Regulatory Law Chambers logo

Milner Power Inc., ATCO Power Ltd. Complaints Regarding the ISO Transmission Loss Factor Rule and Loss Factor Methodology, AUC Decision 790-D08-2020

Link to Decision Summarized

Loss Factor Calculation


In this decision, the AUC found that the Alberta Electric System Operator’s (“AESO”) amended Module C payment plan compliance filing (“Module C Payment Plan”) concerning the collection and reimbursement of loss charges calculated for the period from January 1, 2006, to December 31, 2016, (the “Historical Period”) is compliant with directions in Decision 790-D06-20172 and Decision 25150-D02-2020.

Background

This decision followed a series of decisions issued by the AUC and its predecessor, the Alberta Energy and Utilities Board, concerning a complaint by Milner Power Inc. in 2005, that the methodology used to calculate line losses did not comply with Alberta’s Transmission Regulation. An explanation of line losses and the full chronology of this proceeding can be found in previous decisions.

In Decision 790-D06-2017, the AUC approved a methodology for the calculation of loss factors for the historical period and directed the AESO to submit a compliance filing implementing the methodology for that period.

In Decision 790-D07-2019, the AUC approved a request from the AESO to bifurcate the compliance filing directed in 790-D06-2017. In doing so, the AUC deferred its consideration of issues related to the collection and reimbursement of loss charges until they were addressed by the AESO in its second compliance filing.

In Decision 25150-D02-2020, the AESO was directed to settle line losses for the historical period over three settlement periods; one three-year and two four-year periods. The AESO was also directed to assign the necessary resources to implement this settlement approach and to recover its incremental costs through the energy market fee.

Current Application

On July 28, 2020, the AESO submitted its Module C Payment Plan.

Heartland Generation Ltd. (“Heartland”) responded to the AUC’s process letter. In its submission, Heartland noted the AUC statement in Decision 25150-D02-2020, that settlement of the first three years of historical loss factors should occur as soon as possible. Relying on this statement, Heartland supported a limited scope and strict process schedule for this compliance proceeding.

Milner Power Inc. (“Milner”) submitted that it supported the AESO’s filings, but raised concerns regarding the application of the 60-day due-date delay, and possible settlement delay if the AUC was unable to issue a decision before September 30, 2020. Following the response from the AESO, stating the use of the phrase “at least 60 days” was to accommodate potential variability in financial settlement dates and would not result in excessive delays, Milner stated its support of the AESO’s filing.

Collection and Reimbursement Requirements in Decision 790-D06-2017 and 25150-D02-2020

Entity to Receive Invoices

Decision 790-D06-2017 directed the AESO to issue invoices to the supply transmission service (“STS”) contract holder at the time the losses originally occurred. The AESO’s Module C Payment Plan defines “Eligible Entity” as “a current or former market participant who has been issued invoices by the AESO for line loss charges in accordance with AUC Decisions 790-D06-2017 and 25150-D02-2020.” The AUC found the AESO’s proposed definition of “Eligible Entity” to comply with the direction in paragraph 208(c) of Decision 790-D06-2017.

Three Settlement Periods

In Decision 25150-D02-2020, the AESO was directed to implement three settlement periods including one of three years, and two of four years each for the historical period with simultaneous collection and reimbursement pursuant to the ISO tariff. The AUC found the settlement periods proposed by the AESO in the Module C Payment Plan to comply by this direction.

Accelerated Approach

The AESO was direct to implement the accelerated single settlement approach and recover the incremental cost through the energy market trading fee. The AUC found that the information provided by the AESO demonstrates its use of an accelerated approach to settle the line loss charges in accordance with the three settlement periods stipulated in Decision 25150-D02-2020. As the deployment of the necessary resources to implement the three settlement periods was ongoing, the AUC expected that the AESO would continue to comply with this direction until the calculations are completed and all relevant line loss charges are settled.

Statements of Account

The AESO was directed to provide statements of account for the final line loss charges to market participants setting out the recalculated line loss charges for the historical period on a year by year basis as they become available, before a final true-up takes place.

The AESO stated that it would issue preliminary and final settlement statements based on the schedule included in the Module C Payment Plan. The AUC found that the timing for statements setting out the recalculated line loss charges for the historical period proposed in the AESO’s Module C Payment Plan complies with the AUC direction in Decision 790-D06-2017.

Interest

The AESO was ordered in Decision 790-D06-2017, to charge/award interest, equal to the Bank of Canada rate plus one and one half percent. The AESO was required to set out the interest attributed to the monthly amounts for each market participant as it calculated and made available the updated statements of account for the final line loss charges.

As this was an ongoing requirement, the AUC expected that the AESO would continue to comply with this direction until all loss factor charges are settled for the historical period.

Structure, Terms, and Eligibility Criteria

The AESO was directed to develop the structure, terms, and eligibility criteria for its proposed payment plan and file it with the compliance filing to Decision 790-D06-2017. That AUC found criteria proposed in the Module C Payment Plan complies with the direction in Decision 790-D06-2017.

Recovery of Costs Through the Energy Market Trading Fee

The AUC direction concerning the recovery of costs through the energy market trading fee remained outstanding, as it would be applied as the line loss calculations were completed and the costs associated with completing the settlement became known. The AUC considered these to be the AESO’s own administrative costs as defined in section 1(1)(g) of the Transmission Regulation, which are defined to include the transmission-related costs and expenses of the AESO respecting the administration, operation and management of the AESO.

Collection of the Shortfalls Through Rider E

The AUC direction concerning the collection of any shortfalls through Rider E remained outstanding and could be required once all calculations were completed and any shortfalls became known. In the event of shortfalls, the AUC expected the AESO to include them in a Rider E as part of its ongoing tariff filings before the AUC.

Related Posts

Judd v Alberta Energy Regulator, 2024 ABCA 154

Judd v Alberta Energy Regulator, 2024 ABCA 154

Link to Decision Summarized Download Summary in PDF Appeal – Production of Records Application Michael Judd ("Appellant") appealed a decision by the Alberta Energy Regulator (“AER”) that denied his...