The Board directs Newfoundland Power to reduce its proposed Operating Costs by $2.0 million in 2025 and 2026 to reflect a productivity allowance to provide an incentive to Newfoundland Power to take additional measures to manage its costs and find efficiencies. In addition to the productivity allowance, the Board directs Newfoundland Power to revise its proposals to exclude the costs associated with short-term incentive payments to the executive and directors.

Rate of Return on Equity

The Board does not accept the proposed increase in the rate of return on equity from 8.5% to 9.85% and directs Newfoundland Power to file a revised rate of return on rate base reflecting a rate of return on equity of 8.6%. The Board finds that Newfoundland Power’s capital structure should continue to include a common equity component not exceeding 45%.

Balancing Cost and Reliability

The balance of cost and reliability was an important issue in this proceeding. The Board directs Newfoundland Power to develop a scope of work for the development of a strategic plan with respect to balancing cost and reliability, identifying issues and challenges that may have significant potential implications for its system and customers, such as electrification, climate change and aging infrastructure.

The Board approves a number of revisions to Newfoundland Power’s deferral accounts and the creation of a new deferral account to enable the recognition and amortization of costs over periods consistent with regulatory principles.