Single Gas Cost Flow-through Rate
Direct Energy Regulated Services (“DERS”) applied for approval of a single gas cost flow-through rate (“GCFR”) for its Rider F rate to regulated rate option customers on the ACTO Gas North and ATCO Gas South systems. DERS performs the natural gas default rate tariff and regulated rate tariff on behalf of ATCO Gas and Pipelines Ltd. (“ATCO”) in ATCO’s service areas as the default service provider (“DSP”). DERS had previously submitted GCFR applications for the North and South service areas since taking over the DSP role in 2004. However, with the recent integration of the pipelines division of ATCO into the Nova Gas Transmission Ltd. system in Alberta, DERS submitted that separate rates for the North and South areas were no longer needed.
DERS submitted that the single GCFR would be calculated using the same methodology as currently employed, but on a province-wide basis. DERS submitted that a single GCFR, though it would not likely create a cost savings, would be beneficial for the further evolution of the gas marketplace in Alberta. DERS submitted that the simplicity of the single rate would allow customers to more easily weigh their options in the market. DERS also noted that the North and South rates were 96 percent correlated, and therefore the transition to a single rate would not have a significant price impact for either set of customers.
The City of Calgary (“Calgary”) stated that it did not oppose the single GCFR, however, requested that the AUC confirm that the single GCFR would have no bearing or impact on the continuation of separate distribution rates for North and South customers of ATCO. Calgary also requested that the AUC direct DERS to provide an analysis of potential cost savings from the switch to the single GCFR in its next general rate application.
DERS responded to Calgary by noting that the single GCFR proposal was not related to ATCO’s distribution rates, and therefore ATCO’s rates did not impact the GCFR rates charged by DERS.
With respect to Calgary’s request, the AUC held that the appropriate forum to test whether or not the single GCFR has resulted in any cost savings is in DERS’ next general rate application. Therefore, the AUC directed DERS to report on any resultant cost savings in its next general rate application.
The AUC determined that the changes to the natural gas market, particularly with respect to the integration of regulated gas transmission in Alberta, the creation of a province-wide unaccounted for gas rate, and a province-wide load balancing deferral account, were all indicative of a need to switch to a single province-wide GCFR. Accordingly, the AUC approved DERS’ application as filed.
