Nova Scotia Power / Emera - the endless loop explained

If you agree to provide a regulated monopoly (such as Nova Scotia Power) with a fiscal Rate of Return that exceeds what the market actually expects, then it will become an endless loop of rate increases.

Based on the news reports, it appears that they've negotiated a 9.6% Rate of Return. Each time they achieve this, then the Company's worth will go up to compensate, which reduces the Rate of Return back to something that market actually expects.

...And then the cycle starts again.

BASICally: