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FortisAlberta Inc. Compliance Filing to Decision 24281-D01-2019 (AUC Decision 25143-D01-2020)

Link to Decision Summarized

Industrial System Designation – Connection Order


In this decision, the AUC considered whether to approve the FortisAlberta Inc. (“Fortis”) compliance application regarding the AUC’s directions issued in Decision 24281-D01-2019. The AUC found that Fortis complied with all of the AUC’s directions except for Direction 1 that will be addressed in Fortis’ next Phase II application, which is being considered in Proceeding 25201.

Background

On October 18, 2019, the AUC issued Decision 24281-D01-2019 pertaining to Fortis’ capital tracker true-up for its 2016 and 2017 Alberta Electric System Operator (“AESO”) Contributions Program. Decision 24281-D01-2019 included a direction, Direction 10, requiring Fortis to file a compliance filing to the decision on or before December 2, 2019. On December 2, 2019, Fortis submitted its compliance filing with the AUC.

Compliance with AUC directions

Direction 1: Commitments required from end-use customers

In Decision 24281-D01-2019, the AUC found that commitments required from end-use customers by Fortis were not sufficiently strong. A consequence of this was that the correlation between end-user commitments, or contracts, and actual loads were far too weak to provide Fortis with a reasonable capacity planning signal. Accordingly, the AUC directed Fortis to review its pro forma Electric Service Agreement as part of its next Phase II application. Because Fortis’ next Phase II application was filed on January 17, 2020, in Proceeding 25201, the AUC could not yet make a finding that Fortis complied with this direction.

Directions 2 through 6 and 8: Adjustments to 2017 capital additions. Accounting test requirements of Criterion 1

Decision 24281-D01-2019 included four directions requiring Fortis to make adjustments to its 2016 and 2017 capital additions for its AESO Contributions Program:

(a)      Fortis was directed to apply an adjustment in the amount of negative $80,000 to the AESO contribution assigned to the South Mayerthorpe 443S Upgrade Project for the year 2016;

(b)      Fortis was directed to apply an adjustment in the amount of negative $1,754,585 to the AESO contribution additions for the Cochrane 291S Upgrade Project for the year 2016;

(c)      Fortis was directed to reverse the AESO contribution amounts relating to cancelled projects of $3,200,000 in 2014 and $2,394,361 in 2015 through an adjustment applied in 2016 in the amount of negative $5,594,361; and

(d)      Fortis was directed to apply risk-reward reductions totalling negative $1,222,085 as an adjustment to its 2016 AESO contribution amount.

In response to directions 2 through 6, Fortis confirmed that it made adjustments to the AESO contribution additions of negative $80,000 relating to the South Mayerthorpe 443S Upgrade Project for the year 2016, negative $1,754,585 relating to the Cochrane 291S Upgrade Project for the year 2016, and negative $5,594,361 for the year 2016 in respect of the Edwards Lake 189S New Substation Project. Further, Fortis applied an adjustment to transfer the amount of negative $1,222,085 relating to risk-reward reductions from AESO contribution additions in the year 2017 to 2016 and submitted updated K factor calculations.

The AUC found that Fortis complied with the directions set out in paragraphs 81, 90, 95, 99, 105 and 106 of Decision 24281-D01-2019.

Direction 7: Identification of cumulative AESO contribution additions based on estimated amounts

The AUC directed Fortis to identify all projects listed in Proceeding 24281, Exhibit 24281-X0053,18 in which the cumulative AESO contribution addition amounts for 2016 or 2017 were based on estimated amounts in its compliance filing. Fortis indicated it had identified all such projects in Table 2 of its application. The AUC was satisfied with the information provided and found that Fortis complied with Direction 7.

Direction 9: Finalization of 2016 and 2017 capital tracker true-ups and adjustment of going-in rates and K-bar amounts for the 2018-2022 PBR plan

The AUC directed Fortis to use the approved amounts to finalize its 2016 and 2017 capital tracker true-ups and adjust its going-in rates and K-bar amounts for the 2018-2022 PBR plan. In its compliance filing, Fortis was directed to inform the AUC on how and when it planned to make these adjustments. Fortis explained that it intended to finalize its 2016 and 2017 capital tracker true-up amounts applied for in this compliance filing and to adjust its going-in rates, K-bar and AESO contributions hybrid deferral amounts, for each of the years 2018, 2019 and 2020 in its 2021 annual rate adjustment filing.

The AUC accepted Fortis’ proposal to finalize its 2016 and 2017 capital tracker true-ups and adjust its going-in rates and K-bar amounts for the 2018-2022 PBR plan, including adjustment to the AESO contributions hybrid deferral amounts in its 2021 annual rate adjustment filing. Therefore, the AUC found that Fortis complied with Direction 9.

Order

The AUC ordered that:

(a)      the 2016 actual K factor revenue of $12.8 million for the AESO Contributions Program was approved; and

(b)      the 2017 actual K factor revenue of $14.6 million for the AESO Contributions Program was approved.

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