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AltaLink Management Ltd. 2019-2021 Transmission Facility Owner General Tariff Application Compliance Filing to Decision 23848-D01-2020, AUC Decision 25627-D01-2020

Link to Decision Summarized

Rates


In this decision, the AUC approved an application filed by AltaLink Management Ltd. (“AltaLink”) requesting approval of its compliance filing to Decision 23848-D01-2020, AltaLink’s 2019-2021 transmission facility owner (“TFO”) general tariff application (“GTA”). The AUC approved the resulting revenue requirements for the years 2019-2021 as filed by AltaLink.

Background

On May 29, 2020, AltaLink filed a compliance filing application with the AUC, pursuant to the AUC’s order in Decision 23848-D01-2020. AltaLink requested approval of its compliance with directions from Decision 23848-D01-2020 regarding AltaLink’s 2019-2021 TFO GTA.

In Decision 24757-D01-2019, the AUC granted final approval for the transfer and sale of specific transmission assets, located on the Piikani Reserve No. 147, from AltaLink to PiikaniLink Limited Partnership (“PLP”). In the same decision, AltaLink was granted approval to allocate a monthly amount of $435,654 of its approved 2019 interim tariff to PLP, In Decision 25307-D01-2020, the AUC granted final approval for the transfer and sale of specific transmission assets, located on the Blood Reserve No. 148, from AltaLink to KainaiLink Limited Partnership (“KLP”). In the same decision, AltaLink was granted approval to allocate a monthly amount of $269,443 of its approved 2020 interim tariff to KLP.

For reasons of regulatory efficiency and cost-effectiveness, AltaLink proposed that PLP’s 2019-2021 final tariffs and that KLP’s 2019-2021 final tariffs be considered in AltaLink’s compliance filing to Decision 23848-D01-2020. As such, AltaLink’s compliance filing to Decision 23848-D01-2020 included AltaLink’s responses to the decisions and directions from decisions 24757-D01-2019 and 25307-D01-2020.

AltaLink’s Responses to Directions Provided in Decision 23848-D01-2020

The AUC accepted that directions 4, 7, 9, 10, 11, 12, 13, 15, 16, and 22 provided in Decision 23848-D01-2020 will remain outstanding and are to be addressed at the time of AltaLink’s next GTA.

The AUC was satisfied that AltaLink complied with the requirements of directions 1, 2, 3, 5, 6, 8, 14, 18, 19, 20, and 21, in its compliance filing.

Directions 2 and 3

As per the AUC’s instructions in directions 2 and 3, AltaLink provided the wildfire risk maps for the Whitecourt fire region and the White Zone, as well as a status update of the Targeted Component and Structure Replacements in High-Risk Fire Areas (“HRFAs”) program (the “Targeted Program”) of the Wildfire Mitigation Plan.

While the AUC was satisfied that AltaLink complied with directions 2 and 3 provided in Decision 23848-D01-2020 and acknowledged that AltaLink was not adjusting its original forecast of $24.6 million for the Targeted Program in this 2019-2021 test period, the AUC noted that the additional costs that AltaLink requires to complete work related to the Targeted Program beyond this test period (the remaining $8.3 million) were not under consideration in this proceeding. The AUC advised that if AltaLink requires additional capital expenditures to complete this work beyond the current test period, it must apply for the associated capital amounts as part of its next GTA.

The AUC raised concerns regarding lines that were part of AltaLink’s capital replacement and upgrades (“CRU”) program that were moved into the Targeted Program. It was not clear to the AUC whether some of the $8.3 million in costs associated with the remaining work to be completed beyond this 2019-2021 test period, resulted from this proposed shift in program. It was also not clear whether AltaLink plans to apply a corresponding reduction to its CRU costs, also agreed to in the Negotiated Settlement Agreement (“NSA”), as a result of this change. AltaLink was directed to clarify in its next GTA whether it intends to apply for additional capital expenditures to complete work related to the Targeted Program.

Direction 5

As per the AUC’s instructions in Direction 5, AltaLink provided an updated table containing the length of transmission lines in km identified to be rebuilt, as well as a breakdown of forecast and actual costs incurred up to March 31, 2020, for the line rebuilds in HRFAs program of the Wildfire Mitigation Plan. The AUC was satisfied that AltaLink complied with Direction 5 provided in Decision 23848-D01-2020. The AUC approved the $7.1 million of forecast costs related to the line rebuilds in the HRFAs program of the Wildfire Mitigation Plan for the 2019-2021 test period subject to a complete prudence assessment and true-up as part of AltaLink’s next opening rate base.

Directions 8 and 14

As per the AUC’s instructions in directions 8 and 14, AltaLink provided an updated version of Exhibit 23848-X0321, AML Undertaking 005 Attachment (Known Violation Timelines and Mitigations Spreadsheet), to include all additional line spans that were identified with line clearance deficiencies since October 2019, and to include the additional columns that the AUC requested. Furthermore, AltaLink provided a summary of all line clearance mitigation (“LCM”) program activities to March 31, 2020, including the actual number of lines mitigated and the actual LCM program expenditures, and provided an update to its LCM program forecast for 2019, 2020 and 2021.

The AUC was satisfied that AltaLink complied with directions 8 and 14 issued in Decision 23848-D01-2020. Furthermore, the AUC was satisfied that, generally, AltaLink’s updated LCM program forecast, and the associated prioritization scheme and deficiency resolution timeline that AltaLink proposed in this compliance filing, appeared to reasonably balance the need to resolve a large number of clearance deficiencies with factors such as power system impacts, outage coordination, landowner and environmental requirements, and public safety. As part of AltaLink’s updated prioritization scheme and deficiency resolution timeline, the AUC considered it prudent that AltaLink adjusted the number of line spans that it plans to mitigate in this test period, to focus its mitigation efforts on resolving the higher risk clearance deficiencies first. Despite this, the AUC noted that it is still concerned with the significant number of clearance deficiencies that AltaLink has identified through its LiDAR surveys and engineering assessments, as they far exceed AltaLink’s historical deficiency rates. Additionally, the AUC is still concerned that the scope of the LCM program in this test period has drastically increased, as compared to previous test periods. In light of this, the AUC considered that the information being requested in directions 9, 10, 11, 12, 13, 15, and 16 from Decision 23848-D01-2020 are still necessary to assess the reasonableness of AltaLink’s incremental LCM expenditures in this test period.

The AUC approved $12.1 million of AltaLink’s incremental LCM program forecast, for a total LCM program expenditure of $30.9 million for the test period, but noted this $12.1 million LCM program expenditure will be subject to a complete prudence assessment and true-up as part of AltaLink’s next opening rate base.

AltaLink’s Responses to Directions Provided in Decision 22612-D01-2018

Concerning the AltaLink transfer of transmission assets to PLP and KLP and the associated Decision 22612-D01-2018, the AUC was satisfied that AltaLink complied with the requirements of directions 1, 2, 3, and 4 in this compliance filing.

PLP and KLP 2019-2021 Revenue Requirements

AltaLink stated that the approved methodology was used to develop PLP and KLP 2019-2021 revenue requirements. This methodology consists of an apportionment of the costs required to operate and maintain the assets of PLP and KLP, and according to AltaLink, it is consistent with the AUC findings of Decision 22612-D01-2018 and Decision 23848-D01-2020.

The main components of PLP and KLP 2019-2021 revenue requirements are summarized below:


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The AUC approved these requested revenue requirements.

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