Rates – Transmission Deferral Account – Compliance Filing
In this decision, the AUC considered whether to approve an application (the “Application”) by ATCO Electric Ltd. (“ATCO Electric” or “AET”) for approval of its Hanna Region Transmission Development (“HRTD”) deferral account second compliance filing with respect to specific AUC directions issued in the following decisions:
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Decision 22393-D02-2019, ATCO Electric’s Hanna Region Transmission Development Deferral Account; and
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Decision 24753-D01-2020, ATCO Electric’s Hanna Region Transmission Development Deferral Account Compliance Filing.
The AUC found that ATCO Electric complied with directions 3, 4 and 5 from Decision 22393-D02-2019 and directions 1, 2 and 3 from Decision 24753-D01-2020.
Background
On February 3, 2017, ATCO Electric filed an application with the AUC requesting approval of capital additions totalling $688.0 million for its HRTD program for the years 2012-2015. On June 6, 2019, the AUC issued Decision 22393-D02-2019. The AUC set out nine directions for ATCO Electric to address in a compliance application.
On July 22, 2019, ATCO Electric filed its compliance application. On March 19, 2020, the AUC issued Decision 24753-D01-2020. The AUC found that ATCO Electric had complied with directions 1, 2, 6, 7, 8 and 9 from Decision 22393-D02-2019, but that it had not complied with directions 3, 4 and 5. Directions 3, 4 and 5 state:
3. With respect to the invoices detailed above, and the legal costs for the work performed that have been attributed to the HRTD program, including any invoice submitted by Bennett Jones [LLP] to ATCO Electric in a pre-LEAF [Legal Expenditure Authorization Form] and LEAF format, ATCO Electric is directed in its compliance filing to this decision to identify, summarize and remove every expense of a similar nature to those noted in sections 7.3.1, 7.3.2 and 7.3.3 above. The Commission finds them to be unnecessary or beyond what could be considered a reasonable expenditure.
4. In light of ATCO Electric’s acknowledgement that the hourly rates at the partner level exceed peer rates by approximately 10 per cent, ATCO Electric is further directed to apply a reduction of 10 per cent to the legal fees recorded at the partner level as charged by Bennett Jones to the HRTD program.
5 Finally, ATCO Electric is directed to apply a 10 per cent reduction to the remaining legal fees of Bennett Jones, in recognition of the long-standing relationship between the two parties and the volume of the work being conducted.
The AUC directed ATCO Electric to file a second compliance filing by April 20, 2020, to address the AUC’s findings in Decision 22393-D02-2019. The AUC provided the following directions:
1. The Commission finds that ATCO Electric Ltd. has complied with directions 1, 2, 6, 7, 8 and 9 from Decision 22393-D02-2019 but that it has not complied with directions 3, 4 and 5. ATCO Electric Ltd. is directed to file a second compliance filing by April 20, 2020, to address the Commission’s findings.
2. ATCO Electric is directed to include the impact of complying with Direction 3 in applying Direction 4 and, further, to take this amount into consideration in its application of Direction 5 in a further compliance filing.
3. The Commission directs ATCO Electric to provide an updated IR [information request] response to IR AET AUC-2019AUG29-001, which incorporates each of the directions set out in Decision 22393-D02-2019, and the current compliance filing decision, as part of the directed second compliance filing.
On April 20, 2020, ATCO Electric submitted an application to the AUC requesting approval of its HRTD deferral account second compliance filing that was prepared in accordance with the directions from Decision 24753-D01-2020 and outstanding directions from Decision 22393-D02-2019. In the application, ATCO Electric requested approval for a collection balance of $3.405 million from the Alberta Electric System Operator (“AESO”) with a forecast settlement date of December 1, 2020.
Compliance with AUC Directions
In its Application, ATCO Electric responded to the three outstanding directions from Decision 24753-D01-2020 and the three outstanding directions from Decision 22393-D02-2019. The AUC accepted ATCO Electric’s responses to directions 1, 2 and 3 from Decision 24753-D01-2020 and with directions 3, 4 and 5 from Decision 22393-D02-2019. The AUC did not provide additional reasons regarding its approval of ATCO Electric’s response to those directions other than indicating it wished to provide guidance for future applications regarding Direction 2 on legal costs.
Direction 2 – Legal Costs
Direction 2 from Decision 24753-D01-2020, which is provided above, effectively encompassed directions 3, 4 and 5 from Decision 22393-D02-2020. In response to Direction 2 from Decision 24753-D01-2020, ATCO Electric stated that:
AET used specific keywords taken from the 36 specific concerns identified under Section 7.3.1 (4); Section 7.3.2 (3); and Section 7.3.2 (29), to identify the quantum of disallowed costs. Where the description of a legal service included one of these keywords, the cost of this legal service was entirely removed.…
The AUC found that ATCO Electric had complied with Direction 2 from Decision 24753-D01-2020. However, the AUC directed that, in any future applications submitted by ATCO Electric to the AUC, third-party legal professionals’ travel-related time will be charged, for regulatory purposes, at half the hourly rate. The AUC indicated that this finding is consistent with the scale of costs provided in Rule 022, which “allows professionals only half of their hourly rate for travel time.”
Order
The AUC ordered that ATCO Electric’s request to collect $3.405 million as of December 1, 2020, through a one-time charge to the AESO for the settlement of its HRTD deferral account balance was approved.
