General Tariff Application – Refund of Cost Savings
In this decision, the AUC considered an application (the “Application”) by AltaLink Management Ltd. (“AltaLink”) for approval to refund cost savings resulting from AltaLink’s 2017-2018 General Tariff Application (“GTA”) Negotiated Settlement Agreement (“NSA”). The AUC approved the Application.
Background
In the Application AltaLink requested approval of a one-time payment of $6.5 million arising from savings of direct Operations and Maintenance costs, direct Administrative and General costs and Revenue Offsets, to the Alberta Electric System Operator (“AESO”), pursuant to provisions of its GTA NSA under the cost savings arrangement. Further, AltaLink requested approval to increase this one-time payment to the AESO from $6.5 million to $6.6 million, to account for carrying costs, pending AUC approval of AltaLink’s request for payment of interest in its 2014-2015 Deferral Account Reconciliation Compliance Filing. AltaLink requested that this payment occur on or before September 30, 2019.
The Consumer’s Coalition of Alberta (“CCA”) filed an argument on August 15, 2019, as directed by the AUC, identifying three areas of concern in AltaLink’s 2017-2018 GTA NSA revenue sharing agreement: inclusion of short-term incentive plan (“STIP”) costs above target, inclusion of safety bonuses; and AltaLink’s Rule 023 interest calculation. The AUC addressed each of these concerns in its findings.
Commission Findings
Inclusion of STIP Costs Above Target
AltaLink stated that it had consistently determined both STIP and long-term incentive plan (“LTIP”) calculation amounts according to past GTAs, and that the STIP amount of $0.6 million complied with and did not exceed the agreed-upon 2017-2018 GTA NSA amount. The AUC agreed with AltaLink that the STIP and LTIP calculations used to determine actual 2017-2018 LTIP and STIP payouts were consistent with how the calculations were presented in AltaLink’s 2017-2018 amended GTA and was not altered in any way by the NSA. The AUC therefore approved the inclusion of the STIP amount of $0.6 million in AltaLink’s revenue-sharing amounts related to the 2017-2018 GTA.
Inclusion of Safety Bonuses
The CCA requested that the AUC direct AltaLink to remove an amount of $0.3 million in safety bonuses from AltaLink’s GTA NSA revenue sharing Application. The CCA submitted that AltaLink did not include the $0.3 million of safety bonuses in its applied-for revenue requirement in its 2017-2018 GTA and consequently, the AUC should deny the inclusion of these costs in the revenue sharing mechanism. The AUC considered that the NSA did not prescribe how AltaLink was to manage its agreed-upon 2017-2018 expenditures, sharing any excess reduction in costs with ratepayers, including the amount of $0.3 million in safety bonuses. The AUC therefore approved the inclusion of the $0.3 million in safety bonuses in AltaLink’s revenue-sharing amounts related to the 2017-2018 GTA.
Carrying costs – Interest Payment Under Rule 023
AltaLink applied to refund $0.2 million of carrying cost interest as part of the cost savings sharing agreement refund related to its 2017-2018 GTA NSA. Rule 023 enables a utility to request that the AUC award the payment of interest on adjustments to utility rates, tolls or charges or other costs/charges administered within the AUC’s jurisdiction.
The AUC found that the application of carrying costs was not warranted or reasonable in the circumstances of this case. The AUC made this finding based on (a) the expediency with which AltaLink sought to refund the revenue sharing amounts with ratepayers by making its application in 2019; and (b) the relatively low quantum of the refundable amounts ($2.9 million and $3.4 million in 2017 and 2018, respectively) and, therefore, of carrying cost interest associated with those amounts. The AUC therefore denied the addition of carrying costs from AltaLink’s revenue-sharing amounts related to the 2017-2018 GTA.
Order
The AUC ordered AltaLink to:
(a) remove the carrying costs portion from the total refund amount of its 2017-2018 GTA NSA revenue sharing Application; and
(b) provide a one-time refund amount to the AESO of $6.5 million on or before September 30, 2019.
