Deferral Account Reconciliation
The Alberta Electric System Operator (“AESO”) applied to the AUC for approval of the AESO’s deferral account balances for 2013 and 2014, and for changes to deferral account balances for the years 2007 through 2012 previously considered by the AUC.
The AESO requested approval to settle the current deferral account amounts with market participants on an interim basis, subject to adjustment in a final decision, as follows:
(a) A shortfall of $40.2 million of costs for 2014 (first reconciliation);
(b) A surplus of $18.0 million of costs for 2013 (first reconciliation);
(c) A surplus of $0.5 million of costs for 2012 (second reconciliation);
(d) A surplus of $9.1 million of costs for 2011 (third reconciliation);
(e) A surplus of $12.4 million of costs for 2010 (third reconciliation);
(f) A shortfall of $0.4 million of costs for 2009 (fourth reconciliation);
(g) A shortfall of $0.2 million of costs for 2008 (fifth reconciliation); and
(h) A shortfall of $0.1 million of costs for 2007 (sixth reconciliation).
The AESO requested the collection and refunds of the above amounts through the use of a one-time collection/refund option, and proposed to make settlement payments and collections in December 2015.
The AESO submitted that its deferral account reconciliation was prepared in the same manner as its previous deferral account reconciliation applications, and were prepared on a retrospective, monthly, and production month basis.
No party filed argument respecting the AESO’s methodology in preparing the deferral account reconciliation. The AUC approved the methodology as filed, noting that it was consistent with past decisions on AESO deferral account reconciliations. The AUC also approved the AESO’s proposal to settle the outstanding amounts through a one-time collection/refund mechanism, with a three-month option for market participants to pay if the one-time payment represented a significant financial burden.
ATCO Electric Ltd. (“ATCO”) and EPCOR Distribution & Transmission Inc. (“EDTI”) both opposed the AESO’s timing for the interim settlement. ATCO and EDTI submitted that a settlement in December 2015 would not allow sufficient time to settle the interim amounts with customers in 2015, which would in turn, force each to report on the interim settlement in their 2015 fiscal year, but actually settle the accounts in their 2016 fiscal year. Accordingly, ATCO and EDTI requested that the AESO make its interim settlements in January 2016 to mitigate financial reporting effects.
In a separate ruling, the AUC held that it would not authorize the AESO’s proposed settlement in late 2015 on an interim basis, based on submissions from ATCO and EDTI that accounting standards would require them to report these amounts in 2015, without being able to reflect the corresponding amounts to its customers for the same period.
The AESO submitted that the applied for deferral account reconciliations related to ancillary services costs, losses costs, and the AESO’s own administrative costs, which are approved by the AESO board, pursuant to section 8 of the Electric Utilities Act. The AESO submitted that pursuant to sections 46(1) and 48(1) of the Transmission Regulation, once these costs are approved by the AESO board, they must be considered ‘prudent’ by the AUC unless an interested person satisfies the AUC otherwise.
No party filed argument respecting the prudence or amount of the AESO’s costs in its deferral account reconciliation.
In noting that no party submitted evidence regarding the prudence of the AESO’s costs approved by the AESO board, the AUC approved the AESO’s own administrative costs, ancillary services costs, and losses costs as filed.
Accordingly, the AUC also approved the settlement of the deferral account balances with a net deferral account shortfall from 2007-2014 in the amount of a $0.8 million.
Alberta Direct Connect Consumer Association (“ADC”) requested that the AUC make the following orders with respect to the AESO’s deferral account reconciliation application:
(a) Mandate a deadline for future deferral account reconciliations within three to four months after the calendar year to avoid delays, as has happened in this application for 2013 costs;
(b) Direct the AESO to pay interest on refunded amounts using the 2013 generic cost of capital as a benchmark; and
(c) Create a streamlined procedure for interim demand transmission service tariff updates to be filed and implemented whenever the amount for Rider C in the ISO Tariff is greater than $2/megawatt-hour.
The AESO submitted that its decision to delay the 2013 deferral account balances was primarily due to the directionally opposite balances for 2013 and 2014, and that combining the two into a single application would avoid refunding a surplus in 2013 and collecting a separate shortfall in 2014. The AESO also submitted that accumulated interest on market participant deferral account balances was dealt with in Decision 2009-010, and that the redistribution of interest on outstanding amounts among market participants was inappropriate.
The AUC held that any deadlines for future deferral accounts reconciliation applications, or proposed changes to the Rider C amounts in the ISO Tariff, should be addressed as part of the consultation between the AESO and market participants regarding annual tariff updates, and declined to issue a ruling on this matter.
With respect to the accumulation of late interest on balances to market participants, the AUC held that the AESO’s practice of netting shortfalls and surpluses in multiple years to be a reasonable practice. Accordingly, the AUC declined to reconsider its previous determination in Decision 2009-010 disallowing accumulated interest on deferral account balances.
In accordance with the above determinations, the AUC approved the AESO’s deferral account reconciliation application as filed.
