Industrial Power Consumers Association of Alberta

AltaLink 2024-2025 NSA Application

In proceeding 28174, AltaLink Management Inc. (AltaLink) applies to the Alberta Utilities Commission (the Commission) for the approval of a negotiated settlement agreement (NSA). The NSA was made between AltaLink, the Alberta Direct Connect Customers, the Consumers’ Coalition of Alberta (CCA), the Alberta Federation of REA’s Ltd. (AFREA), the Industrial Power Consumers Association of Alberta (IPCAA), and the Utilities Consumer Advocate (UCA).

The Commission permitted a negotiated settlement process on all but the following two matters:[1]

  • AltaLink’s proposed wildfire deferral account.
  • AltaLink’s request to recover $11 million in returns incurred over the 2022-2023 period that apply to 2019-2021 actual salvage expenditures.

Additionally, parties involved in the negotiated settlement agreed to exclude three additional matters that are closley related to the two excluded by the Commission:[2]

  • AltaLink’s 2024-2025 forecast salvage expenditures.
  • AltaLink’s 2019-2023 actual salvage expenditures.
  • AltaLink’s Wildfire Mitigation Plan business cases.

The NSA also did not result in any changes to AltaLink’s terms and conditions.[3]



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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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ATCO Electric’s 2023-2025 General Tariff Application Decision

In Proceeding 27062, the Alberta Utilities Commission (the Commission) decides on the 2023-2025 General Tariff Application of ATCO Electric Ltd. (ATCO). The Commission allowed ATCO and interveners to enter a negotiated settlement process on all matters except for the Vegetation Management reserve removal and modifications to ATCO’s Variable Pay Program reserve. Parties were also unable to agree on the treatment of the $7.5 million undepreciated balance for ATCO’s Jasper Palisades isolated generation plant. Therefore, the Commission dealt with these three issues separately from the negotiated settlement.[1]



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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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