NB Power s 10-Year Plan Fiscal Years 2016 to 2025

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2 NB Power s 10-Year Plan Fiscal Years 2016 to 2025 Contents Highlights... 3 Corporate Overview... 4 Corporate Strategy... 5 Integrated Resource Plan Year Revenue Requirement... 9 In-Province Load Capital Plan Conclusion Appendix A - Balance Sheet

3 Highlights NB Power s three key strategic objectives are Perform within the top 25 per cent ( top quartile ) of utilities in North America Reduce debt by $1 billion and achieve an 80/20 debt to equity ratio by 2021 Pursue a new strategy of reducing and shifting in province demand for electricity that will defer the need for new investments in generation and optimize the system to capture operating and fuel savings By executing on these strategies, NB Power will continue to provide value to the Province of New Brunswick and its customers and position itself as a North American leader in innovation in our industry. These strategies will also enable NB Power to achieve its vision of Sustainable Electricity electricity that is reasonably priced, socially responsible and environmentally friendly. Through continuous improvement, rigorous cost management, identifying new revenue streams and gradual rate increases of two per cent a year NB Power will reduce debt by over a $1 billion and achieve its targeted debt to equity ratio of 80/20 by This is an important outcome that provides our customers with low and stable rate increases and gives NB Power the flexibility to respond to changing markets and technologies and to invest in new sources of generation, in particular options to replace Mactaquac Hydro Generating Station which is nearing its end of life. Financial highlights of the 10-year plan are provided below. Figure 1: Financial highlights 1 Net of customer contributions A forecasted Balance Sheet for the 10-year period is provided in Appendix A. 3

4 Corporate Overview NB Power is a Crown Corporation and an agent of the Crown owned by the Province of New Brunswick and is the largest electric utility in Atlantic Canada. NB Power has five divisions: Generation & Business Development, Nuclear, Transmission & System Operator, Customer Service & Distribution and Corporate Services. New Brunswick Energy Marketing Corporation, a wholly-owned subsidiary of NB Power, conducts energy trading activities in markets outside New Brunswick, both to purchase electricity to serve load in New Brunswick and offer service outside New Brunswick, and to market excess energy generated in New Brunswick to other jurisdictions. NB Power has one of the most diverse generating systems in North America, consisting of 13 nuclear, hydro, coal, oil and diesel powered stations, as well as power purchase agreements from various privately owned renewable and natural gas-powered facilities in New Brunswick. In addition, NB Power maintains more than 6,800 kilometers of transmission lines and over 20,000 kilometers of distribution lines in the province. NB Power is committed to providing safe, reliable and efficient power to its more than 397,000 direct and indirect customers in New Brunswick. Mission NB Power s corporate mission is to Proudly Serve Our Customers by Being Top Quartile. Whether or not employees directly interact with customers, they each have a role to play in keeping the lights on for New Brunswickers. NB Power s more than 2,300 employees who work in generating stations, offices and in operations around the province are dedicated to customer satisfaction and show this in many ways, including Commitment to public safety Emergency preparedness and planning Working to keep rates as low as possible through innovation and efficiencies Maintaining high levels of reliability Educating customers and youth about conservation, energy efficiency and smart energy habits Developing positive relationships in local communities, with key customer accounts and First Nations Planning for tomorrow to meet the future energy needs of New Brunswickers in a sustainable way Vision NB Power s vision is Sustainable Electricity. The Canadian Electricity Association (CEA) defines sustainable electric utilities as those pursuing innovative business strategies and activities that meet the needs of members, stakeholders and the communities in which we operate today, 4

5 while protecting and enhancing the human and natural resources that will be needed for the future. 1 At NB Power, sustainability is factored into every decision and every plan for the future. It s about balancing efforts to deliver competitively priced electricity in a socially responsible way while maintaining long-term corporate health. Corporate Strategy The Province of New Brunswick has given NB Power the responsibility for delivery of the following Ensuring low and stable electricity prices Improving energy security through diversity of supply Reliability of the electrical system Ensuring environmental responsibility Implementing a debt management plan to achieve an equity level of 20 per cent NB Power s board and management developed a long-term strategic plan as a foundation for its business plans, investment decisions and strategic initiatives. The Strategic Plan includes three key strategies. Strategy One NB Power will perform within the top 25 per cent ( top quartile ) of utilities in North America. By implementing commercial practices, NB Power will achieve cost reductions and best practices to help ensure cost-effective electricity generation. Continuous business process improvement techniques will help NB Power leverage cost savings as it strives to excel in operations and customer service and meet its debt obligations. Comparing itself to the top quartile utilities in North America will allow NB Power to identify opportunities to reduce costs and chart a path to become a top quartile costeffective producer and distributor of electricity. Exploring collaborative opportunities such as community-based projects and independent power production to meet our renewable obligations at least cost and leverage our assets to the benefit of our customers. Strategy Two Reduce debt by $1 billion and move towards an 80/20 debt to equity ratio by 2021 to ensure that NB Power is in a financial position to invest in new generation that will ensure stable rates for New Brunswick. Debt reduction targets will be achieved through tightly managed capital spending, stringent cost controls and established revenue and earnings targets

6 Putting in place an investment governance process to ensure investments are prioritized in relation to the strategic plan will ensure the maximum benefit of these investments. Strategy Three Invest in technology, educate customers and incent consumption that will reduce and shift demand (RASD) for electricity and ultimately defer the next major generation investment. NB Power has an opportunity to reduce the peak in winter and the daily peaks during the coldest days of the year. The delivery of specific RASD measures will be based on independent study of commercially viable electricity efficiency technologies or measures, as well as peak load reduction and fuel-switching options. The three major streams of RASD activity are o Customer-focused conservation and energy efficiency efforts that will help customers mitigate the effect of future rate increases. o Investments by the utility in advanced infrastructure management capabilities as well as information and communication technologies commonly referred to as the smart grid that have the potential to reduce demand and energy requirements. o Improvements to operating processes and core capabilities that will improve the utility s ability to manage current and future infrastructure. These strategies will allow NB Power to replace generation as needed between 2025 and 2038, take advantage of future options and operate as efficiently as possible. As well, customers will have the opportunity to reduce their energy costs by changing their consumption patterns. It will take a number of years to execute these three key strategies. NB Power develops annual business plans that take a shorter-term view, with more detailed strategic objectives, shorterterm targets and initiatives, all of which support the three key long-term strategies. These shorter-term strategies are outlined in Figure 2, which is used as an internal tool to obtain focus and alignment throughout the organization. 6

7 Figure 2: NB Power strategy map Integrated Resource Plan NB Power s Integrated Resource Plan (IRP) is a long-term plan that considers economics, the environment, long-term societal interests and various sensitivities of these features. The most recent IRP was approved by the Shareholder and filed with the Energy and Utilities Board (EUB) in July The development of the IRP required in-depth analysis in three key areas 1. Energy efficiency and demand considerations (also known as RASD) as well as supply considerations 2. Reliability and security of supply 3. Policy and regulatory considerations The IRP included input from government departments and agencies, municipal utilities as well as various customer stakeholders. The IRP analysis is part of a continual process that requires periodic load and resource updates as conditions change and evolve over time provincially, nationally and even globally. The IRP presents the least-cost expansion plan encompassing both supply and demand options to meet forecasted NB Power in-province electricity requirements over a 25-year horizon. The Integrated Expansion Plan shown in Figure 3 reflects the following 7

8 Energy efficiency, demand management and demand reduction is vital to the IRP. The IRP has included an aggressive but cost-effective RASD schedule that assumes a savings of approximately 600 MW and 2 TWh by This electricity reduction potential provides a net savings of approximately $440 million to NB Power and to New Brunswick ratepayers over the study period. To encourage development of locally owned small-scale renewable projects, 75 MW of cost-effective community energy resources are targeted by 2020 to help meet the 40 per cent Renewable Portfolio Standard (RPS) requirement. The current Mactaquac Hydro Generating Station s capacity and energy will no longer be available after 2030 because of the ongoing effects of Alkali-Aggregation Reaction (AAR) which is causing the concrete in the structures to expand. For the purpose of the IRP exercise, it was assumed that the capacity and energy is replaced, but with no assumption as to the replacement option or costs. Further study is underway to determine the optimum replacement supply and costs and to fully assess the economics of all options for this replacement. 2 Millbank and Ste. Rose life extension is the most economic choice for continued peak load requirements in response to their scheduled retirement in After the addition of new resources to meet the RPS and the Mactaquac Hydro Generating Station replacement option, as well as Millbank and Ste. Rose life extension, no new capacity is needed to meet peak demand until after Greenhouse gas levels to meet in-province load remain below the 2005 historical level of approximately five million tonnes. 2 Although a cost estimate was not required in the IRP one must be included in this 10-year financial forecast in order to properly reflect forecasted capital spending and debt levels. Refer to the Capital Plan section for additional information. 8

9 Figure 3: Integrated expansion plan In Service Date Integrated Plan Scheduled Retirements 2014 RASD Program Starts Here MW Community Energy 2026 Grand Manan (-29 MW) 2027 Bayside PPA (-285 MW) 2030 Mactaquac Replacement Grandview PPA (-90 MW) Mactaquac (-668 MW) 2031 Millbank/Ste. Rose Life Ext. Millbank/Ste. Rose (-496 MW) 2032 Twin Rivers PPA (-39 MW) 2038 In summary, the strategic direction recommended over the immediate term is Initiation of a community energy program to contribute to the RPS Continuation of RASD programs with increased development in the long-term Continuation of technical work with regards to new generation options that might be viable in New Brunswick, especially options from renewable resources 10-Year Revenue Requirement In the normal course of operations, NB Power s net earnings can vary from forecasted results due to changes in factors such as fuel and purchased power prices, foreign exchange, weather and hydro flows. NB Power used the following key assumptions in preparing this financial forecast. 9

10 Figure 4: Key assumptions 1 Bank of Canada, July 16, Provincial Government s Economic and Fiscal Outlook released in June From Bloomberg, July 16, Information on some of the key factors that could impact actual results from the forecast presented is provided below. Point Lepreau capacity factor Fuel and purchased power costs could differ materially if the assumed Point Lepreau capacity factors are not achieved. Export contracts The forecast assumes that NB Power will renew certain existing standard offer service contracts as the contracts expire. Failure to be the successful bidder on these contracts will impact out-of-province gross margin. Market conditions Volatility in near-term fuel and purchased power prices and the Canadian dollar is largely managed through NB Power s financial hedging program. In the mid to longterm, NB Power is subject to changes in commodity prices and exchange rates. Natural gas supply Uncertainty exists around the future source of supply and the related pricing of natural gas. The forecast is based on current estimates for the pricing of natural gas. Variations in the actual supply and price could vary from assumptions and result in fluctuations in fuel and purchased power costs. Economic conditions 10

11 If future load growth falls short of the forecast or if there are unanticipated industrial closures this could materially impact forecasted in-province revenue. Used nuclear fuel management and nuclear decommissioning Liability and funding estimates for used fuel management reflect current engineering estimates. These estimates include cash flows which extend out over 150 years and are therefore subject to change. Revised estimates for used fuel management costs could impact used fuel management costs and funding requirements. Air emission costs The forecast assumes that air emission penalties will not come into effect during the forecast period and will therefore not impact results during the forecast period. Implementation of air emission penalties during the forecast period could materially impact fuel and purchased power costs. Hydro generation The forecast is based on long-term average hydro flows. When actual flows are below anticipated levels, other more expensive fuels are used to account for the shortfall, thereby increasing generation costs in province and reducing energy available for export. Conversely, when flows are higher than anticipated, hydro generation reduces the use of expensive fuels and decreases generation costs. In-year hydro flows that differ substantially from long-term average can materially impact fuel and purchased power costs. Accounting test for recovery of book values for heavy fuel oil-fired plants Generally Accepted Accounting Principles require periodic evaluation of the utilization of significant fixed assets and the ability of revenues to recover related capital costs. Fixed assets that are not contributing to generation of revenue may require write-down or write-off of their net book values, negatively affecting forecast earnings. Regulatory framework The new Electricity Act, which came into effect October 1, 2013, includes a new regulatory framework that will have all of NB Power subject to regulatory oversight by the Energy and Utilities Board (EUB). NB Power will be required to seek approval of its rates annually starting with fiscal 2015/16, regardless of the amount of rate change. The forecasted annual rate increases are subject to EUB approval. Mactaquac project Projected net earnings are subject to change based on a review of the options for the Mactaquac Hydro Generating Station. The accounting implications of each option are still being determined. There is a possibility that if a selected option has costs associated with dismantling and/or decommissioning, the costs could be recovered over an appropriate period of time from rate payers. 11

12 System reliability and risks The forecast is based on specific assumptions around planned plant outages and interconnection opportunities with neighboring utilities. Any unplanned interruption of plant facilities or interconnection points may result in additional costs to NB Power for fuel and purchased power. International Financial Reporting Standards (IFRS) NB Power must ensure compliance with IFRS, with an effective date of implementation of April 1, 2015 (with a comparative year of April 1, 2014). Estimates have been included in the forecast for the equity impact for the period April 1, 2014 to March 31, Estimates of net earnings impacts have also been included for the forecast period. The conversion project team is currently re-assessing the impacts to NB Power and further impacts to equity and earnings are likely. Forecasted Revenue Requirement NB Power s costs are driven by the cost of fuel and purchased power, costs required to run and maintain the utility, capital investments and recovery of regulatory deferral account balances. NB Power s forecasted revenues, expenses and net earnings for the 10-year period ending in 2025 are presented in Figure 5. Figure 5: Forecasted revenue requirement Sales of Power In-Province Load in New Brunswick is forecasted to grow minimally during the 10-year period. Normal growth is partially offset by the impact of Reduce and Shift Demand and efficiency programs. These programs are expected to reduce energy consumption in the Province by approximately 820 GWh annually by

13 Annual rate increases of two per cent are necessary to achieve the targeted capital structure of 20 per cent equity by Post-2022 rate increases are assumed to be one per cent annually pending decisions related to funding the Mactaquac Hydro Generating Station Replacement project. See the In-Province Load section for additional information on load growth and rate increases. Sales of Power Out-of-Province NB Power takes advantage of its geographical location and diverse generation mix to sell surplus energy into neighboring jurisdictions such as Prince Edward Island, Nova Scotia, Quebec and New England. Out-of-province sales benefit in-province customers by keeping rates lower than they otherwise would be. The forecast assumes that all excess capacity is used to export energy when it is economic to do so, that is, when market prices are forecasted to be higher than the cost to supply. Certain existing Standard Offer Service contracts are assumed to be renewed for the forecast period. The forecast does not reflect any new Standard Offer Service contracts or other sales arrangements. Miscellaneous Revenue Miscellaneous revenue is comprised mainly of revenue derived from water heater rentals, transmission tariff, connection and surcharge fees, pole attachment fees and third-party work performed for other utilities. Currently, miscellaneous revenues are forecasted to be fairly constant over the 10-year period. As NB Power begins to roll out new products and services the revenue forecast will be adjusted. Fuel & Purchased Power Fuel expense reflects the cost of oil, coal, petroleum coke and diesel fuel used in NB Power s thermal stations as well as the cost of uranium used at the Point Lepreau Generating Station. NB Power purchases energy and capacity under long-term purchase agreements from wind, hydro, biomass and natural gas generators in the province as well as through market electricity purchases from utilities in neighbouring jurisdictions. Fuel & purchased power expenses over the forecast period are driven by In-province load growth and export sales volumes Escalating commodity and market prices Bi-annual maintenance outages at Point Lepreau Generating Station Operations, Maintenance & Administration (OM&A) OM&A includes labour, materials, hired services, travel, insurance and other costs associated with operating and managing the utility. NB Power has recently undergone a process improvement and efficiency exercise that has resulted in $30 million of cost savings. To reflect the fact that a culture of continuous improvement is developing the 13

14 forecast for 2015/16 includes another $10 million in permanent cost reductions with an additional $15 million of reductions in 2016/17. Generally, OM&A expense is forecasted to increase annually by inflation, which is forecasted at two per cent. Year-over-year swings reflect bi-annual maintenance outage cycles for Point Lepreau Generating Station. Amortization & Decommissioning Expense Amortization expense is driven by NB Power s investment in assets. The amortization of assets is based on useful service lives and the straight-line method of amortization is used for all assets. Amortization expense increases over the forecast period due to ongoing investments in generating stations and distribution and transmission infrastructure. Decommissioning expense reflects charges to income to account for the future decommissioning of generating stations and used nuclear fuel at Point Lepreau Generating Station. Taxes NB Power is subject to property tax, utility tax and right of way tax. Taxes are assumed to escalate by inflation during the forecast period. Finance Charges NB Power uses a combination of long and short-term debt to finance its operations and all principal and interest is payable to the Province of New Brunswick. NB Power incurs a debt portfolio management fee (0.65 per cent of debt outstanding at the end of the prior fiscal year) that is also payable to the Province of New Brunswick as a result of these borrowing arrangements. Other components of Finance Charges offset interest expense and the debt portfolio management fee. These include Earnings on nuclear trust funds Earnings on sinking funds related to long-term debt issues Interest during construction (IDC), which capitalizes the interest expense related to the funds expended on capital projects not yet in service (work-in-progress) Interest added to regulatory deferral accounts During the forecast period, both long-term and short-term interest rates are expected to increase, resulting in higher interest expense. This cost increase is offset by a reduction in debt levels (excluding the debt requirements for the Mactaquac replacement project) and higher nuclear trust fund and sinking fund earnings. 14

15 Regulatory Deferrals Regulatory Deferral Point Lepreau Refurbishment Pursuant to the Electricity Act, increased costs incurred during the Point Lepreau Generating Station refurbishment outage were accumulated as a regulatory asset and are being amortized and recovered from customers over the life of the refurbished Station. Regulatory Deferral PDVSA 3 Settlement In August 2007, the EUB approved the implementation of a regulatory deferral account to enable the savings associated with the lawsuit settlement with PDVSA to be provided to customers on a levelized basis over a period of 17 years. The deferral is being amortized over the remaining life of Coleson Cove Generating Station (2030). In-Province Load During the summer of 2014, NB Power completed a 10-year Load Forecast for the 2016 to 2025 period. 4 The key assumptions used in this forecast include Average Gross Domestic Product growth of 1.8 per cent annually based on the Provincial Government s Economic and Fiscal Outlook released in June 2014 Known major industrial additions and load changes based on account manager input and public announcements The addition of approximately 15,000 new year-round residential customers by 2025 based on historical customer growth trends and population projections Normal weather (4,666 heating-degree-days) based on a rolling average using the latest 30 years Estimates of energy reduction from NB Power s RASD program, including the LED street lighting replacement program, and Efficiency New Brunswick programs Penetration of electric space heating, water heating and air conditioning based on NB Power s 2013 Energy Planning Survey of residential customers Figure 6 shows the total forecasted in-province load and year-over-year growth. 3 Petróleos de Venezuela, S.A. 4 The Load Forecast used for this 10-Year Plan was approved in July The Load Forecast used in the 2014 Integrated Resource Plan was approved in October The July forecast reflects lower industrial load in the first three years of the plan but higher industrial load in the later years. 15

16 Figure 6: Forecasted in-province load RASD and efficiency programs are forecasted to reduce energy consumption in the province by 820 GWh by The impact this reduction has on future supply requirements in the IRP is illustrated in Figure 7. Figure 7: Impact of RASD 16

17 In-Province Revenue Pending the outcome of a Class Cost Allocation Methodology Review by the EUB, forecasted annual rate increases are applied equally to all customer classes. Although future rate increases may be different by rate class, the overall increase will equal the announced rate increase (e.g., 2 per cent). Figure 8 shows the forecasted annual rate increases by customer class and the resulting revenue, based on the sales projections reflected in Figure 6 above. Figure 8: Forecasted annual rate increases and in-province revenue Capital Plan NB Power is forecasting general capital expenditures, on average, of $197 million per year over the next 10 years. These investments will be used to refurbish, upgrade and expand the generation, transmission and distribution assets that create and deliver electricity to homes, businesses and industry within the province. NB Power is also investing in technologies in support of the RASD initiative. Work is currently underway to evaluate end-of-life options for Mactaquac Hydro Generating Station and a provision for this has been reflected in the capital plan. A breakdown of forecasted spending is provided in Figure 9. 17

18 Figure 9: 10-year capital plan 1 Net of customer contributions Mactaquac Hydro Generating Station Replacement A major capital project being contemplated that may begin during the 10-year forecast period is the replacement of Mactaquac Hydro Generating Station. The expected end of service life for the Station is The Station produces about 1.6 TWh annually and can produce 672 MW at full capacity. Since it was constructed in the late 1960 s, the Station has provided New Brunswickers with low cost, reliable, emission free energy. In the 1980 s, it was determined that a condition known as Alkali Aggregate Reaction (AAR) is causing the concrete in the structures to expand. The growth rate has been steady and sustained, with no sign of slowing down or exhausting itself. NB Power has begun the process of evaluating options for replacing the Station s energy and capacity. The three options being considered are Repower by replacing the spillway and powerhouse No power and maintain the head pond by replacing the spillway but not the powerhouse Remove the spillway, powerhouse and earthen dam All three options will require a minimum spend of approximately $2 billion dollars. Option one will require an additional investment estimated at $1 to $3 billion but will ensure power will be generated going forward. Option three could require an additional significant investment. NB Power will explore alternatives to fund, in advance, the minimum cost for all three options. The results of this decision and its impact on rates will be reflected in future updates of the 10-year plan. Studies are underway to assess the economic, environmental and social implications of each of the three options. For planning purposes, NB Power is estimating timelines using the option that will take the longest to implement (repower) while respecting the anticipated 2030 date for end of service. With that in mind, a preferred option is expected to be recommended to the Province of New Brunswick in

19 Pending the selection of the preferred option, the estimated capital cost of repowering the Station by replacing the spillway and powerhouse is being used as a proxy in the 10- year capital plan. Of the three options, repower requires the earliest start of substantial work and therefore has the earliest substantial capital expenditures. While the costs listed above will be factored only if this option is chosen, excluding the potential for this expense in this capital plan could risk a major understatement of future capital expenditures. Reduce and Shift Demand (RASD) Program The RASD program that is reflected in the capital plan is a collection of initiatives and projects that are needed to fulfil the strategic objective to reduce and shift demand. As noted earlier, RASD can be broken down into three major streams of activity. The first is customer-made conservation and energy efficiency efforts. The second is investments made by NB Power in the infrastructure, information and communication technologies commonly referred to as the Smart Grid that have the potential to reduce demand and energy requirements. The third stream is improvements to operating processes and core capabilities that will improve the utility s ability to manage current and future infrastructure. NB Power has entered into a multi-year agreement with Siemens Canada to integrate Smart Grid technology into the province s electrical system. This agreement will allow NB Power to continue to offer its customers stable rates by modernizing the provincial electrical system. NB Power and Siemens have developed a comprehensive Smart Grid deployment program. The program is designed so that all of the activities become building blocks for future value creation. Each section of the program can stand alone, providing some flexibility in the timing of their delivery. NB Power will measure the progress of the RASD program through a number of Key Performance Indicators (KPIs). By automating and shifting electricity usage to times of day when there is less overall need, NB Power will be able to use lower cost generating assets to meet its requirements and delay the need to build new generating stations in the future. Implementing Smart Grid programs will enable customers to better control and manage their energy usage. Customers will have more choices about how and when they use their electricity in the future through new technologies, including Smart communicating thermostats Energy smart appliances Self-serve options for energy shifting Information dashboards Modern energy thermal storage devices 19

20 General Capital Expenditures All of NB Power s generating stations were built decades ago and require continuous investment to ensure safe and reliable operation. Similarly, continuous investments are required in the transmission and distribution system to ensure reliability, the safety of employees and the public and to meet customer growth in the province. Annual expenditures on information technology hardware and software, communications equipment, vehicles, tools and equipment is necessary to support day to day operations. In addition to capital investments made to keep the lights on, NB Power also considers capital investments that are intended to provide economic benefits, that is, to reduce operating costs, increase revenues or a combination of both. There are many types of capital projects and programs but they can be categorized as follows: Asset reliability projects include generation facility reliability projects, substation and terminal development projects, planned transmission and distribution system reliability and upgrade projects, vehicle purchases, tools and equipment and property improvements Obligation to serve projects include customer demand work (thousands of smaller dollar work orders), water heater purchases and a portion of planned system improvements that are related to load growth, joint use (i.e., used by other utilities in the province) and road shift projects Safety and regulatory compliance projects include replacement of deteriorated assets which are a potential safety risk and projects that are required to maintain operating licenses (Point Lepreau Generating Station) or meet regulatory requirements Asset optimization/productivity projects include technology projects or other improvement projects that typically have a payback period and provide benefits and savings to the organization Conclusion NB Power s future is bright. By striving to position the utility as a North American leader in innovation in our industry, aggressively controlling costs, and focusing on customer service, safety, reliability and the environment, NB Power will achieve its vision of Sustainable Electricity. NB Power will be able to reduce debt by $1 billion and move towards an 80/20 debt to equity ratio by 2021 while keeping annual rate increases at or below two per cent. This slow and steady approach to rates is key to a vibrant provincial economy. 20

21 NB Power will be preparing a 10-year plan annually, reflecting changes in market conditions, growth and load, capital plans and financial and operating assumptions. The 10-year plan will be a key platform for communicating plans and progress to stakeholders in the Province. 21

22 Appendix A - Balance Sheet The forecasted Balance Sheet is provided in Figure 10. Figure 10: Forecasted balance sheet 22