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EPCOR Distribution & Transmission Inc. 2020 Annual Performance-Based Regulation Rate Adjustment (AUC Decision 24882-D01-2019)

Link to Decision Summarized

Performance-Based Regulation

In this decision, the AUC considered the 2020 annual performance-based regulation (“PBR”) rate adjustment filing of EPCOR Distribution & Transmission Inc. (“EPCOR” or “EDTI”). The AUC approved the following:

  • the 2020 distribution access service (“DAS”) tariff, on an interim basis;

  • the 2020 transmission system access service (“SAS”) tariff;

  • 2020 Balancing Pool Rider G;

  • the customer and retailer terms and conditions (“T&Cs”) for electric DAS; and

  • 2020 distribution tariff policies.

Background and application

On September 10, 2019, EPCOR submitted its 2020 annual PBR rate adjustment filing to the AUC, requesting approval of its 2020 electric DAS rates, Y and Z factor adjustments, riders, SAS rates, billing determinants and corresponding rate schedules to be effective January 1, 2020, on an interim basis. EPCOR also requested approval of its T&Cs and distribution tariff policies of electric distribution service, to be effective January 1, 2020.

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

The AUC noted that there are three ongoing AUC proceedings that have the potential to impact EPCOR’s notional 2017 revenue requirement or 2018 base K-bar. The notional 2017 revenue requirement and 2018 base K-bar will remain interim until each of decisions are released in Proceedings 24325, 24609, and 24980. 

I factor and the resulting I-X index

The Commission found that any revised values after August 2019 were not appropriate for use in this year’s I factor calculation.

The AUC found that EPCOR used the correct Statistics Canada data, 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 EPCOR’s 2020 K-bar in the amount of $25.04 million. This amount would remain interim pending finalization of all actual capital tracker amounts incurred during the 2013-2017 PBR term and any updated depreciation parameters. The 2020 K-bar would be subject to a further true-up for the 2020 actual approved cost of debt.

Y and Z factor materiality threshold

The AUC calculated EPCOR’s Y and Z factor materiality threshold to be $1.72 million for 2019. The AUC calculated this amount based on the 2019 interim Z factor materiality threshold approved in Decision 23896-D01-2019 and escalated it by the 2020 I-X index, in accordance with the methodology prescribed in Decision 20414-D01-2016 (Errata). EPCOR’s 2020 Y and Z factor materiality threshold was set at $1.72 million on an interim basis. This interim threshold amount would 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 factors were approved.

Forecast billing determinants and Q

The AUC found that the methodology and the resulting 2020 forecast billing determinants were reasonable. The AUC directed EPCOR to continue using the forecasting methodology as filed for the remainder of the PBR term unless directed by the Commission. The 2020 forecast billing determinants are approved as filed.

The AUC also reviewed EPCOR’s calculation of its 2020 Q value and found it to be reasonable. The AUC therefore approved EPCOR’s 2020 Q of 0.39 percent. The AUC directed EPCOR to continue providing Q value calculations in its future annual PBR rate adjustment filings.

2019 CS49 notional base rate

On June 14, 2019, EPCOR filed an application with the AUC requesting approval for a 2019 customer specific DAS rate for a new customer (CS49), which the Commission approved.

The AUC reviewed EPCOR’s calculations of its adjusted 2019 base rate for the CS49 customer, and found it consistent with earlier AUC decisions and directions, and approved base rates for other customers. The AUC therefore approved the 2019 base rate for the CS49 customer as $509.71 per day on an interim basis.

CS46 rate true-up

The AUC reviewed EPCOR’s calculations for the true-up to the CS46 rate to reflect the 2018 actual weighted average cost of capital rate of 6.20 per cent and agreed with the methodology and accuracy of the calculated results. The AUC therefore approved the CS46 true-up refund to customers as calculated by EPCOR of $2,131.51.

SAS rates

EPCOR requested approval of its 2020 SAS rates, to be effective January 1, 2020. EPCOR indicated that its 2020 SAS rates reflect the AESO’s 2018 Independent System Operator (“ISO”) tariff approved in Decision 23065-D01-2017.

EPCOR proposed to continue to collect the Balancing Pool rebate as a separate rider (Rider G) to its SAS rates.

The AUC approved EPCOR’s 2020 SAS rates and 2020 Balancing Pool Rider G.

DAS rates

The AUC noted that, on a total bill basis, bill impacts would be below 10 percent; a threshold that the AUC has determined in past decisions to be indicative of possible rate shock. The AUC reviewed EPCOR’s calculation of its 2020 DAS rates, 2020 miscellaneous service fees, 2020 SAS rates, and Rider G, and approved them on an interim basis, effective January 1, 2020.

It held that the 2020 rates shall remain interim until the remaining placeholders and the issue of anomalies in relation to EPCOR’s going-in rates have been addressed by the AUC.

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