Rates – True-Up – Transmission Access Charge
In this decision, the AUC considered an application by EPCOR Distribution & Transmission Inc. (“EPCOR”) 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 $15.23 million was approved as filed, by way of a Rider J. This rider came into effect starting January 1, 2020.
On August 15, 2019, EPCOR filed an application with the AUC requesting approval of its 2018 annual TACDA true-up by way of a Rider J.
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 EPCOR’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 EPCOR pays to the AESO in that year.
In accordance with the provisions of the performance-based regulation (“PBR”) framework approved in Decision 2012-237, EPCOR’s TACDA is a dollar-for-dollar flow through of the AESO tariff charges for the duration of its 2013-2017 PBR term. The AUC adopted the same provision for the 2018-2022 PBR term in Decision 20414-D01-2016 (Errata).
Details of the Application
EPCOR applied for a net 2018 TACDA collection of $15.23 million from customers. EPCOR proposed to collect its 2018 TACDA true-up amount by way of a Rider J to be in effect from January 1, 2020, to December 31, 2020.
2018 TACDA True-Up amount and Rider J rate
The components of the 2018 true-up amount include prior transmission access charge (“TAC”) riders, the system access service (“SAS”) deferral true-up, AESO deferral account rider (“DAR”) true-up, the Balancing Pool true-up, and carrying costs associated with those amounts.
Deferral Account 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. EPCOR’s 2016 TACDA rider, approved in Decision 22887-D01-2017, resulted in a net refund of $12.28 million. EPCOR stated that it refunded $12.26 million over the refund period. The difference results in a refund of $0.02 million.
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. EPCOR’s total 2018 transmission access revenues for distribution connected customers, including revenues received through its quarterly TACDA true-up riders, amounted to $253.37 million, which, when compared to total costs of $250.82 million, results in a refund to customers of $2.55 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 27, 2019, the AESO applied to the AUC for a 2017-2018 DAR requesting to charge or refund amounts from market participants on an interim refundable basis by December 3, 2019. The reconciliation amount to EPCOR was a collection of $19.0 million. This amount was broken down between non-direct connect customers ($18.0 million) and direct connect customers ($1.0 million). EPCOR explained that it included the AESO’s proposed refund in this application because of the materiality of the amount.
Balancing Pool True-Up
The purpose of EPCOR’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 $23.38 million from EPCOR. Due to the differences between forecast and actual billing determinants, EPCOR collected $23.42 million from its customers in 2018, necessitating a net refund of $0.04 million. EPCOR proposed to allocate the Balancing Pool true-up to all customer rate classes, with the exception of direct connect customers, based on actual 2018 energy consumption by rate class.
EPCOR 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. The total carrying costs amounted to a net refund of $0.15 million.
The AUC approved a net collection of $15.23 million.
Rider Implementation Period and Customer Bill Impacts
The AUC reviewed the total bill impacts of the proposed Rider J and found the rate impacts to be reasonable and unlikely to cause rate shock. It approved the Rider J effective January 1, 2020.
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 J Rate
For the purposes of this decision, the AUC accepted EPCOR’s proposal to calculate the Rider J rate using the 2020 forecast billing determinants. In making this determination, the AUC noted that the 2018 TAC deferral account rider would eventually be trued up to ensure the approved amounts were collected from or refunded to customers.