AUC Review – Deferral Accounts
EPCOR Distribution & Transmission Inc. (“EDTI”), on behalf of ATCO Electric Ltd. (“AE”), ENMAX Power Corporation (“ENMAX”) and FortisAlberta Inc. (“FAI”), (collectively, the “DFOs”) filed a joint application for approval of a harmonized schedules template for each company’s annual transmission access charge (“TAC”) deferral account applications.
The AUC had previously issued Decision 2012-304, which outlined the standardized methodology for the DFOs’ quarterly TAC deferral account rider applications. The AUC noted that this led to the development of a uniform approach for filing quarterly TAC deferral account rider applications, and processed by way of filings for acknowledgement, as set out in Bulletin 2015-09. In subsequent 2013 annual TAC deferral account applications, a number of DFOs proposed refinements to the common approach. Accordingly, the AUC initiated the proceeding to determine whether there is an opportunity to harmonize the content and structure of the DFOs’ annual TAC deferral account applications and supporting schedules, with a view to developing a common approach in the future.
During consultations, the parties agreed to develop and provide a common name for the annual TAC deferral account application, to include both the true-up year, and the word “annual”. The AUC approved the common title “20xx Annual Transmission Access Charge Deferral Account True-up” to be used by parties in future years.
With respect to accounting approaches, the AUC noted that two approaches could be used to determine what amounts collected by way of quarterly Alberta Electric System Operator (“AESO”) Demand Transmission Service (“DTS”) deferral account riders should be included in a particular year’s TAC true-up. One approach would deem all revenue received in a calendar year as part of that year’s true-up regardless of what time period the revenue was intended to relate to. The other approach would deem all revenue collected assigned to the period when the revenue should have been earned, otherwise known as an accrual basis.
The AUC held that the accrual basis was the preferred method, noting that all companies except for ENMAX used the accrual basis, and that ENMAX agreed to switch to accrual methods in future TAC deferral account true-ups.
The Office of the Utilities Consumer Advocate (the “UCA”) expressed concerns over the different allocation methodologies used by each of the DFOs in their schedules for TAC deferral account applications. While the UCA noted that the allocation methodologies were outside the scope of the proceeding, it submitted that the common flow-through nature of the AESO costs to each of the DFOs strongly supported the adoption of common allocation methodologies.
The AUC determined that while harmonizing content of the applications was a goal of the proceeding, the allocation methodologies themselves were outside the scope of the proceeding, and approved the continued use of each DFO’s latest approved cost allocation methodology in its TAC deferral true-up applications.
With respect to carry forward provision amounts, for when the quarterly rider amount impact exceeds 10 percent of a customer’s bill, the DFOs proposed to reconcile any amounts in schedule 3 of the proposed forms, as opposed to schedule 8. The DFOs submitted that this would reduce the risk of any possible double accounting of these amounts, since schedule 3 of the proposed forms already calculates the difference between actual revenue collected and TAC charges incurred, net of any carry forward provision amounts. This approach was supported by the UCA.
The AUC accepted this approach, further noting that permitting the option of truing up carry forward provisions in quarterly filings may also have the benefit of avoiding larger true ups from annual applications. The AUC therefore ordered amendments to schedules 3 and 8 to reflect the DFOs’ ability to reconcile under schedule 3.
With respect to establishing a common filing date, ATCO and FAI proposed delaying the current deadline of June 30 to ensure more accurate revenue data. EPCOR expressed a preference for as early as possible in a year to facilitate year-end settlements with customers.
The AUC held that there was no need to establish a fixed date, and therefore determined that parties can file annual applications between July 1 and August 10 each year, but that they may opt for an earlier filing date. The AUC also noted that this may assist interested parties in managing workloads by avoiding having to review four concurrent applications.
The AUC also made the following changes to the proposed annual application schedules template:
(a) Changing the application title consistent with the findings above;
(b) Additional footnotes to schedules provided by the DFOs to show the allocation of amounts to customer classes;
(c) Changing schedule 3.3 for the calculation of carry forward amounts; and
(d) Adding columns to schedule 8.0 for Q1 and Q2 of 2015 to reflect the potential for carry forward amounts from 2014 to be cleared in those quarters.
The AUC otherwise approved the schedules template for the TAC deferral account true up applications, and directed the DFOs to use the approved schedules template effective July 21, 2015.
