AESO Deferral Account Reconciliation – Retroactive/Retrospective Ratemaking
The Alberta Electric System Operator (“AESO”) applied for approval of its 2015 deferral account reconciliation (“DAR”) application. (the “DAR Application”)
In the DAR application, the AESO requested that the AUC approve the current deferral account amounts on an interim and refundable basis, in order to settle deferral account amounts immediately with market participants.
In this Decision, the AUC explained that the AESO’s deferral account reconciles variances arising from the actual costs the AESO incurs in providing system access service and the forecast amounts the AESO recovers in rates charged to customers.
The AUC approved the DAR Application as filed and dismissed the Primary Services Group’s (the “PS Group”) request for relief to adjust the Rate DTS deferral account allocation back to 2008, for the reasons summarized below.
PS Group Concerns
The DAR Application was opposed, in part, by the PS Group. The PS Group submitted that the deferral account methodology used by the AESO was inconsistent with the approved tariff.
The PS Group submitted that the AESO’s methodology allocated a proportion of point of delivery charges to primary service credit eligible customers in excess of what those customers were responsible for under the approved ISO tariff.
Specifically, the PS Group submitted that the AESO’s DAR methodology caused an increase in the amount due for Rate DTS customers’ point of delivery charge, without offsetting that increase for customers who are eligible for the primary service credit as a result of owning their own substation facilities. The PS Group submitted that as a result of the AESO’s methodology, primary service credit eligible customers had been paying for substation related costs not caused by those customers.
Change to Approved Tariff
The AUC dismissed the PS Group’s requested relief on the basis that granting such relief would constitute a change in the approved tariff allocation methodology and that it was not a calculation error, as the PS Group submitted. As such, the AUC found that granting the requested relief would be contrary to the principles against retroactive or retrospective ratemaking.
Deferral Account Methodology Previously Approved
The AUC considered that its approval of the deferral account methodology in its previous decisions approved both the allocation and the methodology on a final basis.
Specifically, the AUC found that
(a) a final decision on the deferral account methodology was made in Decision 2009-010; and
(b) final decisions approving the specific allocation methodology, cost and cost variances, and deferral account amounts has already been issued for the years 2010 through 2014, as set out in the list of decisions identified in paragraph 91 of the Decision.
The AUC held that the AESO’s customers should be able to rely on the finality of the AUC’s decisions with respect to these aspects of prior deferral account reconciliations.
Retroactive Ratemaking
The AUC found that the PS Group’s request to change the allocation methodology to use Rate DTS connection charges net of Rate PSC credits would require a change to Rider C in the ISO tariff. The AUC held that the absence of express language in the ISO tariff that Rate PSC is subject to deferral account treatment in the approved tariff prevents the PS Group’s requested relief from falling under the deferral account exception to the rule against retroactive/retrospective ratemaking.
The AUC held that, although AESO customers are aware that Rate DTS and Rate FTS are subject to deferral account adjustments, customers could not reasonably have known that the AESO’s deferral account would be used to change anything other than a revenue or cost item. On this basis, the AUC concluded that approval of the deferral account methodology in its previous decisions approved both the allocation and the methodology on a final basis.
No New Information/Failure to Bring Concerns in Timely Manner
The AUC further supported its decision by finding that the relief requested was not brought forward in a timely manner. The AUC held that, even had it found the requested relief as falling under the deferral account exception to retroactive making, the PS Group’s adjustment as far back as 2008 would be unreasonable.
The AUC found that there was no new or different information available to the PS Group in April or May, 2016 that would not have been available to PS Group members during the course of the proceeding that led to Decision 2009-010 where the deferral account allocation methodology was first used, or during the five deferral account reconciliation proceedings that followed.
The AUC found that relevant information was available within the deferral account reconciliation applications such that the concerns of the PS Group could have been identified well before 2016.
Direction to the AESO
The AUC directed the AESO to address whether changes to the deferral account allocation methodology and to Rider C are warranted given the concerns raised by the PS Group, as part of its next ISO tariff application.
