ENMAX Power Corporation

Reconsideration of DFO Contribution in Aid of Construction Policy

The Alberta Utilities Commission (the Commission) has initiated proceeding 29006 in response to the Alberta Court of Appeal (the Court) decision in AltaLink Management Ltd. v Alberta Utilities Commission, 2023 ABCA 325 (the Appeal Decision). The Court allowed the appeal of Decision 26061-D01-2021 in which the Commission determined that neither transmission facility owners (TFOs) or distribution facility owners (DFOs) would have the ability to receive a return on construction contributions.[1]



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ENMAX’s R&V Application of the PBR3 K-bar Mechanism

In proceeding 28574, ENMAX Power Corporation (ENMAX) applies for a review and variance of the K-bar mechanism approved by the Alberta Utilities Commission (the Commission) for the third generation of performance-based regulation (PBR3). ENAMX asserts that the Commission erred in believing that the K-bar would provide ENMAX with sufficient funding and seeks the Commission to grant a review of the PBR3 K-bar. ENMAX’s case is grounded in its concern that the approved K-bar does not meet ENMAX’s needs to fund the replacement of its aging assets or to respond to the growing need to modernize the grid. Furthermore, ENMAX states that the current K-bar will force the utility to choose which benefits its customers will forgo and that it may have to put off investment into reliability drivers, externally driven projects, and grid modernization to prioritize safety on its network.[1]



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Contributions in Aid of Construction Appeal

The Court of Appeal of Alberta (the Court) has issued its decision regarding the appeal of Alberta Utilities Commission (AUC) Decision 26061-D01-2021. The appeal was filed by AltaLink Management Ltd. (AltaLink), ATCO Electric Ltd., ENMAX Power Corporation, and EPCOR Distribution & Transmission Inc.  The crux of this appeal is the Commission’s treatment of contributions in aid of construction. In Decision 26061-D01-2021, the Commission disallowed transmission and distribution facility owners (TFOs and DFOs) from earning a return on contributions in aid of construction, despite affirming that the current practice was in line with the legislative framework. The utilities could then only treat the contributions as expenses in the year of disbursement because of the decision. The four DFOs filed an appeal with the Alberta court.[1]



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The PBR3 Parameters

In Proceeding 27388, the Alberta Utilities Commission (the Commission) sets the parameters of the third term of performance-based regulation (PBR3) in Alberta, which w ill be applied to the four following electric distribution utilities: ATCO Electric Ltd., FortisAlberta Inc. (Fortis), ENMAX Power Corporation, and EPCOR Distribution & Transmission Inc. (EPCOR); and the following two natural gas distribution utilities, ATCO Gas and Pipelines Ltd. and Apex Utilities Inc. In sum, PBR3 builds upon PBR2 but makes some key changes in how benefits and efficiencies are respectively provided and quantified going forward with the addition of an efficiency sharing mechanism and the removal of the efficiency carryover mechanism.



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2024 GCOC Arguments

In proceeding 27084, interveners submit their arguments over the matters put forward by the Alberta Utilities Commission (the Commission) regarding the generic cost of capital (GCOC). The Commission had already decided to proceed with a formulaic approach that was previously approved in 2009 and had asked interveners to provide recommendations for the formula’s variables. Interveners previously submited evidence detailing their variable recommendations and have since provided arguments supporting their evidence. However, some interveners continue to argue against the formulaic approach, and most proposed a specific return on equity (ROE) ratios for the 2024 GCOC.  A significant portion of argument focused on debating whether business risk has increased or decreased in the province and why the level of risk justifies each intervener’s proposal.



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ENMAX Energy’s 2023-2024 Energy Price Setting Plan Decision

ENMAX Energy Corporation (ENMAX Energy) provides regulated rate option (RRO) services in ENMAX Power Corporation’s service territory. The Alberta Utilities Commission (the Commission) approves the RRO tariff through an energy price setting plan (EPSP) which sets the monthly RRO rate parameters. In Proceeding 27495, the Commission issues its decision regarding ENMAX Energy’s 2023-2024 EPSP. Key issues in this proceeding include ENMAX Energy’s proposals to amend its Letter of Credit (LOC) rates and how it calculates its Natural Gas Exchange (NGX) Collateral Costs, as well as the recommendations of the Utilities Consumers Advocate (UCA) to exclude the net commodity risk compensation (CRC) from ENMAX Energy’s energy return margin calculations and to limit ENMAX Energy’s monthly monitoring costs.[1]



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Information Requests in the Residential Standards and Maximum Investment Levels (MILs) Proceeding

In Proceeding 27658, intervenors submit their information requests that address several topics in the standards of service and maximum investment levels (MILs) for residential services proceeding. These information requests fall in line with one or several topics included in the February 2023 issues list. Parties addressed information requests to the following intervenors: the distribution facility owners (DFOs) (ATCO Electric Ltd., ENMAX Power Corporation, EPCOR Distribution & Transmission Inc., FortisAlberta Inc.), the Developers (Anthem Properties, BILD Alberta, Melcor Developments Ltd.), the Municipalities (Alberta Municipalities, City of Airdrie), the Alberta Federation of Rural Electrification Associations (AFREA), and the Utilities Consumer Advocate (UCA).



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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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