ATCO

ATCO’s 2018-2023 Transmission Deferral Accounts Decision

In Proceeding 26573, the Alberta Utilities Commission (the Commission) issued its decision regarding the 2018-2023 Transmission Deferral Accounts disposal of ATCO Electric Ltd. (ATCO). Central to this proceeding was ATCO’s Jasper Interconnection Project (the Jasper Project), in which it was found that ATCO sole-sourced one of its contracts at above-market rates. In making its decision to disallow over $7.6 million in cost recovery, the Commission considered the way ATCO prepared for and managed the Jasper Project and ATCO’s treatment of cancelled customer project costs. The Commission also directs a reduction associated with the sole-sourced contract, but the exact amount depends on ATCO calculating the value of the contract in its compliance filing.



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ATCO v Commission Court of Appeal Decision

In the Court of Appeal of Alberta, ATCO Electric Ltd. (ATCO) v Alberta Utilities Commission (the Commission), 2023 ABCA 129 Memorandum of Judgment, ATCO sought the appeal of a Commission decision that denied ATCO the recovery of losses associated with the 2016 Fort McMurray wildfire. The Commission’s initial decision relied on ATCO Gas & Pipelines Ltd v Alberta (Energy & Utilities Board), 2006 SCC 4 (the Stores Block decision), from which the Commission understood that ‘extraordinary retirements’ of assets are attributable to shareholders rather than customer accounts. After considering the circumstances, the Court of Appeal issued a decision allowing ATCO’s appeal to stand.



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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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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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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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ATCO Electric Transmission’s Negotiated Settlement Agreement for its 2023-2025 General Tariff Application

In proceeding 27062, ATCO Electric Transmission (ATCO) submit its 2023-2025 general tariff application to the Alberta Utilities Commission (the Commission) for approval. In August 2022, the Commission approved ATCO and the Interveners to enter a negotiated settlement process, and the parties engaged in settlement negotiations starting December 12. By December 20, all parties agreed in principle to a negotiated settlement. ATCO now requests that the Commission approve the settlement agreement and the resulting adjustments.[1]



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ATCO and Enforcement Staff Settlement Agreement on Customer Rate Class Switching Requests [Update]

In proceeding 27948, the Enforcement staff of the Alberta Utilities Commission (the Commission) request an enforcement proceeding and approval of a settlement agreement between the Enforcement staff and ATCO Gas and Pipelines Ltd. (ATCO). The investigation behind the agreement was in response to a complaint from TCB Welding & Construction Ltd. (TCB) concerning high-use delivery service charges. TCB alleged that ATCO delayed switching it from the mid-use to the high-use delivery service rate and TCB was overcharged from December 2020 to November 2021.[1]

The Contraventions

After their investigation, Enforcement staff found that ATCO failed:

  • To make TCB aware of ATCOs rate schedules for different customer rate classes.
  • To apply the most favourable rate schedule to TCB in a timely fashion.
  • To refund the difference in rates charged to TCB between when it requested an alternative rate and when ATCO updated TCB’s rate class.[2]


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Commission Decision on Direct Energy’s Energy Price Setting Plan Application

In Proceeding 27562, the Alberta Utilities Commission (the Commission) issues its decision regarding the 2023-2025 Energy Price Setting Plan (EPSP) Application of Direct Energy Regulated Services (Direct Energy). Direct Energy is a regulated rate option (RRO) provider in ATCO Electric Ltd.’s service territory. The EPSP establishes electricity pricing for these RRO customers. Direct Energy proposed EPSP includes nine total changes: six to the confidential procurement protocol and three to other non-confidential provisions of the EPSP. However, after hearing intervenor arguments, Direct Energy’s EPSP is not approved by the Commission, and Direct Energy is to refile the plan after making the necessary changes.[1]



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