Exemption from ISO Reporting Requirements
In this decision, the AUC approved the application from Alberta PowerLine Limited Partnership (“APL”) requesting an exemption from the reporting requirements of Rule 005: Annual Reporting Requirements of Financial and Operational Results. In its application, APL further requested that the exemption be approved for the duration of APL’s contractual obligation to operate the Fort McMurray West transmission facilities, which is expected to terminate on June 27, 2054.
Background
APL was an electric “utility established specifically to develop the Fort McMurray West 500 kilovolt (“kV”) transmission project.” Section 4 of the schedule “Critical Transmission Infrastructure” in the Electric Utilities Act (”EUA”)identified two single-circuit 500 kV alternating current transmission facilities from the Edmonton region to the Fort McMurray region as critical transmission infrastructure. Critical transmission infrastructure is subject to Part 2.1 of the Electric Utilities Act (“EUA”).
Section 24.2 of the Transmission Regulation specified that the Fort McMurray project, as critical transmission infrastructure, must be procured by a competitive process developed by the Independent System Operator, and the AUC must approve the process. The Independent System Operator in Alberta operated as the Alberta Electric System Operator (“AESO”). The AUC approved the competitive process, to be conducted by the AESO, for the Edmonton Fort McMurray transmission lines.
In Decision 23161-D01-2018, the AUC found that the contractual agreement between the AESO and APL (“Project Agreement”) related to certain transmission assets for the Fort McMurray West Transmission Project was prudent, as required by section 24.2(4) of the Transmission Regulation. The Project Agreement sets out the monthly payments from the AESO to ALP over the Project Agreement’s operating period.
In the current application, ALP confirmed that the Project Agreement defines the payments made to ALP by the AESO for the use of the facilities, and the agreement is expected to terminate on June 27, 2054.
Findings
Section 8(2) of the Alberta Utilities Commission Act enables the AUC to act on its own initiative or motion and do all things that are necessary for or incidental to the exercise of its powers and the performance of its duties and functions. Section 8(5)(b) specifies the AUC may make an order granting the relief applied for. The AUC found that ALP’s request for an exemption from Rule 005 falls within the AUC’s discretionary authority. The AUC considered that a partial or full exemption should only be granted in limited circumstances.
As an owner of an electric utility, as per sections 1(jj) and 1(o) of the EUA, ALP has a duty to maintain accounts and records under section 118(1) of the EUA. Rule 005 annual filings, the manner in which the AUC gathers reports of electric utilities’ financial and operational information, has been created under the AUC’s rule-making authority under section 118(2) of the EUA.
ALP relied on the terms of the Project Agreement and its inability to report information to the extent required by Rule 005 as reasons why the exemption should be granted. The AUC determined that this characteristic does constitute a compelling justification for granting an exemption to ALP from filing under Rule 005.
The utility’s revenues arose out of a legislatively sanctioned competitive process approved by the AUC and resulted in a Project Agreement between the utility and the AESO, which determined ALP’s revenues received over the life of the agreement. ALP’s general tariff application was approved in Decision 23161-D01-2018 based on the terms of the Project Agreement, including the expected termination date of the agreement in 2054.
The AUC noted that the payments required by the Project Agreement are ultimately included in the AESO tariff as part of the AESO’s total administrative costs. The AESO’s administrative costs are subject to the oversight of the AESO’s board and the AUC’s review of these costs is limited.
The AUC also made note of certain changes in the Project Agreement and prices which are addressed through the adjustment methodologies that were approved by the AUC in Decision 2013-044. These are subject to a materiality threshold and other conditions. If a change is allowed for by the terms of the Project Agreement such as the payment, schedule and other obligations, section 24.3 of the Transmission Regulation allows for the AESO and ALP to change the agreement. Section 24.3(3) of the Transmission Regulation states that “The Commission’s approval must be obtained before the ISO and the eligible person make a change if in the opinion of the ISO (a) a material change to the resulting arrangement is required, and (b) the change may not be made under the terms of a resulting arrangement.” In the event of a dispute between the AESO and APL regarding a change, either party can submit the dispute to the AUC for its determination, under section 24.3(4) of the Transmission Regulation. Because of these provisions, the AUC noted that it will have oversight over changes or disputes pursuant to sections 24.3(3) and 24.3(4) tof the Transmission Regulation that will allow the AUC to compel information to resolve the dispute and annual Rule 005 reporting is unnecessary in the circumstances.
While transparency of utilities’ financial and operational information is generally a benefit of Rule 005, the AUC found that the transparency of ALP achieved through this reporting would be limited. Rule 005 reporting as a tool for comparison to other electric utilities would also be relatively limited because ALP’s revenues are not recorded through a traditional rate base rate-of-return methodology, operating and maintenance costs are not classified by comparable expense categories, and only a subset of Rule 005 information and schedules can be reported.
The AUC granted the exemption from the annual reporting requirements of Rule 005, as filed. The exemption would apply until the agreement terminates in 2054. Further, the AUC confirmed that the approved exemption applies to the 2019 Rule 005 reporting requirements. The AUC noted that the granting of this exemption did not relieve ALP from its duty to maintain accounts and records in accordance with section 118(1)(a) of the EUA. The AUC further noted that this decision does not preclude or limit the AUC’s authority under section 118(1)(b) of the EUA to require the disclosure of financial or operational information in future proceedings.
