Transmission Facility Owner Tariff
In this decision, the AUC found that the ATCO Electric Ltd (“ATCO”) approved 2020 interim tariff should be set based on the 2019 currently applied-for rates in Proceeding 248051 in the amount of $691.9 million effective January 1, 2020, until otherwise directed by the AUC.
Background and application
ATCO filed an application with the AUC, requesting interim approval of its forecast 2020 Transmission Facility Owner (“TFO”) tariff, effective January 1, 2020. ATCO requested approval of the interim tariff based on its forecast 2020 tariff of $719.7 million, resulting in an interim tariff of $59.98 million on a monthly basis. ATCO submitted that the applied-for interim tariff was higher than the approved 2019 interim tariff primarily due to an increase in the recovery of depreciation associated with net salvage and life parameter updates, and inflationary pressures on operating costs.
The AUC acknowledged ATCO’s arguments as to the probability of its forecasted revenue shortfall and why it considered that its requested increase should not be subject to any reduction. However, ATCO’s requested revenue requirements, including the matters identified as the reason for the requested increase, had not yet been adjudicated and so remained uncertain.
The AUC noted that a significant portion of the requested interim tariff increase was related to contentious items, as $30.7 million of the requested $45.9 million interim tariff increase was from recovery of depreciation.
The AUC found that the approved interim tariff should be set based on ATCO‘s 2019 currently applied for tariff of $691.9 million. The AUC considered this to be a reasonable point of reference, as the 2019 currently applied-for tariff was based on a rate structure and costing methodology which were thoroughly tested in ATCO’s 2018-2019 general tariff application. Further, the AUC considered that an interim tariff of $691.9 million would help smooth out the total increase in costs for 2020 and avoid rate shocks to ratepayers.