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Closing Arguments Regarding Fuel Adjustment Mechanism

HALIFAX, Nova Scotia, November 13, 2007: Closing arguments will be presented today to the Nova Scotia Utility and Review Board regarding an agreement between Nova Scotia Power and several stakeholders regarding implementation of a Fuel Adjustment Mechanism (FAM). The following stakeholders are party to the agreement: Stora Enso Port Hawkesbury, Bowater Mersey Paper Company, the Municipal Electric Utilities Co-operative of Nova Scotia, Canadian Manufacturers and Exporters, and several major employers in the province known before the UARB as Avon Valley et al.

Highlights of the FAM agreement include:

• Incentive – if fuel costs increase or decrease up to $50 million dollars in any given year, 90 per cent of that amount will be passed on to Nova Scotia Power’s customers. 10 per cent of the additional cost or savings is the responsibility of the company, to a maximum amount of $5 million annually. Fuel savings or cost changes in excess of $50 million annually accrue to customers.
• Details for reporting fuel information will be developed in 2008.
• Beginning January 1, 2009, Nova Scotia Power’s return on equity would be set at 9.35 per cent, with an allowed earnings band of 9.1 to 9.6 per cent. No other change to ROE for the first two years of the FAM being in place.

Pending approval by the Utility and Review Board, the Fuel Adjustment Mechanism would be in place January 1, 2009.