2022 ISO Tariff Modernization Application Arguments

In Proceeding 27864, the Alberta Electric System Operator (AESO) and interveners submit their arguments before the Commission for and against the AESO’s 2022 Independent System Operator (ISO) Tariff Modernization Application. In general, intervenors oppose the AESO’s proposed revisions to System Access Service Requests (SASRs) and Generating Unit Owner’s Contribution (GUOC) policies. However, intervenors do not oppose the AESO’s revisions to Transmission Must Run (TMR), cost allocation for transmission line relocations, or Payment in Lieu of Notice (PILON), which we summarize in our previous article. Therefore, this article only discusses the SASR and GUOC arguments.

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Distribution Exemption Application

ATCO Electric and Sustaintech have submitted Evidence and IRs in the proceeding on Sustaintech’s application for distribution exemption (ID 27633).

Readers will recall from a previous update that Sustainitech and ARC enterprises (together, SACO) are applying for a distribution exemption under the Hydro and Electric Energy Act (HEEA) which would allow a gas processing plant to supply energy to an adjacent site without qualifying as a distribution system.

ATCO electric intervened in the proceeding raising concerns about the application’s compatibility with the Electric Utilities Act (EUA), specifically the requirement that persons using electricity obtain that service from the distribution company in whose service area they are located (Sec, 101)ATCO subsequently submitted intervener evidence and responded to information requests.

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Directions for Fortis’s Streetlight Investment

In Proceeding 27682, the Alberta Utilities Commission (the Commission) issues its decision regarding the terms and conditions (T&Cs) of FortisAlberta Inc. (Fortis) that pertain to its streetlight investment. In December 2021, Fortis sought the Commission’s input to determine whether Fortis should pay its streetlight investment to the developer or the municipality if the parties cannot agree on who is entitled to the payment. In Decision 27067-D01-2022, the Commission directed that the streetlight investment be paid to the municipality if the developer and municipality are in dispute. The Commission further directed Fortis to clarify the streetlight investment entitlement in its T&Cs.[1]

Fortis made its compliance filing. However, the Commission found that Fortis only complied with one of the three directions. Nevertheless, the Commission does not require Fortis to submit another compliance filing because the Commission will hear issues concerning streetlight investment in Proceeding 27658.[2]

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Arguments on ATCO’s Disposal of its 2018-2021 Transmission Deferral Accounts

In Proceeding 26573, ATCO Electric Ltd. (ATCO) proposed to remove $10.8 million of what it deemed as “above fair market value” costs related to matting, brushing, and hydrovac services for the Jasper Interconnection Project (Jasper Project). The proposed adjustment would reduce the project cost from $35.9 million to approximately $25.1 million. However, the original cost estimate for the project was $9.2 million.[1]

The Alberta Utilities Commission (the Commission) reopened this deferral account application after completing an investigative process that revealed ATCO sole-sourced its matting, brushing, and hydrovac contract to Backwoods Contracting Ltd. (Backwoods) at above-market rates. The $10.8 million is what ATCO estimates are the above-market amount spent on the project. In this proceeding, the CCA and the UCA present their arguments before the Commission on whether ATCO’s proposed $10.8 million reduction is reasonable. 

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ATCO Electric Transmission 2023-2025 Tariff Application Arguments

In Proceeding 27062, ATCO Electric Transmission (ATCO) submit its 2023-2025 general tariff application to the Alberta Utilities Commission (the Commission) for approval. In December 2022, all parties agreed to a negotiated settlement, which the Commission approved in January 2023. However, the settlement excluded the three following matters:

  • A depreciation adjustment related to the Jasper Palisades Isolated Generation Plant.
  • Modification to the variable pay program.
  • Vegetation management reserve removal.

The intervening parties submit their oral arguments that address these three remaining issues.

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FortisAlberta EV Charging Pilot Project

On January 16, FortisAlberta launched an Electric Vehicle Charging pilot project.  Fortis is looking to sign up to 600 vehicles throughout its service territory. Initially the project will simply gather data on how and when EV owners charge their vehicles. Latter stages will include managed charging.

FortisAlberta included costs associated with this, and other demand side management pilot projects, in their 2023 Cost Rebasing Application. In Decision 26615-D01-2022, the Commission approved the pilot project, but asked for additional information, included specific goals and measurable key performance indicators.

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Residential Standards of Service and Maximum Investment Levels (MILs) Proceeding Issues List

In Proceeding 27658, the Alberta Utilities Commission (the Commission) finalizes the issues list for addressing standards of service and maximum investment levels for residential services. In September, the Commission put forward a preliminary list of issues for consideration. The Commission received comments on the preliminary issues from ATCO Electric Ltd. (ATCO), EPCOR Distribution & Transmission Inc., ENMAX Power Corporation, FortisAlberta Inc., the Alberta Federation of Rural Electrification Associations, the Office of the Utilities Consumer Advocate, and Melcor Developments Ltd. The Commission developed the following list based on these submissions.[1]

Issues List Summary[2]

  • The goal of setting MILs.
  • Whether MILs should be eliminated.
  • If MILs are not eliminated, determining the types of costs that should be eligible for MILs.
  • Deciding whether the prior MILs principles referenced in Decision 2010-309 are relevant and result in reasonable rates.
  • The scope of work that developers expect completed in exchange for MILs.
  • The electrical infrastructure the developer or homeowner is responsible for installing.
  • The average cost of providing electrical service to new greenfield residential developments.
  • The proportion of new connection costs to be recovered through MILs.
  • The developer and distribution facility owner (DFO) costs for consideration in MILs.
  • The timing of a utility investing in new residential services (i.e., once the infrastructure is in place, or when an end-use customer has bought a home and has enrolled with a utility service?).
  • The effect of performance-based regulation (PBR) on MILs.
  • Whether the developer or the municipality is responsible for street lighting.

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2024 GCOC Evidence

In proceeding 27084, intervenors submit their evidence regarding the issues list and other matters put forward by the Alberta Utilities Commission (the Commission) concerning the 2024 Generic Cost of Capital (GCOC). The Commission decided that the equity risk premium (ERP) approach for determining return on equity (ROE) is appropriate. The ERP approach is the basis for the one-factor formula previously approved by the Commission in 2009 and the two-factor formula adopted by the Ontario Energy Board (OEB). The Commission produced an issues list based on the two-factor approach, which the following formula expresses:

  • ROE (test year) = Notional ROE (VAR1 + VAR3) + Factor One + Factor Two
  • Factor One = VAR4 x (Forecast Long Canada Bond Yield (test year) (VAR2) – Base Forecast Long Canada Bond Yield (VAR1))
  • Factor Two = VAR7 x (Utility Bond Spread (test year) (VAR6) – Base Utility Bond Spread (VAR5))

The Commission’s questions in the issues list mainly ask intervenors to calculate and justify appropriate variables (VAR) for the above equation.

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Evidence on PBR3 Parameters

In proceeding 27388, intervenors submit evidence to the Alberta Utilities Commission (the Commission) in setting formula parameters for the third term of performance-based regulation (PBR3). The Commission asked intervenors to address seven specific issues:

  • Rate adjustment timing.
  • The type of PBR plan used to regulate electric and gas distribution facility owners (DFO).
  • The I Factor.
  • The X Factor.
  • Capital funding provisions.
  • Earnings sharing and efficiency carry-over mechanisms.
  • Efficiency tracking.

Intervenors each provided evidence that address at least one of these issues.

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TransAlta’s 2022-2023 General Tariff Transmission Application

In proceeding 27964, TransAlta Corporation requests approval of a $9.0 million revenue requirement for 2022 and $9.4 million for 2023, along with a one-time payment from the Alberta Electric System Operator (AESO) of $846,000 to reconcile approved interim rates. This revenue requirement includes TransAlta’s transmission facility owner rates applicable to the AESO’s use of TransAlta’s transmission facilities over the test period and TransAlta’s costs associated with the Operations and Maintenance Agreement between AltaLink Management Ltd. (AltaLink) and TransAlta.[1]

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