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ENMAX Power Corporation 2017 Annual Transmission Access Charge Deferral Account True-Up (AUC Decision 23817-D01-2018)

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Transmission Access Charge Deferral Account Rider


In this decision, the AUC considered ENMAX Power Corporation (“ENMAX”)’s application for a net 2017 transmission access charge deferral account (“TACDA”) collection from customers of $31,404,372. ENMAX proposed to collect its 2017 TACDA true-up amount by way of a transmission access charge rider effective from January 1, 2019, to December 31, 2019.

The AUC approved ENMAX’s 2017 TACDA true-up net collection amount of $31,404,372, effective January 1, 2019.

Background

All electric distribution companies accessing the electric transmission system in the province are charged by the Alberta Electric System Operator (“AESO”) for transmission services provided in relation to customers in their distribution service areas. The purpose of ENMAX’s annual TACDA true-up application is to ensure that the revenues collected through its transmission access charges in a year recover the AESO tariff charges that ENMAX pays to the AESO in that year.

In accordance with the provisions of the performance-based regulation (“PBR”) framework approved in Decision 21149-D01-2016 (Errata), ENMAX’s TACDA was a dollar-for-dollar flow-through of the AESO tariff charges for the duration of its 2015-2017 PBR term. In other words, the utility does not assume any volume risk in flowing through AESO-related costs to customers.

2017 TACDA True-Up Amount and Transmission Access Charge Rider Rate

The components of the 2017 TACDA true-up amount include the true-up of the portion of the 2015 transmission access charge rider, the true-up of the three amounts arising from various 2017 AESO charges (i.e., the system access service deferral true-up, AESO deferral account reconciliation true-up and Balancing Pool true-up) and carrying costs associated with the 2015 true-up amounts.

2015 Transmission Access Charge Rider True-Up

The purpose of deferral account rider true-ups is to ensure that the amounts collected or refunded in total equal the amounts approved by the AUC. In this proceeding, ENMAX requested approval to reconcile its 2015 Transmission Access Charge (“TAC”) rider true-up amounts.

ENMAX proposed to true-up the remaining portion of the 2015 TAC rider less amounts ENMAX previously recorded. ENMAX calculated the total collection for this portion to be $1.254 million. ENMAX incorporated this collection into the TAC rider adjustment.

ENMAX determined the deferral account rider true-up amount for each rate class as the difference between the amount approved for collection or refund by rate class, and the amount actually collected or refunded for each rate class.

System Access Service Deferral True-Up

The purpose of a system access service deferral true-up is to reconcile the actual transmission access revenue received by ENMAX from its customers through both the base system access service rates and quarterly TAC true-up riders, to the actual transmission access costs paid to the AESO. In the application, ENMAX included two components in its 2017 system access service deferral true-up: (1) the reconciliation of 2017 quarterly TAC riders and; (2) the 2017 TAC deferral true-up.

ENMAX calculated its 2017 system access service deferral true-up as the difference between the actual transmission costs of $315.119 million and the sum of system access service base revenue and quarterly TAC revenue of $166.971 million and $119.870 million, respectively. The result was a net collection from customers of $28.278 million.

ENMAX allocated the AESO costs to customers, based on its cost-of-service methodology, previously approved by the AUC. ENMAX did not allocate AESO costs to customers under its “D600 distribution tariff large distributed generation” and “D700 distribution tariff transmission connected” rate classes, which were billed on a flow-through basis.

AESO Deferral Account Reconciliation True-Up

ENMAX did not receive an AESO deferral account reconciliation invoice prior to filing the application. Therefore, no AESO deferral account reconciliation true-up amounts were included in ENMAX’s 2017 TACDA.

Balancing Pool True-Up

Each year, the Balancing Pool is required under provisions of the EUA to forecast its revenues and expenses to determine any excess (or shortfall) of funds. Based on this forecast, the Balancing Pool determines an annualized amount that will be refunded to (or collected from) electricity consumers over the year, “… so that no profit or loss results, after accounting for the annualized amount under section 82(7) as a revenue or expense of the Balancing Pool.” This amount, known as the consumer allocation, applies to all market participants who receive system access services from the AESO and is recovered through Rider F of the Independent System Operator (“ISO”) tariff. In Decision 22264-D01-201613, the AUC approved ENMAX’s Balancing Pool rider effective January 1, 2017. This resulted in a $1.10 per megawatt hour collection from customers in 2017.

The purpose of ENMAX’s Balancing Pool true-up is to ensure that its Balancing Pool refund to or collection from its customers matches its settlement with the AESO. In 2017, ENMAX paid $10.665 million in Balancing Pool allocations that were then flowed through to ENMAX’s customers. Due to the difference between forecast and actual billing determinants, ENMAX collected $10.694 million from its customers in 2017, necessitating a net refund of $0.029 million. ENMAX allocated the Balancing Pool true-up to customer rate classes in proportion to the actual energy consumed by each rate class in 2017. ENMAX did not allocate the true-up amount to Rate D600 and Rate D700 customers that were billed on a flow-through basis since metering and billing of the Rate D600 and Rate D700 customers ensured that the amounts billed to those customers were consistent with $1.10 per megawatt hour collection.

Carrying Costs

ENMAX calculated carrying costs on outstanding amounts related to the true-up balances in accordance with Rule 023: Rules Respecting Payment of Interest. The rate used was the Bank of Canada monthly bank rate plus 1.5 percent. ENMAX calculated a weighted average Bank of Canada rate for July 2017, as the Bank of Canada monthly bank rate changed during that month. ENMAX calculated the total carrying costs to be a net collection of $1.902 million. ENMAX allocated carrying costs to rate classes in proportion to their respective deferral balances.

AUC Findings

The AUC approved ENMAX’s 2017 transmission access charge deferral account rider, effective January 1, 2019.

The AUC found that on a total bill basis, bill impacts were less than 10 percent, a threshold the AUC determined in past decisions to be indicative of possible rate shock. Therefore, the AUC found the rate impacts were reasonable and unlikely to cause rate shock.

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