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ENMAX Power Corporation – 2018 Annual Transmission Access Charge Deferral Account True-Up, AUC Decision 24807-D01-2019

Link to Decision Summarized

Rates -True-up – Transmission Access Charge


In this decision, the AUC considered an application by ENMAX Power Corporation (“ENMAX”) 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 AUC approved a 2018 TACDA true-up net collection amount of $37,788,326 by way of a transmission access charge (“TAC”) rider effective January 1, 2020.

Background

On August 9, 2019, ENMAX filed an application with the AUC requesting approval of its 2018 annual TACDA true-up by way of a TAC rider.

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 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 is a dollar-for-dollar flow through of the AESO tariff charges for the duration of its 2015-2017 PBR term. The AUC adopted the same provision for the 2018-2022 PBR term in Decision 20414-D01-2016 (Errata).

Details of the Application

ENMAX applied for a net 2018 TACDA collection from customers of $37,788,326. ENMAX proposed to collect its 2018 TACDA true-up amount by way of a TAC rider to be in effect from January 1, 2020, to December 31, 2020.

2018 TACDA True-Up Amount and TAC rider rate

The components of the 2018 TACDA true-up amount included the true-up of the portion of the 2016 TAC rider, the system access service (“SAS”) deferral true-up, the AESO deferral account reconciliation (“DAR”) true-up, the Balancing Pool true-up, and carrying costs associated with these amounts.

2016 TAC 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. ENMAX’s 2016 TACDA rider, approved in Decision 22871-D01-2017, resulted in a net refund of $16.696 million. ENMAX indicated that it refunded $16.890 million over the refund period. The difference results in a collection of $0.194 million.

SAS Deferral True-Up

The purpose of an SAS deferral true-up is to reconcile the actual transmission access revenue received by ENMAX from its customers through both the base SAS rates and quarterly TAC true-up riders, to the actual transmission access costs paid to the AESO. ENMAX calculated its 2018 SAS deferral true-up as the difference between the actual transmission costs of $335.143 million and the sum of SAS base revenue and quarterly TAC revenue of $167.056 million and $152.313 million, respectively. The result was a net collection from customers of $15.773 million.

AESO 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.

On September 30, 2018, ENMAX received an AESO DAR invoice that involved a refund of $3.319 million. In addition, on September 27, 2019, the AESO applied to the AUC requesting approval for its deferral account balances for 2017 and 2018, and changes to its deferral account balances from 2006 to 2016. The proposed reconciliation resulted in a $24.255 million charge to ENMAX. The charge, along with the refund amount of $3.319 million from September 2018, results in a total collection from customers of $20.937 million.

Balancing Pool True-Up

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 2018, ENMAX paid $29.883 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 $29.958 million from its customers in 2018, necessitating a net refund of $0.075 million.

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. ENMAX calculated the total carrying costs to be a net collection of $0.959 million.

AUC Findings

The AUC approved a net collection of $37,788,326.

Rider Implementation Period and Customer Bill Impacts

The AUC reviewed the total bill impacts and found the rate impacts to be reasonable and unlikely to cause rate shock. It approved the 2018 TAC rider implementation effective January 1, 2020.

Rider C Analysis

Based on the Rider C analysis provided, 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.

TAC Rider Rate

For the purpose of this decision, the AUC accepted ENMAX’s proposal to calculate TAC rider rates using the 2020 forecast billing determinants. In making this determination, the AUC noted that the 2018 TAC rider would eventually be trued up to ensure that the approved amounts were collected from, or refunded to, customers (similar to the 2016 rider true-up in the current proceeding).

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