Rates – Interim Transmission Facility Owner Tariff
In this decision, the AUC considered whether to approve the ENMAX Power Corporation (“ENMAX”) October 24, 2019 application (the “Application”) for a 2020 interim transmission facility owner tariff in the amount of $99.77 million to be collected by way of a monthly rate of $8.31 million effective January 1, 2020. The AUC approved the Application.
Background
ENMAX filed its 2018-2020 transmission general tariff application (“GTA”) with the AUC on December 12, 2018. ENMAX submitted that it is unlikely that a final transmission tariff would be approved before the third quarter of 2020.
ENMAX indicated that the proposed 2020 interim tariff was intended to reduce the increase that would otherwise result from the future implementation of a final 2020 tariff, by collecting 60 per cent of the revenue shortfall over the period of time commencing January 1, 2020, until the interim tariff is replaced by a revised interim or final 2020 tariff.
AUC findings
In Decision 2005-099, the AUC’s predecessor (the Alberta Energy and Utilities Board) established a test to evaluate interim rate applications.
The first part of the test relates to quantum and need factors, and includes the following considerations:
(a) the identified revenue deficiency should be probable and material;
(b) all or some portion of any contentious items may be excluded from the amount collected;
(c) is the increase required to preserve the financial integrity of the applicant or to avoid financial hardship to the applicant?
(d) can the applicant continue safe utility operations without the interim adjustment?
The second part of the test relates to the public interest and includes the following considerations:
(a) interim rates should promote rate stability and ease rate shock;
(b) interim adjustments should help to maintain intergenerational equity;
(c) can interim rate increases be avoided through the use of carrying costs?
(d) interim rate increases may be required to provide appropriate price signals to customers; and
(e) it may be appropriate to apply the interim rider on an across-the-board basis.
With respect to the quantum and need factors, the AUC found that the revenue shortfall of $16.48 million projected by ENMAX for 2020 in the absence of the interim adjustment is material and is probable. Further, due to the timing of ENMAX’s GTA and associated compliance filing, final rates for ENMAX are not likely to be in place before the middle of 2020.
The AUC also found that ENMAX’s request to recover 60 per cent of its 2020 revenue shortfall was reasonable as it removed revenue amounts associated with any contentious or settled items in its GTA and excluded them from the amount proposed to be collected on an interim basis.
With respect to the public interest factors articulated in the second part of the test, the AUC found that the collection, beginning January 1, 2020, of a portion of any rate increase resulting from ENMAX’s final 2020 tariff, promotes rate stability through a gradual rate increase. Therefore, ENMAX’s proposed 2020 interim tariff would help to levelize the transmission tariff in 2020, maintain intergenerational equity and reflect the correct price signal.
Overall, the AUC found that ENMAX’s proposed 2020 interim transmission tariff achieved a reasonable balance among the considerations of the two-part test.
AUC Order
The AUC ordered that ENMAX’s 2020 interim transmission facility owner tariff in the amount of $99.77 million is approved, to be collected by way of a monthly rate of $8.31 million, effective January 1, 2020, on an interim basis.
