Compliance Filing – Distribution Tariff – Transmission General Tariff
ENMAX Power Corporation (“EPC”) filed the compliance filings for its 2014 Phase I Distribution Tariff Application (“DTA”) and 2014-2015 Transmission General Tariff Application (“GTA”) pursuant to Decision 2014-347.
EPC requested approval of the following, to be effective September 1, 2015:
(a) A distribution revenue requirement of $302.1 million for 2014;
(b) A distribution access service (“DAS”) adjustment rider of $1.4 million to collect a shortfall for 2014; and
(c) DAS adjustment rate rider schedules and 2015 transmission tariff rate schedules.
In this decision, the AUC only discussed directions 14, 15, 20 and 21 issued in Decision 2014-347, noting that EPC had either fully complied with the remaining directions, or that the outstanding directions were intended for future applications.
With respect to Direction 14, the AUC previously ordered EPC to adjust its return on equity and equity ratio to reflect the AUC’s findings in 2191-D01-2015. EPC submitted that it updated its application to reflect the AUC’s findings, but requested that the rates be approved on an interim basis, as there were several applications pending before the Alberta Court of Appeal.
The AUC found that EPC reflected the effects of Decision 2191-D01-2015 in its compliance filing, and therefore complied with Direction 14. The AUC determined that it would exercise its discretion pursuant to section 29(7) of the Alberta Utilities Commission Act to approve the distribution and transmission rates on an interim basis pending the outcome of the appeal proceedings.
With respect to Direction 15, the AUC previously ordered EPC to use the actual interest costs for any debt issued by the date of its compliance filing. The Office of the Utilities Consumer Advocate (the “UCA”) posed an information request to EPC seeking incorporation of actual 2014 costs of debt in its compliance filing. EPC submitted revised debt schedules, noting that the lower than anticipated cost of debt resulted in a reduction of $0.102 million for the distribution function in 2014, and $0.033 million and $0.034 million in 2014 and 2015, respectively, for the transmission function. The UCA submitted that it did not object to the approval of the compliance filing, subject to the inclusion of EPC’s revised debt schedules.
The AUC found that EPC reflected its actual debt costs, as submitted in its revised debt schedules, and therefore held that EPC complied with Direction 15.
With respect to Directions 20 and 21, the AUC directed EPC to record its amortization of reserve differences (recognized as a dollar value for each plant account) using the composite remaining life of the assets to ensure a smoother recovery during the period of time between depreciation studies. The AUC also directed EPC to revise its schedule of depreciation accrual rates to reflect the separation of the required annual true-ups that will be recorded as a dollar amount to each account.
EPC submitted that it reflected these two directions in its Minimum Filing Requirements (“MFR”) schedules. However, when asked in an information request to reflect the reserve differences as a separate line item, EPC stated that it had determined the amortization of reserve difference amounts on an individual account basis elsewhere in its MFR schedules, and could not separately calculate the amortization of reserve differences on an actual or forecast basis due to constraints in its financial system. In response to an AUC inquiry as to whether EPC would be able to determine a composite depreciation rate that excludes the amortization of reserve differences in its last amortization study, and separately identify the reserve difference amounts on its MFR schedules, EPC responded that it would revise the affected MFR schedules accordingly.
The AUC held that based on EPC’s response to further inquiries, EPC has the ability to comply with Directions 20 and 21, and directed EPC to comply with the directions using the format of disclosure provided by EPC in response to the subsequent AUC inquiries submitted on May 13, 2015. The AUC directed EPC to file revised MFR schedules disclosing the amortization of reserve differences as a separate component of depreciation expense within 30 days of the release of the decision.
The AUC found that with the exception of the method used by EPC for the amortization of reserve difference in its MFR schedules, EPC had otherwise complied with the AUC’s previous directions. The AUC noted that the amortization method unnecessarily impacted revenue requirement, and therefore approved the revenue requirement amounts as reflected in the revisions submitted by EPC on April 7, 2015 in the amount of:
(a) $299.9 million for 2014 distribution;
(b) $65.4 million for 2014 transmission; and
(c) $74.1 million for 2015 transmission.
The AUC therefore ordered that:
(a) EPC file revised MFR schedules disclosing the amortization of reserve differences as a separate component of the approved April 7, 2015 depreciation expense within 30 days of the release of the decision;
(b) EPC’s distribution and transmission revenue requirements were approved as follows:
(i) 2014 distribution $299.9 million;
(ii) 2014 transmission $65.4 million; and
(iii) 2015 transmission $74.1 million;
(c) EPC’s 2014 DAS adjustment rider is approved, effective September 1, 2015; and
(d) EPC’s 2015 transmission tariff is approved, effective September 1, 2015.
