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EPCOR Energy Alberta GP Inc. Arrangement to Provide Regulated Rate Option Service in the Distribution Service Area of FortisAlberta Inc. (AUC Decision 24839-D01-2019)

Link to Decision Summarized

Regulated Rate Option Service


In this decision, the AUC considered an application from EPCOR Energy Alberta GP Inc. (“EEA”) requesting approval of the arrangement under which EPCOR Energy Alberta GP Inc. would provide regulated rate option (“RRO”) service to eligible customers within FortisAlberta Inc.’s distribution service area. The AUC approved the proposed RRO arrangement agreement (the “RRO Arrangement Agreement”) as filed.

Background

EEA currently provides RRO service within the Fortis service area pursuant to the terms of the current arrangement agreement, which was approved by the Alberta Energy and Utilities Board (the “Board”), the AUC’s predecessor, in Decision 2000-71, and in accordance with subsequent decisions and events affecting the names and structure of the signing parties.

EEA provided an explanation of the differences between the current agreement and the proposed RRO Arrangement Agreement. These included updated legislative references, new provisions for the event of early expiry or termination, ongoing governance and reporting of EEA’s obligations and the handling of customer data, and an expanded scope of indemnity. 

For each of the differences, EEA submitted there would be no effect on RRO customers, with the exception of changes covering the effect of expiration or early termination and changes to governance and reporting. With respect to expiration or early termination, EEA explained that RRO customers will benefit from the clear and sensible provisions that facilitate a smooth transition of the RRO obligations back to Fortis in the event the proposed RRO Arrangement Agreement expires or is terminated early. With respect to governance and reporting, EEA submitted that RRO customers will benefit from the parties having clear expectations around governance and reporting.

Legislative provisions

The AUC outlined the applicable sections of the Electric Utilities Act (“EUA”) and the Regulated Rate Option Regulation (“RRO Regulation”) which relate to an electric distribution system owner’s ability to enter into an arrangement for another party to provide RRO service on the owner’s behalf. These included sections 104(1) and 105(1) of the EUA which sets out the duties and ongoing obligations of owners of electric distributions systems, and section 20 of the RRO Regulation, which sets out the requirement that the AUC approve RRO agreements like the one contemplated in this application.

Criteria to be applied respecting the authorization of an RRO Arrangement Agreement

The AUC noted that a public interest test is applied when reviewing approvals to RRO arrangement agreements. It cited Decision 2000-71, where the Board indicated that in order to preserve the public interest, the Board should be satisfied that, on balance, customers will at least be no worse off after the transaction, or suffer “no harm” as a result of the arrangement. Other factors to be considered when assessing such an application include:

  • whether the liability for provision of service remains with the owner;

  • whether there is a potential impact to rates, and whether the impact is just and reasonable;

  • the provision of safe, reliable and economic delivery of electric energy;

  • compliance with the Code of Conduct Regulation, and the Inter-Affiliate Code of Conduct;

  • the fair, efficient and openly competitive principle; and

  • the other duties of owners of electric distribution systems and their authorized service providers under the Electric Utilities Act, RRO Regulation and other applicable legislative provisions. 

Compliance with applicable enactments and rules

The AUC found that the proposed RRO Arrangement Agreement was consistent with the legislative duties of the owner of the distribution system and the person authorized to perform any or all of the duties or functions of the owner. 

No-harm test 

The AUC found that there are regulatory safeguards embodied in the AUC’s broad regulatory authority over the provision of RRO service and the legislative framework governing the RRO in Alberta, to ensure that no harm should arise from the continuation of EEA as the RRO service provider in the Fortis service area.

The AUC was satisfied that the “no-harm” standard required to be applied in applications of this kind were met, and that EEA discharged its onus in this regard.

Order

The AUC approved the agreement setting out the terms of the arrangement under which EEA in its capacity as the general partner of EPCOR Energy Alberta Limited Partnership, will provide RRO service to eligible customers within FortisAlberta Inc.’s distribution service area, effective on January 1, 2021, and expiring on December 31, 2040.

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