Please provide an explanation for the expenses included for each unit/plant in the 6 "remaining NBV" column. 7 8...

AI summary The text outlines a request for clarification on the expenses included in the 'remaining NBV' column and the derivation of forecasted decommissioning costs. It also inquires about the impact of delaying securitization until 2027 and why securitization has not been applied to these costs. The response explains that the remaining NBV is based on forecasted capital costs, additions, retirements, depreciation, and securitization proceeds.

10 11 3. No. Provided the scope of the securitization transaction remained the unrecovered NBV of 12 assets expected to be within the scope of the DDA as of December 31, 2025, there would 13 be no change in the forecast unrecovered balance...

AI summary The text discusses the scope of a securitization transaction, specifically focusing on the unrecovered Net Book Value (NBV) of 12 assets expected to be within the scope of the DDA by December 31, 2025, and notes that this would not change the forecast unrecovered balance by December 31, 2029.

NON-CONFIDENTIAL 1 Request IR-1: 2 3 Please confirm how the "30-year period (2028–2057)" referenced in Section 2.9 relates to the 4 28 year, 20-year, and 10-year DDA amortization scenarios. Specifically: 5 6 (a) Is the 30-year period the f...

AI summary The document discusses the 30-year period (2028–2057) used for modeling NPV revenue requirement calculations in relation to different DDA amortization scenarios (28, 20, and 10 years). It confirms that the 30-year period is the full modeling horizon for all scenarios and explains that cash flows beyond the amortization period are treated as zero for the shorter-term scenarios.

NON-CONFIDENTIAL 1 Request IR-2: 2 3 Please provide a status update on securitization, if applicable. 4 5 Response IR-2: 6 7 Not applicable. There have been no additional updates since the time the report was filed. Decarbonization Deferra...

AI summary The document provides a response to an information request regarding the status of securitization, indicating that there have been no additional updates since the report was filed.

NON-CONFIDENTIAL 1 Request IR-5: 2 3 Please confirm, or clarify otherwise, that the "no securitization" balances are based on a 4 scenario where the DDA assets go back to normal (i.e. the same as 2025) 5 depreciation/accounting treatment i...

AI summary The response clarifies that under the 'no securitization' scenario, depreciation expenses for DDA assets are paused from 2026 to 2027, with financing costs accumulating instead. Depreciation resumes in 2028, and accumulated financing costs remain deferred. Upon asset retirement, unrecovered net book value and deferred financing costs are transferred to the DDA.

Request IR-2: Please provide a status update on securitization, if applicable.

AI summary Request IR-2 seeks a status update on securitization efforts, if applicable, within the Nova Scotia regulatory proceeding context.

Request IR-5: - Please confirm, or clarify otherwise, that the "no securitization" balances are based on a scenario - where the DDA assets go back to normal (i.e. the same as 2025) depreciation/accounting - treatment in 2028 and 2029. Docu...

AI summary The text requests confirmation or clarification on whether the 'no securitization' balances are based on a scenario where DDA assets revert to 2025 depreciation and accounting treatment by 2028 and 2029.

1 Request IR-2: - 2 Please confirm or explain whether, for each amortization scenario (28, 20, and 10 years), both - 3 (a) the recovery of net book value under the DDA (at WACC), and (b) the securitization recovery - 4 are assumed to occur...

AI summary The text requests clarification on whether amortization periods for DDA recovery (at WACC) and securitization are aligned across scenarios (28, 20, 10 years) or if securitization is modeled independently of DDA assumptions.

6 Request IR-3: - 7 In the DDA (no securitization) case presented in Appendix D, please confirm: - 8 (a) Whether all financing costs are recovered contemporaneously through 9 revenue requirement, or - 10 (b) Whether any portion of financin...

AI summary The request asks whether financing costs in the DDA case are recovered through revenue requirement or deferred and recovered separately, referencing deferred financing costs in sections 2.2–2.4.

13 Request IR-4: - 14 Please reconcile the treatment of costs in Figure 3 (which includes "Securitization Deferral – - 15 Deferred Financing Costs" of $81.6 million), with Appendix D, which compares recovery of - 16 approximately $713 mill...

AI summary The text requests reconciliation between Figure 3's treatment of 'Securitization Deferral – Deferred Financing Costs' ($81.6 million) and Appendix D's analysis of $713 million in net book value recovery. It specifically asks whether Appendix D includes or excludes deferred financing costs related to the securitization deferral account.

19 Request IR-5: - 20 Please confirm the assumed timing of the securitization transaction (e.g., January 1, 2026) - 21 relative to the start of the recovery period (2028), and the amortization schedules presented in - 22 Appendix D.

AI summary Request IR-5 seeks clarification on the timing of a securitization transaction (e.g., January 1, 2026) relative to the 2028 recovery period start and the amortization schedules detailed in Appendix D.

1 Request IR-7: - 2 Please confirm that all comparative scenarios (securitization and DDA) are based on recovery of - 3 the same initial principal amount (approximately $713 million), and identify any adjustments made - 4 to that amount (i...

AI summary Request IR-7 seeks confirmation that securitization and DDA scenarios use the same $713 million principal amount, and asks to identify adjustments for deferred financing costs, decommissioning costs, or other referenced amounts.

1 Request IR-1: 2 Reference: Figure 2 – Unrecovered DDA costs in 2029 assuming 2026 Securitization. 3 4 1. Please provide an explanation for the expenses included for each unit/plant in the 5 "remaining NBV" column. 6 7 2. Please provide a...

AI summary The document contains two requests (IR-1 and IR-2) related to the unrecovered DDA costs in 2029 under the assumption of a 2026 securitization. The requests seek explanations for the expenses in the 'remaining NBV' column, the derivation of decommissioning cost forecasts, the impact of delaying securitization to 2027, and the possibility of including these costs in the securitization approach.

July 10, 2026 VIA EMAIL Ms. Crystal Henwood Clerk of the Board Nova Scotia Energy Board 1601 Lower Water Street, 3rd Floor Halifax NS B3J 3S3 Dear Ms. Henwood: Re: M12833 - Nova Scotia Power Incorporated's 2025 Annual Report respecting the...

AI summary This document discusses the Decarbonization Deferral Account (DDA) mechanism proposed by Nova Scotia Power Incorporated (NS Power) and its 2025 Annual Report. The Nova Scotia Energy Board approved the DDA in principle but left all aspects open for stakeholder discussion, including the possibility of securitization. The Small Business Advocate (SBA) has reviewed the 2025 DDA Report and submitted comments.

Benefits of Securitization In its submissions for the 2024 DDA Report, the SBA acknowledged that the DDA Report fulfilled the information requirements as set out in the Compliance Filing but also pointed out that one of the primary functio...

AI summary The SBA requested that NS Power provide a baseline for potential savings by comparing the rate impact of securitization to conventional recovery. The 2025 DDA Report includes tables showing expected savings from securitization, driven by differences in financing costs between securitization bonds and NS Power's approved WACC.

Status of Supporting Legislation What continues to remain unknown is the status and timing of legislation allowing the use of securitization; the credit market response to NS Power pursuing securitization; and potential changes in retireme...

AI summary The status of legislation enabling securitization remains unclear, with concerns about credit market responses and the timing of thermal unit retirements in the DDA. The SBA seeks more detailed information on legislative progress and the impact of delaying securitization to 2027 instead of 2026.

Submissions: The SBA respectfully submits that this 2025 DDA Report, while inclusive of helpful scenario analyses of the financial benefit of securitization, represents only the current status of the DDA account and more work is required w...

AI summary The Small Business Advocate (SBA) submits that the 2025 DDA Report provides useful analysis on the financial benefits of securitization but notes that further work is needed on how the DDA will be addressed moving forward. The SBA looks forward to continuing discussions with the Board, NS Power, and other intervenors.

Background On April 30, 2026, Nova Scotia Power Inc. ("NS Power") filed its Decarbonization Deferral Account 2025 Annual Report (the "Report") with the Nova Scotia Energy Board (the "Board"). The Decarbonization Deferral Account, or DDA, w...

AI summary NS Power submitted its DDA 2025 Annual Report to the Board, detailing $784 million in unrecovered costs for retiring thermal assets by 2030. NS Power proposed securitization of coal plant costs in its 2026-2027 GRA, but this has not occurred due to lack of legislative authorization.

Submissions On review, it would appear that the Report is responsive to the reporting requirements as directed by the Board, and consistent with the DDA Manual. The CA takes no issue with the contents of the Report in this regard, and part...

AI summary The submission reviews a report's compliance with Board requirements and notes NS Power's continued commitment to securitization for coal asset recovery. However, no substantive progress update on securitization was provided since the 2026-2027 GRA. The CA supports securitization due to its benefits to customers, referencing Table 5 of the Application.

Revenue Requirement ($ Million) Securitization DDA Cost (Benefit) Principal Payments 713 713 - Financing Costs – Debt & Equity 671 699 (28) Income taxes 291 447 (156) Revenue Requirement 1,675 1,859 (184) NPV of Revenue Requirement 654 860...

AI summary The text discusses concerns raised by the CA regarding the lack of progress on securitization and the potential unrecovered costs of $156M by 2029. The CA requests quarterly updates from NS Power and questions why the scope of the securitization transaction cannot be adjusted to include additional unrecovered costs.

NON-CONFIDENTIAL 1 TABLE OF CONTENTS 2 3 1.0 Introduction 3 4 2.0 Consumer Advocate Comments 3 5 2.1 NS Power Reply 4 6 3.0 Small Business Advocate Comments 6 7 3.1 NS Power Reply 6 8 3.2 Future DDA Work 7 9 3.3 NS Power Reply 7 10 4.0 Con...

AI summary NS Power filed its 2025 Decarbonization Deferral Account (DDA) Annual Report, and the Consumer Advocate (CA) and Small Business Advocate (SBA) submitted comments. The CA noted that NS Power provided no substantive update on securitization progress and expressed concern over the lack of advancement on this issue.

DATE FILED: July 24, 2026 Page 3 of 8 1 believes it would be beneficial if NS Power committed to providing quarterly 2 updates on its efforts to pursue securitization. 3 Further, with respect to securitization, the CA notes that Figure 2 o...

AI summary The Consumer Advocate (CA) requests quarterly updates from NS Power on its securitization efforts, noting that unrecovered costs could reach $156M by 2029. NS Power agrees with the value of securitization but argues that annual reporting is sufficient, as legislative action is required and beyond its control, and quarterly updates would merely reiterate delays.

1 4.0 CONCLUSION 2 - 3 NS Power appreciates the engagement of the Consumer Advocate and Small Business Advocate - 4 on this matter and acknowledges their interest in achieving the significant customer benefits that - 5 securitization would...

AI summary NS Power acknowledges the involvement of the Consumer Advocate and Small Business Advocate in the securitization process and emphasizes the need for provincial enabling regulations. The company is committed to working with the Board and stakeholders, and will provide annual updates through the DDA reporting process.

M12833 - Nova Scotia Power Inc. - Decarbonization Deferral Account - 2025 Annual Report The Decarbonization Deferral Account was proposed in NS Power's 2023-2024 General Rate Application. In a settlement agreement in that matter, NS Power...

AI summary The Decarbonization Deferral Account was established to manage the retirement of thermal plant assets by 2030. NS Power proposed securitization of related costs, but legislative requirements for securitization remain unpassed. The account's scope and retirement dates are subject to changes from the Integrated Resource Plan.