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ENMAX Power Corporation 2020 Annual Performance-Based Regulation Rate Adjustment (AUC Decision 24875-D01-2019)

Link to Decision Summarized

Performance-Based Regulation


In this decision, the AUC considered ENMAX Power Corporation (“ENMAX”)’s 2020 annual performance-based regulation (“PBR”) rate adjustment filing. The AUC made the following determinations:

  • the adjustments to the interim notional 2017 revenue requirement and 2018 base K-bar for the 2018-2022 PBR plan for ENMAX were approved. However, these amounts would remain interim since certain placeholders remain unresolved;

  • the interim 2020 electric distribution service base rates and the corresponding rate schedules, with adjustments for 2018 and 2020 K-bar, Type 1 capital, line loss reduction program, 2018 hybrid deferral account, and Y factor, were approved effective January 1, 2020;

  • a distribution access service (“DAS”) adjustment rider refund was approved in the amount of $2.10 million effective January 1, 2020 to March 31, 2020; and

  • distribution tariff terms and conditions were approved effective January 1, 2020.

Background and application

On September 10, 2019, ENMAX submitted its 2020 annual PBR rate adjustment filing to the AUC, requesting approval of its 2020 electric distribution service rates and the corresponding rate schedules, to be effective January 1, 2020, on an interim basis. ENMAX also requested approval of its distribution tariff terms and conditions (“T&Cs”) of electric distribution service, to be effective January 1, 2020.

Adjustments to the interim notional 2017 revenue requirement and 2018 base K-bar

In Decision 21508-D01-2017 the AUC approved ENMAX’s 2017 forecast capital tracker amounts as part of a negotiated settlement agreement. Subsequently, in Decision 23694-D01-2019, the AUC approved a true-up of the 2017 forecast amounts on an actual basis, and the resultant actual K factors, by way of approving an additional NSA.

In the present proceeding, ENMAX explained that Decision 23694-D01-2019 affected ENMAX’s notional 2017 revenue requirement necessitating adjustments to its 2018 and 2019 rates.

ENMAX proposed a number of adjustments.  In aggregate, these adjustments resulted in a 2018 K-bar true-up of ($0.61) million and associated carrying costs of ($0.04) million.

The AUC considered the adjustments made to the notional 2017 revenue requirement and 2018 base K-bar amounts to be generally in alignment with the Commission’s findings in Decision 21508-D01-2017 and Decision 23694-D01-2019. The AUC approved the resultant adjustments to the interim notional 2017 revenue requirement and 2018 base K-bar as filed. However, the AUC observed that these amounts would remain interim pending AUC determinations in Proceedings 23966, 24325, and 24761.

I factor and the resulting I-X index

The AUC reviewed ENMAX’s calculations and approved the I factor of 1.36 per cent and the resulting I-X index value of 1.06 per cent for 2020.

K-bar factor

The AUC approved ENMAX’s 2020 K-bar in the amount of $18.29 million. This amount remained interim pending finalization of all actual capital tracker amounts incurred during the 2015-2017 PBR term. The 2020 K-bar will be subject to a further true-up for the 2020 actual approved cost of debt.

Type 1 capital

ENMAX had one Type 1 capital placeholder. The AUC approved ENMAX’s placeholder request for cost recovery of 90 per cent of the management-approved internal 2019 forecast of $18.81 million in capital additions for the costs associated with relocation of ENMAX’s infrastructure in years 2020 through 2022, pursuant to The City of Calgary’s Green Line Light Rail Transit (“LRT”) project and the corresponding incremental revenue requirement of the 90 per cent placeholder in the amount of $1.02 million.

ENMAX requested approval of a Type 1 capital placeholder for the 2020 revenue requirement amount of $1.25 million associated with the Green Line LRT project. The AUC approved the 2020 revenue requirement in the amount of $1.25 million for the Green Line LRT project as filed, subject to the AUC’s ultimate determination as to whether this project meets the Type 1 capital criteria and the expenditures are prudent in the true-up application that ENMAX indicated would be filed in 2020.

Distribution line loss reduction program true-up

The AUC reviewed ENMAX’s schedules pertaining to the line loss reduction program costs and savings. The AUC noted that the net savings amount would be equally shared between ENMAX and its customers.

The AUC found that the 2018 true-up difference of $0.81 million results from the previously approved forecast of $0.71 million in Decision 23355-D02-2018 and the actual data of $1.52 million. The AUC approved ENMAX’s applied-for line loss reduction program savings adjustment as filed.

The AUC noted that ENMAX’s line loss reduction program ended on December 31, 2018, concluding a 10-year approved term. Therefore, the 2018 adjustment considered in this proceeding is the final adjustment for the program under this term.

Y and Z factor materiality threshold

The AUC approved ENMAX’s Y and Z factor materiality threshold to be $1.87 million for 2020 on an interim basis. As set out in Decision 20414-D01-2016 (Errata), this interim threshold amount will be finalized upon approval of the final notional 2017 revenue requirement.

Y factor

The AUC noted that the Y factor costs applied for were of a type that the AUC approved for Y factor treatment in Decision 20414-D01-2016 (Errata). The Y factor amounts were approved.

Forecast billing determinants and Q

ENMAX reconciled forecast and actual billing determinants from 2018. There were variances larger than ± five per cent for energy consumption in residential, small commercial and large commercial primary rate classes due to more heating degree days and cooling degree days than initially forecast. There were also variances larger than ± five per cent for a number of sites and energy consumption in the large distributed generation rate class due to energizing an additional two sites that were not forecast. Finally, there was a larger than ± five per cent variance for energy consumption in the street lighting rate class. ENMAX stated that “the increase in energy consumption is due to the increased number of fixtures than initially anticipated.”

The AUC considered that variances from forecasts resulting from circumstances such as those described by ENMAX for 2018 were reasonable.

The 2020 forecast billing determinants were approved as filed. The AUC also approved ENMAX’s 2020 Q of 0.63 percent. The AUC directed ENMAX to continue providing Q value calculations in its future annual PBR rate adjustment filings.

Distribution rates

The AUC accepted the general principles and methodologies utilized by ENMAX for calculating its 2020 PBR rates.

The AUC also reviewed the typical bill impacts from December 2019 to January 2020, and observed that the month-over-month decreases to customer bills from December 2019 to January 2020, were not expected to exceed 10 per cent for all rate classes.

The AUC approved ENMAX’s 2020 PBR rates on an interim basis, effective January 1, 2020.

Distribution access service (“DAS”) adjustment rider

ENMAX requested approval to include a DAS adjustment rider to reconcile amounts related to 2015-2016 K factor true-up, 2018-2019 base rates true-up and 2019 DAS adjustment rider true-up. The AUC approved the DAS adjustment rider refund in the amount of $2.10 million, as filed, and ENMAX’s proposal of implementing the rider adjustment over the three-month period, from January 1 to March 31, 2020.

ENMAX’s hybrid deferral account proposal

ENMAX proposed to capture any changes to historical AESO contribution amounts through a true-up mechanism by way of a deferral account, with the properties of K-bar continuing to provide incremental capital funding for new AESO contributions. ENMAX outlined specifics of the deferral account methodology as follows:

  • projects from the 2015-2017 PBR term where a permit and licence (“P&L”) had been issued by December 31, 2017, would be subject to deferral account treatment by way of a new PG5 Deferral Account; and

  • projects that receive P&L after December 31, 2017, would be managed under the incentive properties of K-bar.

The AUC accepted ENMAX’s proposal with the qualification that projects, including any project changes, that had received a P&L during the 2015-2017 PBR term shall be given deferral account treatment provided that the AUC has approved the need, scope, level, timing and associated costs for the project as part of capital tracker review, including by way of approving a negotiated settlement agreement. Projects that receive permit and licence after December 31, 2017, shall be managed under the incentive properties of K-bar.

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