Compliance Filing – Capital Tracker Refiling and True-up – PBR Capital Tracker Forecast
Pursuant to the AUC’s directions in Decision 3267-D01-2015, ATCO Gas filed its compliance filing for its 2013 Performance Based Regulation (“PBR”) Capital Tracker Re-filing and True-up, and its 2014-2015 PBR Capital Tracker Forecast.
In its compliance filing, ATCO Gas requested additional revenues under its PBR plan for necessary capital expenditures (referred to as K factor amounts) for its North and South service areas, as follows:
(a) 2013 True-up – North: $6,861,000;
(b) 2013 True-up – South: $2,718,000;
(c) 2014 Forecast – North: $13,113,000;
(d) 2014 Forecast – South: $5,878,000;
(e) 2015 Forecast – North: $21,029,000; and
(f) 2015 Forecast – South: $11,404,000.
The updated K factor amounts were, in ATCO Gas’ submission, a result of following the 28 directions to ATCO Gas provided by the AUC in Decision 3267-D01-2015.
With respect to direction 2, for ATCO Gas’ bare mains replacement program, ATCO Gas submitted that it had reduced its requested K factor adjustment by a total of approximately $656,000. The AUC determined that ATCO Gas had complied with the direction set out in Decision 3267-D01-2015.
With respect to direction 6, for ATCO Gas’ allocation and capitalization of overheads for 2013, 2014 and 2015, ATCO Gas submitted that it had reduced its requested K factor adjustment by a total of approximately $64,000 to limit the total pool of overheads to the lesser of the amounts applied for or the I-X increases for each year. ATCO Gas noted that the impact on its depreciation expenses from changes to capitalized overhead would be negligible and therefore made no corresponding adjustments to depreciation. The AUC determined that ATCO Gas had complied with the direction set out in Decision 3267-D01-2015, but ordered ATCO Gas to more clearly link the impacts of its allocated-indirects and K factors in future applications.
With respect to direction 7, ATCO Gas submitted that the discrepancies between schedule A2.5 and A5 in its prior application was that schedule A5 was the correct one for capital additions by program, adding that schedule A2.5 reflected the year-over-year change in construction work in progress for the period 2011-2015. ATCO Gas submitted that this correction to the discrepancy resulted in:
(a) An increase in the North K factor of $211,000 in 2013;
(b) A reduction in the North K factor of $82,000 in 2014;
(c) A reduction in the North K factor of $2,000 in 2015;
(d) An increase in the South K factor of $22,000 in 2013;
(e) An increase in the South K factor of $192,000 in 2014; and
(f) A reduction in the South K factor of $112,000 in 2015.
The AUC determined that ATCO Gas complied with the direction set out in Decision 3267-D01-2015.
With respect to direction 10, ATCO Gas submitted that it updated its Steel Mains Replacement expenditures to reflect the AUC’s direction that the expenditures be spread evenly over the 2015-2017 period. ATCO noted that this resulted in a total reduction to the K factor of approximately $5,856,000. The AUC determined that ATCO had complied with the direction issued in Decision 3267-D01-2015, but directed ATCO Gas to continue to identify Steel Mains Replacement adjustments for future K factor filings and other rate base filings until such time as the AUC determines the impact of such adjustments to be insignificant.
With respect to direction 16, the AUC directed ATCO Gas to provide methods for allocating capital cost allowances to capital programs going back to 2001. ATCO Gas provided two possible methods for doing so. The AUC determined that ATCO Gas’ two alternative methods for allocating capital cost allowances going back to 2001 did not fully comply with the direction, noting that ATCO Gas was not able to easily estimate the opening undepreciated capital costs for each program. The AUC noted that ATCO Gas appeared to have data for some of its asset classes, and could not determine why ATCO Gas was unable to comply. The AUC noted that it may choose to re-examine the issue in a future proceeding, but determined that it was prepared to accept ATCO’s preferred alternative allocation methodology for capital cost allowances for the purposes of this decision.
With respect to directions 13, 14, 17 and 19, ATCO Gas submitted that it had updated its I-X billing determinants and Q factor, its weighted average cost of capital rates approved in Decision 3434-D01-2015, its accounting test, and updated all the I-X index values to 1.49 percent, to reflect the AUC’s determinations in Decision 2014-363 and Decision 2013-435. ATCO noted that these adjustments resulted in a total reduction of $404,000 to the 2015 K factor amount for direction 13, and a total reduction of $9,013,000 to the 2013-2015 K factor amounts for direction 14. The AUC determined that ATCO Gas complied with each of directions 13, 14, 17, and 19.
With respect to direction 20, ATCO Gas submitted that it had reassessed whether the adjustments to the requested K factors had resulted in any changes to whether the projects met the appropriate materiality thresholds, and provided an updated table for the K factor costs of the 18 capital tracker programs assessed in Decision 3267-D01-2015. The AUC found that ATCO had appropriately reassessed the materiality of each of the 18 capital tracker programs.
With respect to directions 24, 25 and 26, ATCO Gas calculated the total refund amount to ratepayers as follows:
(a) A refund of $3,731,000 to North service area rate payers, and a collection of $161,000 in interest; and
(b) A refund of $5,727,000 to South service area rate payers, and a refund of $101,000 in interest.
ATCO Gas calculated the rate impacts for refunds associated with the PBR capital tracker adjustments (“Rider S”) over the course of September 1, 2015 to December 31, 2015 as being less than 1.3% for impacted ratepayers. The AUC determined that the rate impacts for the Rider S refund between September 1, 2015 and December 31, 2015 were minimal, and therefore approved the proposed refund period.
ATCO Gas also requested the carrying costs of the refund to customers, calculated in accordance with AUC Rule 023: Rules Respecting Payment of Interest. The AUC determined that ATCO’s methodology for calculating carrying charges payable to ratepayers was appropriate.
The AUC therefore ordered ATCO Gas to refund $9,398,000 to its ratepayers in the North and South service territories through Rider S from September 1, 2015 to December 31, 2015.
