Rates – Transmission Service Charge Update
In this decision, the AUC considered an application from ATCO Gas requesting approval of an update to its 2020 transmission service charge rider (“Rider T”) rates, effective August 1, 2020. The AUC approved the updated Rider T rates.
Background
ATCO Gas flows through to its customers the rates charged by the transmission service provider, NOVA Gas Transmission Ltd. (“NGTL”). Rider T is the service charge used to collect forecast transmission costs and to refund or collect any differences between the prior year’s forecast and actuals. ATCO Gas forecasts its transmission expense based on NGTL’s rates and charges applied to the contract demand quantity (“CDQ”). Any difference between what ATCO Gas collects through Rider T based on its forecast and what it ultimately pays to NGTL based on actuals is recorded in a deferral account and refunded to, or recovered from, customers as part of a subsequent Rider T.
AUC Findings
Cross-Subsidization Between North and South Customers
In Decision 2014-062, the AUC approved the implementation of a province-wide Rider T rate to replace the previous practice of maintaining separate Rider T rates for ATCO Gas’s north and south service territories. In successive ATCO Gas Rider T decisions subsequent to Decision 2014-062, the AUC required ATCO Gas to provide analyses to assist the AUC to assess whether there was substantial cross-subsidization between north and south customers as a result of the province-wide implementation of a Rider T rate.
In the current application, ATCO Gas provided the following table setting out the differences between the proposed province-wide rates and the rates that would have resulted if calculated separately for north and south customers.
ATCO Gas’s analysis showed that, under province-wide Rider T rates, as compared to having separate rates for north and south, a typical (low-use) residential customer in the south would see a $0.99 decrease in their annual bill and a typical (low-use) residential customer in the north would see a corresponding increase of $0.90 due to differences in billing determinants and CDQ. The AUC found that this level of cross-subsidization was not significant enough to justify having separate rates for north and south, and was consistent with the AUC’s acceptance of similar minimal cross-subsidization in prior decisions approving ATCO Gas’s Rider T.
Rider T Rates and Bill Impacts
The following table sets out a comparison of the current and proposed rates for each of ATCO Gas’s rate groups:
ATCO Gas explained that, assuming an implementation date of August 1, 2020, the total annual charges for a residential (low-use) customer in the south service territory that utilizes 115 GJ annually would see an increase to $702 from $696, and a similar residential customer in the north service territory would see an increase to $742 from $736. ATCO Gas stated that the applied for 2020 Rider T rate changes are reasonable and would not result in undue rate shock compared to existing distribution rates.
The AUC found that the estimated rate impact of the August 1, 2020, Rider T was reasonable for all rate classes. The AUC stated that the implementation of the updated 2020 Rider T results in rate increases for all three rate groups, for both ATCO Gas North and ATCO Gas South.
The AUC approved the proposed new Rider T rates set out in Table 2. The AUC stated that the approved Rider T rates would remain in place until otherwise directed by the AUC.
