Regulatory Law Chambers logo

ATCO Pipelines 2019 Interim Revenue Requirement Application (AUC Decision 24285-D01-2019)

Link to decision summarized

Interim Revenue Requirement

In this decision, the AUC considered ATCO Pipelines (“ATCO”)’s request for a 2019 interim revenue requirement. The AUC approved a 2019 interim revenue requirement in the amount of $277,821,000 to be collected by ATCO by way of a one-time charge of $115,759,000, effective May 1, 2019, and a monthly rate of $23,151,800, effective June 1, 2019, for the remaining seven months of 2019.

The AUC approved a 2019 interim revenue requirement increase of $12,595,000, which was 59 percent of the original applied for increase.

The AUC found that ATCO’s request to recover 100 percent of its revised 2019 revenue shortfall was not reasonable as it included contentious items identified by interveners in the general rate application and in Proceeding 23799, which, while material, were not probable. These items were not yet adjudicated, and the revenue requirement of the items remained uncertain.

ATCO’s revenue requirement was billed to NOVA Gas Transmission Ltd. (“NGTL”) on a monthly basis and was included within NGTL’s revenue requirement and rates. Any impact to end-use customers was, therefore, subject to rate determinations of NGTL by the NEB. As a result, the AUC’s analysis of rate shock was predominately focused on the proposed increase of the interim rate, with an understanding that changes in ATCO’s revenue requirement would have an impact on NGTL’s rates and rate design.

The AUC found that by collecting a portion of the increase that would result from the future implementation of ATCO’s final 2019 revenue requirement effective May 1, 2019, promoted rate stability for customers. Any potential rate shock is minimized by permitting a gradual revenue requirement increase. In addition, the AUC’s approval of an interim increase to the revenue requirement that will be charged to NGTL on a monthly basis attempted to preserve intergenerational equity by ensuring that the current revenue requirement is charged to current customers. Any direct rate impact to end-use customers will ultimately be subject to the determinations of the NEB on NGTL’s rates.

The AUC found that this 2019 interim rate was reasonable as it allowed the following:

(a) recovery of the portion of the requested revenue requirement increase that was probable and material;

(b) the continued financial integrity of ATCO; and

(c) reliable service to customers.

The 2019 interim revenue requirement will be trued up when the AUC approves ATCO’s final 2019-2020 revenue requirement in the general rate application.

Related Posts