General Tariff Application – Review and Variance
In this decision, the AUC considered whether to grant an application (the “Review Application”) filed by ATCO Electric Ltd. (“ATCO Electric”) requesting a review and variance of specific determinations made in Decision 22742-D01-2019 (the “Decision”), issued regarding ATCO Electric’s 2018-2019 transmission general tariff application. The AUC granted the review application, in part.
AUC’s review process
The AUC’s authority to review its own decisions is discretionary and is found in section 10 of the Alberta Utilities Commission Act. That section authorizes the AUC to make rules governing its review process, and the AUC established Rule 016 under that authority. Rule 016 sets out the process for considering an application for review. A person who is directly and adversely affected by a decision may file an application for review within 60 days of the issuance of a decision, pursuant to section 3(3) of Rule 016. The review application was filed within the required period, on August 19, 2019.
The review process typically has two stages. In the first stage, a review panel must decide whether there are grounds to review the original decision (sometimes referred to as the “preliminary question”). If the review panel determines that there are grounds to review the decision, the AUC moves to the second stage of the review process with a hearing or other proceeding to decide whether to confirm, vary, or rescind the original decision. This decision addressed the preliminary question.
Allocation of the Kearl Line relocation costs
In the original proceeding, ATCO Electric requested confirmation that the forecast costs associated with relocating a portion of line 9L101, a 240-kV looped line in the Fort McMurray area (“the Kearl Line”), be allocated as ATCO Electric system costs rather than as direct customer costs payable by the mine owner. The hearing panel determined that the proposed Kearl Line relocation costs were the responsibility of the mine owner.
The review panel noted that the AUC has a duty to provide reasons in support of its decisions to enable parties to a proceeding to understand how the AUC considered the evidence and arrived at its decision. The reasons provided by the hearing panel with respect to the Kearl Line relocation costs were insufficiently cogent to satisfy this requirement.
The review panel found that ATCO Electric demonstrated there was an error of law which was either apparent on the face of the decision or existed on a balance of probabilities that could lead the AUC to materially vary this aspect of the Decision. The requirements of section 6(3)(a) of Rule 016 were therefore met, and the application for review of the hearing panel’s determination concerning the allocation of Kearl Line relocation costs was allowed.
Allocation of head office costs
Consistent with its statutory obligation to set just and reasonable rates, the hearing panel found that a lease rate of $20 per square foot, for both test years, was a just and reasonable amount to include in customer rates in the circumstances.
The review panel found that the hearing panel’s assessment of a reasonable price per square foot was a determination that, on its face or on a balance of probabilities, was not unreasonable. ATCO Electric did not show, either on a balance of probabilities or apparent on the face of the Decision, that an error in fact, law or jurisdiction existed with respect to this finding that could lead the AUC to materially vary or rescind the Decision. Accordingly, ATCO Electric’s request for a review of the hearing panel’s allowance of $20 price per square foot for head office rent at ATCO Electric Park for inclusion in rates for 2018 and 2019, was denied.
Square footage
In its review application, ATCO Electric clarified that the square footage of the entire ATCO Park (a new corporate head office complex) was approximately 246,000 square feet. ATCO Electric stated that the 155,000 square foot figure related only to space for ATCO Electric corporate and head office employees.
The review panel found that it was apparent that the hearing panel proceeded on the basis that 155,000 square feet represented the entire capacity of ATCO Electric Park and included, not only, head office and corporate employees and their related costs, but also employees of the other ATCO Electric entities, up to 600 employees in total. This influenced the hearing panel’s finding that 155,000 square feet included all ATCO Electric tenants of ATCO Park as well as its conclusion that only a portion of that space should be attributable to the corporate and head office employees and allocated to ATCO Electric.
The review panel found that ATCO Electric demonstrated, that an error of fact existed on a balance of probabilities that could lead the AUC to materially vary or rescind its determination of the space attributable to the corporate and head office employees. ATCO Electric’s request for a review of the allocation of corporate and head office space was allowed.
Severance
ATCO Electric sought review of the hearing panel’s disallowance of the recovery of a portion of the applied-for severance costs through rates. However, the review panel found it was evident that the hearing panel had made no final decision regarding recovery of ATCO Electric’s applied-for severance costs through rates. Those determinations would be made in the compliance filing to the Decision, being assessed in Proceeding 24805. Accordingly, the review panel found the request for a review of this issue to be premature.
ATCO Electric did not show, either on a balance of probabilities or apparent on the face of the Decision, that an error in fact, law or jurisdiction, existed concerning the hearing panel’s disposition of the issue concerning the treatment of applied-for severance costs, that could lead the AUC to materially vary or rescind the Decision. Accordingly, ATCO Electric’s request for a review of this issue was denied.
AFUDC income tax treatment
ATCO Electric applied to review the hearing panel’s direction to provide a proposal to correct any prior allowance for funds used during construction (“AFUDC”)-related errors in the calculation of income taxes, which were subsequently collected through revenue requirement in prior years in its compliance filing.
The review panel found that because a determination of the error in ATCO Electric’s treatment of AFUDC to calculate its income tax expense had not yet been made, the request for a review on the grounds alleged is premature. The review panel found that determination of whether an error existed and the appropriate remedy would be made in the compliance filing to the Decision, being assessed in Proceeding 24805.
ATCO Electric did not show, either on a balance of probabilities or apparent on the face of the Decision, that an error in fact, law or jurisdiction existed that could lead the AUC to materially vary or rescind the Decision. Accordingly, ATCO Electric’s request for a review of the hearing panel’s direction to ATCO Electric to provide a proposal to correct any prior AFUDC-related errors was denied.
Review panel conclusions
In answering the preliminary question, the review panel found that ATCO Electric demonstrated that reviewable errors existed either on a balance of probabilities or the face of the Decision, which could lead the AUC to materially vary portions of Decision 22742-D01-2019. Accordingly, ATCO Electric satisfied the requirements for a review of those specific sections of the Decision.
Having met the first stage of the review and variance application, the AUC indicated it would issue process and scope directions for the second stage of the review process in due course.
