Compliance Filing – Tariff – Rates – Generic Cost of Capital
EPCOR Distribution & Transmission Inc. (“EDTI”) filed an application in compliance with directions made by the AUC in Decision 3539-D01-2015 in respect of EDTI’s transmission facility owner (“TFO”) tariff, and Decision 20692-D01-2015 in respect of its 2013 generic cost of capital (“GCOC”) refiling.
EDTI requested the approval of its 2015-2017 TFO revenue requirement, rates, and its TFO terms and conditions. EDTI also requested true-ups to the years 2013 and 2014 related to the AUC’s findings in the GCOC decision. EDTI further requested approval of true-ups for 2015 related to the difference between its interim and approved rates for its TFO tariff and the GCOC decision.
EDTI proposed to aggregate all of the requested true-ups into one net payment of $0.54 million to account for the shortfall over the true-up period, to be added to EDTI’s July 2016 TFO rate.
EDTI’s adjusted revenue requirements for 2015-2017 were as follows:
-
$93,867,300 for 2015;
-
$99,816,130 for 2016; and
-
$98,591,311 for 2017.
The AUC noted that with respect to each of the directions made in Decision 3539-D01-2015 and 20692-D01-2015, that EDTI had complied with each of the 49 directions made, or that the directions were applicable only to future applications, unless otherwise specified.
The AUC, in Decision 3539-D01-2015 directed EDTI to incorporate the use of a three year average using 2012-2014 actuals to determine forecast revenue requirement amounts related to transmission work for others.
EDTI submitted that it applied a three-year average using 2012-2014 for its 2015-2017 forecast expenses for transmission work for others, which were then increased by an approved overhead factor of 69 percent for direct labour costs, and a cost recovery surcharge of 20 percent.
EDTI submitted that it applied a refined method by calculating each year’s costs in 2014 dollars and taking the simple average of the result to calculate the three-year average, as opposed to a simple average. EDTI noted that this approach was previously approved by the AUC in Decision 2012-272. EDTI submitted that the total revenue requirement impact was a reduction of $0.03 million in each of the three years.
The AUC held that EDTI had complied with the AUC’s direction in Decision 3539-D01-2015, despite not using the simple average of 2012-2014 costs. The AUC determined that EDTI’s refined methodology adequately accounted for inflation escalation, and noted that this approach was previously approved.
The AUC held that since EDTI had complied with all prior directions in Decision 3539-D01-2015 and Decision 20692-D01-2015, that the requested forecast TFO revenue requirements for 2015-2017 were approved, and the requested 2013, 2014 and 2015 true-up refund amounts were also approved.
The AUC accordingly ordered that EDTI’s TFO revenue requirements of $93,867,000 for 2015, $99,816,130 for 2016, and $98,591,311 for 2017 were approved as filed. The AUC also approved EDTI’s TFO rates and terms and conditions over the same period, as filed.
