Utility Rate Normalization and Credit Resilience: Nova Scotia Power’s Strategic Settlement as a Blueprint for Sustainable Energy Investment

The global energy transition is reshaping utility business models, demanding a delicate balance between affordability, reliability, and decarbonization. Nova Scotia Power’s recent rate settlement offers a compelling case study in how regulated utilities can navigate this complex landscape. By aligning rate normalization with long-term grid investments and climate goals, the utility demonstrates a model for sustainable energy investment in a decarbonizing world.

Rate Normalization: Balancing Affordability and Investment

Nova Scotia Power’s 2026–2027 rate settlement proposes an average 2.1% annual increase across all customer groups, a modest adjustment relative to historical trends. From 2014 to 2022, residential rates rose by an average of 1.2% annually, outpacing inflation while funding renewable energy contracts and grid modernization [2]. The current settlement extends this disciplined approach, allocating over $1.3 billion for reliability upgrades—storm hardening, vegetation management, and battery storage—over five years [3]. These investments are critical for integrating 1,000 MW of wind energy and supporting Nova Scotia’s 80% renewable target by 2030 [1].

The settlement’s success hinges on its collaborative design. By engaging customer advocates and regulatory bodies, Nova Scotia Power has embedded affordability safeguards, such as community engagement programs and targeted support for low-income households [3]. This stakeholder alignment reduces political and regulatory risk, a key factor in maintaining credit resilience.

Credit Resilience: A Foundation for Sustainable Investment

Credit rating agencies underscore Nova Scotia Power’s financial stability. S&P Global Ratings affirmed its ‘BBB-’ long-term credit rating in April 2025, citing a stable outlook and strong equity thickness (40% for rate-making purposes) [1]. Morningstar DBRS similarly confirmed its BBB (high) rating, emphasizing the utility’s predictable revenue streams and prudent cost management [1]. These ratings reflect confidence in the utility’s ability to fund decarbonization while maintaining service reliability.

The utility’s historical discipline in rate stability further bolsters its credit profile. From 2014 to 2022, it avoided rate shocks by aligning increases with inflation and fuel cost trends [2]. This approach has preserved customer trust and investor confidence, even as capital expenditures rise to meet climate mandates.

Decarbonization as a Strategic Lever

Nova Scotia Power’s grid investments are not merely operational upgrades—they are strategic enablers of decarbonization. The Green Choice Program, which adds six new wind farms by 2028, will increase renewable energy by 19% and cut emissions by 8% [3]. These projects, partially funded by a $1.2 billion capital investment, also create local jobs, aligning environmental and economic goals.

Battery storage and hybrid generation (e.g., natural gas with hydrogen potential) further illustrate the utility’s adaptability. These technologies address intermittency risks in renewable energy, ensuring grid reliability as wind and solar capacity grows [1]. Federal and provincial grid modernization funding amplifies the impact of these investments, reducing the burden on ratepayers [3].

Conclusion: A Model for the Energy Transition

Nova Scotia Power’s rate settlement exemplifies how regulated utilities can harmonize affordability, credit resilience, and decarbonization. By securing stakeholder buy-in, maintaining disciplined cost management, and leveraging regulatory frameworks, it creates a replicable blueprint for utilities worldwide. As climate goals tighten and energy systems evolve, such strategic normalization will be essential for sustaining investor confidence and public trust.

Source:
[1] The Path to 2030: Nova Scotia's clean energy future, https://nspower.ca/about-us/articles/details/articles/2024/03/01/the-path-to-2030-nova-scotia-s-clean-energy-future
[2] Rate Stability Plan | Regulatory Initiatives | Nova Scotia Power, https://nspower.ca/about-us/regulations/rate-stability-plan
[3] 2022-2024 General Rate Application| Nova Scotia Power, https://nspower.ca/about-us/regulations/rate-application