Performance-Based Regulation
In this decision, the AUC considered the 2020 annual performance-based regulation (“PBR”) rate adjustment filing of AltaGas Utilities Inc. (“AltaGas”). The decision included the following determinations by the AUC:
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the adjustments to the interim notional 2017 revenue requirement and 2018 base K-bar for the 2018-2022 PBR plans for AltaGas were approved but remained interim since certain placeholders remained unresolved;
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the 2020 distribution service rates, special charges, Rider F and the corresponding rate schedules were approved effective January 1, 2020, on an interim basis;
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the customer and retailer terms and conditions of gas distribution service were approved effective January 1, 2020; and
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the rates that were approved for 2017 on an interim basis were approved on a final basis.
Background
In September 2019, AltaGas submitted its 2020 annual PBR rate adjustment filing to the AUC, requesting approval of its 2020 distribution service rates, special charges, Rider F and corresponding rate schedules, to be effective January 1, 2020, on an interim basis. AltaGas also requested approval of its customer and retailer terms and conditions (“T&Cs”) of gas distribution service, to be effective January 1, 2020.
Ongoing proceedings with the potential to impact AltaGas 2018, 2019, and 2020 PBR rates
AltaGas advised the AUC that placeholders will remain until decisions are issued in AUC Proceedings 24161, 24325, 24609 and 25031.
Adjustments to the interim notional 2017 revenue requirement and 2018 base K-bar
AltaGas was directed to review all of its calculations and adjust for any material impacts regarding the leap year in a future application. The 2018 K-bar reduction of $51,949 and refund to customers of $2,700 in associated carrying costs were approved. The AUC noted that the 2018 K-bar amount remains interim pending the outcomes of the proceedings outlined above.
I factor and the resulting I-X index
The AUC approved the I factor of 1.36 per cent and the resulting I-X index value of 1.06 per cent for 2020.
K factor
AltaGas currently has one Type 1 capital placeholder, approved in Decision 23898-D01-2019 (Errata). The AUC approved AltaGas’ placeholder request for cost recovery of 90 per cent of the management-approved internal 2019 forecast of $10.0 million in total forecast project cost associated with the Etzikom lateral project and the 2019 revenue requirement associated with this placeholder of $0.17 million.
The AUC reviewed the detailed calculation of the revenue requirement associated with AltaGas’ 2020 Etzikom lateral project and found that the calculations were correct. The $0.68 million 2020 Etzikom lateral revenue requirement was approved, subject to the AUC’s ultimate determinations, in the true-up application that AltaGas indicated would be filed in 2020, as to whether this project meets the Type 1 capital criteria and whether the expenditures are prudent.
K-bar factor
The AUC approved AltaGas’ 2020 K-bar in the amount of $6.95 million. It noted that this amount remains interim, pending the outcomes from the proceedings detailed above. It further noted that the 2020 K-bar will be subject to a further true-up for the 2020 actual approved cost of debt.
Y and Z factors
Y and Z factor materiality threshold
The AUC found that AltaGas calculated its Y and Z factor materiality threshold of $0.53 million for 2020 using the methodology prescribed in Decision 20414-D01-2016 (Errata) and approved this amount on an interim basis. The AUC further noted that pursuant to Decision 20414-D01-2016 (Errata), this interim threshold amount will be finalized upon approval of the final notional 2017 revenue requirement.
Y factor
AltaGas applied for Y factor adjustments for 2020 that included AUC assessment fees; Utilities Consumer Advocate assessment fees; hearing costs for interveners; Natural Gas Settlement System Code; production abandonment costs; and carrying charges on true-up balances. AltaGas’ Y factor amounts were approved, as filed.
Forecast billing determinants and Q
Based on its review and assessment of AltaGas’ methodology and billing determinants in this proceeding, the AUC found that the methodology and the resulting 2020 forecast billing determinants were reasonable. The AUC reviewed AltaGas’ proposed changes to its forecasting methodology for the irrigation rate class and found the changes reasonable and reasonably likely to result in improved long-term forecasting accuracy.
The AUC approved AltaGas’ proposed change to its forecasting methodology for the irrigation rate class and directed AltaGas to continue using this forecasting methodology for the remainder of the PBR term unless otherwise directed by the AUC. The 2020 forecast billing determinants were approved as filed.
The AUC also reviewed AltaGas’ calculation of its 2020 Q and found it to be reasonable. The AUC therefore approved AltaGas’ 2020 Q of 0.04 percent.
Distribution rates
The AUC approved AltaGas’ 2020 distribution rates and special charges on an interim basis, effective January 1, 2020. These 2020 rates shall remain interim until remaining placeholders have been approved by the AUC. The 2020 rates will be finalized following such approvals and any required true-up adjustments will be made in accordance with directions subsequently provided by the AUC.
The AUC found that all outstanding K factor and Y factor true-ups and placeholder adjustments had been resolved for 2017 and approved AltaGas’ 2017 rates as final.
