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ATCO Electric Ltd. 2018 Annual Transmission Access Charge Deferral Account True-Up, AUC Decision 24779-D01-2019

Link to Decision Summarized

Rates – True-Up Application – Transmission Access Charge


In this decision, the AUC considered an application by ATCO Electric Ltd. (“ATCO Electric”) requesting approval of its 2018 annual transmission access charge deferral account (“TACDA”) true-up and carrying costs on the true-up amounts in accordance with Rule 023: Rules Respecting Payment of Interest. The 2018 TACDA true-up resulting in a collection from customers of $21.092 million was approved as filed, by way of a Rider G. This rider came into effect on January 1, 2020.

Background

On July 26, 2019, ATCO Electric filed an application with the AUC requesting approval of its 2018 annual TACDA true-up by way of a Rider G.

All electric distribution companies (“DFOs”) 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 ATCO Electric’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 ATCO Electric pays to the AESO in that year.

In accordance with the provisions of the performance-based regulation (“PBR”) framework approved in Decision 2012-237, ATCO Electric’s TACDA is a dollar-for-dollar flow through of the AESO tariff charges for the duration of the 2013-2017 PBR term. The AUC adopted the same provision for the 2018-2022 PBR term in Decision 20414-D01-2016 (Errata).

ATCO Electric’s Application

ATCO Electric applied for a net 2018 TACDA collection of $21.092 million from customers. It proposed to collect its 2018 TACDA true-up amount by way of a Rider G to be in effect from January 1, 2020, to December 31, 2020.

2018 TACDA true-up amount and Rider G rate

The components of the 2018 true-up amount included the true-up of the 2016 TACDA rider, the true-up of the three amounts arising from the various 2018 AESO charges, and carrying costs associated with those amounts. They are described further below.

2016 TACDA Rider True-Up

The purpose of a deferral account rider true-up is to ensure that, for each of the AESO charges, the amounts actually collected or refunded equal the amounts approved by the AUC. ATCO Electric’s 2016 TACDA rider, approved in Decision 22875-D01-2017, resulted in a net refund of $9.020 million. ATCO Electric stated that it refunded $9.707 million over the refund period. The difference results in a collection of $0.687 million.

System Access Service (“SAS”) Deferral True-Up

The purpose of a SAS deferral true-up is to reconcile the actual transmission access revenue received from customers to the actual transmission access costs paid to the AESO. ATCO Electric indicated that its total 2018 transmission access revenues for distribution connected customers, including revenues received through its quarterly TACDA true-up riders, amounted to $328.378 million, which, compared to the total costs of $331.631 million, results in a collection from customers of $3.253 million.

AESO Deferral Account Reconciliation (“DAR”) True-Up

Under section 14(3) of the Electric Utilities Act, “The Independent System Operator must be managed so that, on an annual basis, no profit or loss results from its operation.” Accordingly, any variances arising between the actual costs the AESO incurs and the forecast amounts, recovered through its rates based on forecast volumes, are refunded to, or recovered from, market participants by way of the AESO DAR, typically undertaken on an annual basis. In turn, the DFOs flow through these collections or refunds to customers in their service areas.

In this application, ATCO Electric requested approval to include the collection related to the 2017-2018 AESO DAR of $25.575 million. When combined with a $7.764 million refund associated with the 2016 AESO DAR, this amounted to a net collection of $18.012 million.

Balancing Pool True-Up

The AUC noted that the purpose of ATCO Electric’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 2018, the AESO collected $38.957 million from ATCO Electric. Due to differences between forecast and actual billing determinants, ATCO Electric collected $39.589 million from its customers in 2018, necessitating a net refund of $0.632 million. ATCO Electric proposed to allocate the Balancing Pool true-up to all customer rate classes, with the exception of Rate T31, based on the original amount collected in 2018.

Carrying Costs

ATCO Electric calculated carrying costs on outstanding amounts related to the true-up balances in accordance with Rule 023: Rules Respecting Payment of Interest. The total carrying costs amounted to a net refund of $0.227 million.

AUC Findings

The AUC approved a net collection of $21.092 million.

Rider Implementation Period and Customer Bill Impacts

The AUC reviewed the total bill impacts of the proposed Rider G and found the rate impacts to be reasonable and unlikely to cause rate shock.

Rider C Analysis

The AUC found that converting the approved percentage based Rider C rates to the equivalent $/MWh charge remains appropriate in the calculation of the AESO Rider C allocation.

Rider G Rate

For the purposes of this decision, the AUC accepted ATCO Electric’s proposal to calculate the Rider G rate using the 2020 forecast billing determinants. In making this determination, the AUC noted that the 2018 TACDA rider would eventually be trued up to ensure the approved amounts were collected from, or refunded to, customers (similar to how the 2016 rider was trued up in the present proceeding).

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