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Direct Energy Regulated Services 2019 Default Rate Tariff and Regulated Rate Tariff Compliance Filing (AUC Decision 25255-D01-2020)

Link to Decision Summarized

Compliance Filing – Default Rate Tariff – Regulated Rate Tariff


In this decision, the AUC approved the Direct Energy Regulated Services (“DERS”) compliance filing to Decision 24237-D01-2019, regarding its 2019 default rate tariff (“DRT”) and regulated rate tariff (“RRT”) revenue requirements for 2019, as filed. The AUC also approved the corresponding rates for 2019 on a final basis. The AUC directed DERS to file a subsequent application to true-up each of the rates approved in this decision after it completed billing on interim rates up to December 31, 2019.

AUC findings regarding Decision 24237-D01-2019 directions

Decision 24237-D01-2019 contained directions in 18 different paragraphs. The AUC noted that responses to four directions would be required as part of DERS’ next DRT and RRT application and, consequently, were not addressed in this decision.

The AUC found that DERS complied with the directions in paragraphs 83, 94, 95, 97, 98, 105, 106, 125, 132, 173, 181, 182, 238 and 258 of Decision 24237-D01-2019.

Paragraph 83 Directions: Threshold adjustment payments

The AUC directed DERS to include an updated 2019 forecast for threshold adjustment payments. The AUC also directed DERS to include details of how the total payment was calculated, as well as how DERS’ 70 percent share was calculated. The AUC found that DERS complied with these directions.

Paragraph 94 and 95 Directions: Merchant fees

The AUC directed DERS to forecast the 2019 rates charged by the credit card companies by using the average of the rates for 2017 and 2018 and include details of how the 2019 forecast merchant fees were calculated. The AUC found that DERS complied with this direction.

Paragraph 97 and 98 Directions: Working capital

The AUC directed DERS to use negative $97,000 for the 2019 forecast mid-year hearing cost reserve account balance on: (1) line 24 of the DRT working capital schedule; and (2) line 22 of the RRT working capital schedule. The AUC directed DERS to update the working capital schedules, lead lag schedules, budget payment plan figures and income tax schedules as required, to account for AUC-directed changes to other cost areas. The AUC found that DERS complied with these directions.

Paragraph 105 and 106 Directions: Hearing cost reserve account

The AUC directed DERS to remove $0.425 million from: (1) the 2019 DRT forecast hearing cost reserve account; and (2) the 2019 RRT forecast hearing cost reserve account. The AUC directed DERS to include the following amounts in the 2019 revenue requirements for the hearing cost reserve: minus $0.164 million for the DRT and minus $0.1945 million for the RRT. The AUC found that DERS complied with these directions.

Paragraph 125 Direction: Bad debt expense and collection agency costs

The AUC directed DERS to forecast the 2019 bad debt expense and collection agency costs using the percentages set out in Table 4 of Decision 24237-D01-2019. The AUC found that DERS complied with this direction.

Paragraph 132 Direction: Other administration costs

The AUC directed DERS to reduce the 2019 forecast other administration costs by $415,000 and to allocate the reduction between the DRT and the RRT in accordance with how the costs were included in the DRT and RRT revenue requirements. The AUC found that DERS complied with this direction.

Paragraph 173 Direction: Corporate services costs

The AUC directed DERS to include total forecast corporate services costs of $5.679 million for 2019, allocating 80 percent to the DRT and 20 percent to the RRT. The AUC found that DERS complied with this direction.

Paragraph 181 and 182 directions: DRT return margin

The AUC directed DERS to update the DRT reasonable return schedule for 2019. The AUC directed DERS to include working formulas on the DRT reasonable return schedule for the 2019 after-tax return mark-up percentage and the 2019 pre-tax return margin dollars and to use the approved overall effective income tax rate of 26.50 percent in these formulas. The AUC found that DERS complied with the directions.

Paragraph 238 direction: Terms and conditions of service (“T&Cs”)

The AUC directed DERS to include updated T&Cs for the DRT and RRT, on DERS’ website. The AUC found that DERS complied with this direction.

Direction in paragraph 258: Compliance filing

The AUC directed DERS to submit a compliance filing on or before January 8, 2020, responding to the AUC’s directions. The AUC found that DERS complied with this direction.

AUC approved revenue requirements and final rates for 2019

The AUC approved the DRT revenue requirement for 2019 and the RRT revenue requirement for 2019. The AUC also approved the final DRT and RRT non-energy rates for 2019 and the final DRT return margin charge for 2019 of $0.052 per gigajoule (“GJ”).

The AUC approved the DRT energy-related “other” charges for 2019. The resulting approved rate (on a $ per GJ basis) for 2019 could be calculated by dividing these approved costs by the approved forecast volume of natural gas sales for 2019. The AUC also approved the labour (gas procurement) costs for the DRT for 2019 of $433,400 on a final basis.

Order

The AUC ordered that DERS file an application that includes the true-up figures for its RRT, DRT, DRT return margin, DRT energy-related other costs, and DRT energy-related labour charges for the period of January 1, 2019, to December 31, 2019, after DERS has completed billing on interim rates for 2019.

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