Rates
In this decision, the AUC approved the application from ATCO Gas (“ATCO”), a division of ATCO Gas and Pipelines Ltd. for an unaccounted-for gas (“UFG”) Rider D rate of 1.102 per cent, effective November 1, 2020. The AUC also approved ATCO’s request to include the Government of Canada carbon levy associated with line heater fuel use in its load-balancing deferral account (“LBDA”), but denied the request that other future carbon or climate change-related fees associated with line heater fuel be approved for collection through the LBDA. The AUC also denied ATCO’s request for a no-notice process for future Rider D applications.
Background
Charges for UFG are recovered in-kind from all shippers on the ATCO Gas distribution system, including the default supply providers by way of a Rider D. The AUC noted that upon approval of ATCO Gas’s proposed Rider D of 1.102 per cent, all customers of retailer and default supply providers utilizing distribution access service for delivering gas off the ATCO Gas distribution system will be assessed a distribution UFG charge of 1.102 per cent at the point of delivery. The effect is that all retailer and default supply provider customers must buy an extra 1.102 per cent of natural gas in order to zero-balance their receipts and deliveries on the ATCO Gas system.
Issues
Calculation of Rate Rider D
Consistent with previous Rider D applications, ATCO Gas calculated its Rider D rate using measurement data from the preceding three years, in this case from January 2017 to December 2019. ATCO Gas then averaged the UFG percentages for 2017, 2018, and 2019 to determine the Rider D rate for 2020.
Compliance with AUC Directions from Decision 24815-D01-2019
ATCO explained that the seasonal differences in UFG were a result of ATCO having over 1.2 million delivery points, of which the majority were read on monthly cycles. The Daily Forecasting and Settlement System (”DFSS”) allocates monthly meter readings to daily flow using daily average temperatures and other factors such as season and day of the week. The calendarized monthly deliveries reported are calculated estimates and affect the accuracy of UFG on a month to month basis in the shoulder and summer months.
ATCO further attributed the seasonal differences in UFG to the fact that ATCO designs and builds the distribution system for peak operating conditions. During the shoulder and summer months, the operation of the distribution system needs to be adjusted to ensure accurate measurement during low-flow conditions. The appropriate timing of these adjustments is weather dependent since local temperature fluctuations are unpredictable
With respect to the direction regarding clear explanation of seasonal differences, measurement corrections or differences in UFG, ATCO identified the following issues that could cause UFG to increase or decrease:
In response to the direction to provide information on what steps had been taken to reduce UFG, ATCO noted it took various steps to minimize the UFG amount. This included implementing procedures to ensure measurement accuracy in the expected flow conditions.
The AUC lastly directed ATCO to provide details with respect to all measurement adjustments showing the reconciliation of prior years’ data. In response, ATCO Gas and ATCO Pipelines are upgrading measurement equipment, data monitoring, verification of measurement data, seasonal operational adjustments, adjusting sample points and heat areas, as necessary.
ATCO stated that the 2019 UFG of 1.267 per cent was in line with comparable prior year fluctuations including 1.211 per cent for 2018 and 1.368 per cent for 2013.
Government of Canada Carbon Levy
In this application, ATCO proposed that the Government of Canada carbon levy associated with line heaters be collected through the LBDA. ATCO was directed to pay a carbon levy of $1.567 per gigajoule (“GJ”) on fuel that is combusted in Alberta during the delivery of natural gas to customers. The Government of Canada carbon levy replaces the previous Government of Alberta levy, and ATCO considered it to be a like-for-like replacement. Therefore ATCO requested the same recovery mechanism for the Government of Canada carbon levy on line heater fuel through the LBDA. ATCO estimated the cost of the Government of Canada carbon levy on line heaters in 2020 to be approximately $425,000.
Findings
The AUC approved Rider D at 1.102 per cent and the Rider D Schedule, effective November 1, 2020. The AUC recognized that UFG is an element of operating a natural gas distribution system and accepted the reasons cited by ATCO for increases and decreases in UFG.
Regarding directions from Decision 24815-D01-2019, the AUC found ATCO to have complied with the directions given. ATCO was directed to continue to provide clear explanations for seasonal UFG differences, measurement corrections, and reasons for UFG increases or decreases. The AUC further directed ATCO to continue providing information on practices and procedures it had employed to reduce UFG.
Consistent with the Government of Alberta carbon levy treatment approved in Decision 22889-D01-2017, the AUC approved ATCO’s proposal for the same recovery mechanism for the Government of Canada carbon levy on line heater fuel through the LBDA.
The AUC directed ATCO, in its next Rider D application, to show the monthly line heater fuel usage, the associated carbon levy dollars, and the difference from the previous year.
The AUC denied ATCO’s request for approval of the collection of other future carbon or climate change-related fees associated with line heater fuel through the LBDA, as the AUC did not find this necessary at the time and did not see the approval reducing the regulatory burden.
The AUC further did not grant ATCO’s request that “all future carbon or climate change fees” be included in the LBDA without having the details of the program or its impacts on line heater fuel. In the case of additional carbon or climate change programs that would affect ATCO’s line heater usage, the impact to the LBDA would be best addressed at the time any such program is implemented or enacted.
The AUC was not convinced that it would be appropriate for future Rider D rate updates to occur through a no-notice process as outlined in AUC Bulletin 2015-09. Given that UFG had been trending upward from 2017 to 2019, the AUC considered that UFG should be monitored in future UFG Rider D proceedings, that issues related to future UFG application could be contentious, and that some process could be required to test the evidence presented in those proceedings. The AUC denied ATCO’s request for a no-notice process in its future UFG Rider D applications.
