This bill would require the provincial regulator to alter how it sets the allowed return on equity for electric utility capital projects based on the actual financing mix used, and it would force competitive bidding for large transmission builds unless narrowly exempted. It also increases disclosure and public reporting around who builds transmission and how much it costs.
The measure is aimed at reducing cross‑subsidization of utility equity costs to ratepayers and opening the door for third‑party transmission developers. For finance teams, system planners and procurement officials, the bill changes who bears financing risk, how projects get approved, and which costs are recoverable from customers.
At a Glance
What It Does
The bill directs the Nova Scotia Energy Board to adjust allowed returns on equity for capital projects to reflect the project’s actual equity ratio, and requires utilities to disclose project financing in rate or capital filings. It also requires competitive procurement for transmission projects above a monetary threshold and creates an administrative route — either a ministerial procurement authority or the Board — to run those procurements.
Who It Affects
Regulated electric utilities in Nova Scotia, potential independent transmission developers and project financiers, the provincial regulator and any procurement authority the Minister establishes. Ratepayers and government finance officials are also affected through changed cost recovery and transparency obligations.
Why It Matters
It alters the fundamental incentive for utilities to finance projects with equity versus debt, potentially lowering rates but also changing utility credit profiles. The procurement mandate invites private entrants for large transmission work and creates new administrative and compliance duties for the regulator and utilities.
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What This Bill Actually Does
The bill creates a two‑track intervention: one financial, one procurement. On the finance side, the regulator must evaluate each capital project’s actual financing mix when deciding what return on equity the utility may recover from customers.
If a utility uses more equity than the capital structure the regulator previously approved, the allowed return is cut to reflect the lower risk to investors; the Board must set a methodology for making those adjustments and can do so by regulation or guidance. Utilities must disclose the financing structure for each project when they seek cost recovery so the Board can perform this review.
On the procurement side, the bill forces competition for new or upgraded transmission projects above a set capital threshold. The Minister can create a dedicated transmission procurement authority to run auctions or, if the Minister does not, order the Board to run them.
Utilities may bid but cannot claim exclusive development rights unless they win through the competitive process or obtain a formal exemption.The bill defines limited exemptions for emergency work, technical necessity tied to incumbent ownership, or where competition is impractical or contrary to the public interest — each exemption must be justified in writing. Procurement decisions and the rationale for who will build a project must be posted publicly within a fixed period after a decision, and the procuring body must submit an annual report to the Minister summarizing project decisions and costs.Finally, the bill grants the Governor in Council and the Board powers to make regulations to implement the framework and requires any necessary appropriations.
Together the provisions reallocate commercial risk exposure, impose new disclosure and reporting duties, and establish a formal pathway for non‑utility developers to bid for major transmission work.
The Five Things You Need to Know
The Board must reduce the allowed return on equity proportionally when a project’s actual equity ratio exceeds the utility’s most recently approved deemed equity ratio.
Utilities must disclose the financing structure for every capital project in rate applications or capital plans submitted to the Board.
Competitive procurement is required for any new or upgraded transmission project with capital costs above $50,000,000, subject to listed exemptions.
The Minister may establish a transmission procurement authority to run competitions, or may direct the Energy Board to run them if no authority is created.
All procurement decisions and their rationales must be made public within 60 days, and the procuring body must file an annual report to the Minister with procurement outcomes and build costs.
Section-by-Section Breakdown
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Risk‑adjusted ROE — mandate to adjust return on equity
Section 3 directs the Energy Board to tie the allowed return on equity to the actual equity ratio used to finance a project, and to reduce that return when the equity share exceeds the utility’s regulator‑approved (‘deemed’) equity ratio. It requires the Board to adopt a methodology — by guideline or regulation — that accounts for financial risk, capital market conditions and standard cost‑of‑capital practices. Practically, this forces the Board to choose a mathematical approach (for example, a linear scaling or formulaic adjustment) and to codify how equity versus debt affect investor risk premia and the utility’s cost of capital.
Mandatory disclosure of financing in rate filings
Section 4 requires utilities to disclose the financing structure of each capital project in applications and capital plans. The Board must review those disclosures as part of its risk‑adjusted ROE determination before approving cost recovery. This provision converts financing decisions — previously an internal treasury matter — into a regulatory input, creating a permanent audit trail and evidentiary record the Board can use to audit project financing and challenge recovery claims.
Competitive procurement threshold and administration options
Section 5 sets a monetary threshold that triggers mandatory competitive procurement for transmission projects (the bill text sets that threshold at $50 million) and gives the Minister authority to create a transmission procurement body. If the Minister does not create a separate entity, the Minister must direct the Energy Board to administer the procurement. The section also clarifies that utilities may bid in those processes but cannot receive exclusive development rights outside the competition.
Exemptions, transparency and reporting for procurement
Sections 6 through 8 define narrow exemptions (emergency reliability work, technical necessity tied to the incumbent, or impracticality/public interest findings), require written decisions explaining exemptions, and impose transparency obligations: procurement outcomes and rationales must be publicly posted within 60 days, and the administering body must deliver an annual report to the Minister summarizing procurement decisions and construction costs. These clauses create both procedural safeguards (written reasons) and public accountability mechanisms (timely publication and annual summaries).
Delegated regulation and funding
Sections 9 and 10 grant the Governor in Council power to make regulations about the procurement authority, dispute resolution, definitions and other implementation details, and state that any money required must be appropriated by the Legislature. This preserves executive flexibility to set detailed procurement or dispute rules later, but it also leaves open whether the province budgets specific funding for the new procurement authority or expanded Board duties.
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Explore this topic in Codify Search →Who Benefits and Who Bears the Cost
Every bill creates winners and losers. Here's who stands to gain and who bears the cost.
Who Benefits
- Residential and small‑business ratepayers — greater scrutiny of equity costs and public procurement could lower the portion of project costs recovered as higher equity returns, reducing long‑term rates or limiting rate increases tied to capital projects.
- Independent transmission developers and project financiers — mandatory competition creates new market opportunities to build and own large transmission assets in Nova Scotia that were previously the exclusive domain of the incumbent utility.
- Procurement and competition advocates (including ratepayer groups and some policymakers) — the bill institutionalizes transparency and open bidding, supplying public records and annual reports that make comparisons and oversight easier.
Who Bears the Cost
- Regulated utilities — they face reduced recoverable returns when they choose higher equity financing, must reveal treasury decisions in public filings, and may lose exclusive development opportunities on high‑value transmission projects.
- The Energy Board or a new procurement authority — the regulator will incur additional staff time, technical procurement capability and possibly transaction costs to run competitive processes and to implement the ROE methodology.
- Provincial government / taxpayers — if the Minister establishes and funds a new procurement authority, the province will carry start‑up and ongoing administrative costs; there may also be transitional costs if projects are delayed or restructured during procurements.
Key Issues
The Core Tension
The bill balances two legitimate goals that pull in opposite directions: protecting ratepayers from paying higher equity returns and opening transmission to competitive discipline, versus preserving utilities’ ability to raise capital reliably for long‑lived grid investments. Tightening returns and mandatory bidding can lower costs but may increase financing fragility, complicate project delivery, or shift costs elsewhere — a trade‑off with no single correct answer.
The bill sketches mechanics without the arithmetic: it requires the Board to reduce allowed ROE when a project uses more equity than the deemed ratio, but it leaves the formula and calibration to later guidelines or regulations. That opens significant discretion: small methodological choices will determine whether adjustments are modest or punitive, which in turn shapes utilities’ financing choices, bond covenants and credit ratings.
The Bill’s public interest standard for exemptions is also thinly defined, exposing procurement outcomes to challenge on procedural or substantive grounds.
The procurement mandate reduces barriers to entry, but it risks adding delay and transaction costs to essential grid upgrades. Splitting a transmission upgrade into multiple smaller contracts could be used to avoid the monetary threshold; conversely, bidders unfamiliar with local interconnection issues may underbid or propose designs that later require costly changes.
Confidentiality rules for bids versus the 60‑day public disclosure requirement will require careful drafting to protect commercially sensitive information while preserving transparency. The bill also does not address how existing contracts, joint ownership arrangements or federal regulatory intersections (for interprovincial lines) will be treated, leaving room for legal and jurisdictional friction.
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