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Alberta Electric System Operator 2016 Deferral Account Reconciliation (AUC Decision 23802-D02-2018)

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AESO Net Deferral Account Settlement – Surplus

In this decision, the AUC considered the Alberta Electric System Operator (“AESO”)’s application requesting to settle its 2016 net deferral account surplus with market participants, in the amount of $26.2 million.

The AUC approved the settlement of the deferral account balances as applied for by the AESO.

Application Details

Pursuant to sections 30 and 119 of the Electric Utilities Act (“EUA”), the AESO filed an application with the AUC requesting approval of its determination of deferral account balances for 2016 and changes to deferral account balances for 2010 through 2015.

The deferral account balance resulted from differences between costs the AESO incurred in providing system access service and the revenues recovered through rates charged to customers in prior periods.

Section 14(3) of the EUA states that the Independent System Operator (“ISO”) must be managed so that, on an annual basis, no profit or loss results from its operation.

The AESO requested the AUC approve the deferral account balance reconciliations for the calendar years 2016 through to 2010 consisting of:

  • a shortfall of $180.9 million for 2016 (first reconciliation);

  • a shortfall of $63.5 million for 2015 (second reconciliation);

  • a surplus of $86.3 million for 2014 (third reconciliation);

  • a surplus of $92.5 million for 2013 (third reconciliation);

  • a surplus of $61.0 million for 2012 (fourth reconciliation);

  • a surplus of $30.0 million for 2011 (fifth reconciliation); and

  • a surplus of $0.7 million for 2010 (fifth reconciliation).

Methodology, Allocation and Settlement of Deferral Account Balances

The AUC approved the AESO’s methodology, allocation, and settlement of the deferral account balances.

No market participant objected to the use of a December 31, 2017 cut-off date in the application, nor to the methodology the AESO used to allocate the voltage control deferral account balance. The AUC accepted the AESO’s method to allocate voltage control charges and found the use of a December 31, 2017 cut-off date to be reasonable. The AUC found this would minimize the refunds and subsequent collections (or vice-versa) from market participants that would have occurred if a December 31, 2016 cut-off date was used.

The deferral account reconciliation only applied to Rate Demand Transmission Service (“DTS”) and Rate Fort Nelson Demand Transmission Service (“FTS”). The deferral account balances were allocated to individual market participants based on each market participant’s percentage of base rate revenue collected, based on Rate DTS and Rate FTS that were in place during the period, by month and by rate component.

Cost Variances

The AUC agreed that a deferral account reconciliation proceeding was the proper venue to consider the prudence of AESO costs incurred with respect to 2016 and any cost variance amounts not already considered in previous deferral account reconciliation decisions related to prior years.

The provisions of the EUA and the Transmission Regulation provide guidance to the AUC regarding the extent to which it may assess the costs and expenses incurred by the AESO in its tariff (namely, the AESO’s own administrative costs, ancillary services costs, and costs related to transmission wires payable under a Transmission Facility Owner’s (“TFO”) tariff).

The AESO’s administrative costs were accepted as filed.

The AUC accepted the AESO’s ancillary amounts as filed and the AESO board approved the costs for ancillary services. Section 3(1) of the Transmission Regulation requires the AESO to consult with market participants directly affected by these costs. No party indicated that the AESO failed to consult properly.

Summary

The AUC approved the deferral account balances and the net deferral account surplus amount of $26.2 million.

The AUC accepted the accuracy of the deferral account amounts and the calculation of the net deferral account surplus of $26.2 million and noted that no market participant objected to the application.

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