General Tariff Application – Compliance Filing
In this decision, the AUC considered AltaLink Management Ltd.’s (“AltaLink”) compliance with the AUC’s directions set out in:
(a) Decision 3524-D01-2016, which determined AltaLink’s 2015-2016 general tariff application (“GTA”); and
(b) Decision 21827-D01-2016, regarding AltaLink’s proposed refund of previously collected construction work in progress (“CWIP”)-in-rate base amounts.
For the reasons summarized below, the AUC:
(a) denied AltaLink’s proposal to recapitalize allowance for funds used during construction (“AFUDC”) in the amount of $7.1 million related to cancelled transmission projects;
(b) directed AltaLink to refund:
(i) $267.1 million related to the amount of return it collected from customers on its CWIP-in-rate base balances over the years 2011-2014;
(ii) $22.7 million related to the return earned on the accumulated CWIP-in-rate base returns in the years 2011-2014; and
(iii) $22.4 million related to the return earned on the accumulated CWIP-in-rate base returns in the years 2015-2016;
and
(c) directed AltaLink to submit direct-assigned capital deferral account (“DACDA”) schedules for the years 2011 to 2014 to calculate the refund of over-collected revenue requirement resulting from the tax adjustments.
Refund of the return on CWIP-in-rate base balances that were paid to AltaLink
AltaLink stated that it had collected $268.5 million of returns on the CWIP-in-rate base balances between 2011 and 2014. Of the $268.5 million collected, $1.4 million was to be excluded as it was related to projects that were approved as final and were therefore not eligible to be refunded. This resulted in a net amount eligible to be refunded of $267.1 million.
AltaLink proposed to refund $246.4 million, of which $229.7 million was related to the return calculated on CWIP. AltaLink explained that the $229.7 million was the amount of AFUDC it calculated to be attributed to the actual project costs for the years 2011-2014.
The difference between the amount that AltaLink had collected in its GTA-approved forecast and the amount AltaLink proposed to refund in this application was $37.4 million. AltaLink stated it transferred that amount to its deferral account and refunded it in an unspecified DACDA compliance filing.
The AUC found that:
(a) AltaLink incorrectly excluded the $37.4 million as part of the refundable amount; and
(b) the amount collected and, therefore, the amount eligible to be refunded by AltaLink was $267.1 million.
The AUC directed AltaLink to refund the $267.1 million of CWIP-in-rate base return it collected from customers in the years 2011 to 2014.
Refund related to tax adjustments from the removal of CWIP-in-rate base return
The AUC noted that the increase of $2.7 million in taxable income appeared to require an additional $24.9 million in capital cost allowance deductions, yet AltaLink’s entire capital cost allowance claim on its whole 2012 DACDA revenue requirement only required a claim of $17.2 million to make the taxable income zero. The AUC found that such an outcome could not be reasonable or correct.
The AUC, therefore, directed AltaLink to refile its compliance with DACDA schedules, for the years 2011 to 2014, as part of AltaLink’s third compliance filing. The AUC directed AltaLink to use the same calculation of taxable income that it used in its DACDA applications, as well as adjusting its capital cost allowance claim such that the taxable income was zero, or until the maximum allowable capital cost allowance claim was reached.
