Compliance Filing – GTA
In this decision, the AUC set out its determinations on ATCO Electric Ltd.’s (“AE”) compliance with the AUC’s directions issued in Decision 24964-D01-2021 and Decision 24964-D02-2021.
AE’s Compliance Filing
Direction 1 and Directions 3-12 issued in Decision 24964-D01-2021 concerned lease and operating rates; consistency in the shared services allocation formulas between proceedings 24964 and 25663; service allocator issues; the inclusion of deferral account adjustments in net revenues for the general cost allocator; the use of 2019 actual and 2020 forecast full-time equivalents (“FTEs”) for GTA and general rate application (“GRA”) test years; the reduction of the total pre-allocated pool of Indigenous, government relations and sustainability FTEs; the adjustment to shared services and capital FTEs; and the submission of assumptions and calculations of the shared services costs split between operations and maintenance (“O&M”) and capital.
Direction 3, Decision 24694-D01-2021
Direction 3 required AE to use 2019 actual variables as inputs into the shared services allocation formulas. The AUC issued this direction to provide for consistency between proceedings 24964 and 25663.
In its compliance filing application, AE continued to incorporate 2018 actual variables. AE supported this calculation with its interpretation of Direction 3 and explained that using 2019 actual variables for 2021 and 2022 maintained consistency for the 2021 and 2022 test years that overlap with ATCO Pipelines’ 2021-2023 GRA in Proceeding 25663.
The AUC disagreed with AE’s interpretation of the direction and clarified that AE should not have restricted the use of 2019 actual variables to the 2021 and 2022 test years. Accordingly, to ensure compliance with Direction 3, AE was required to provide the AUC with revised documentation showing the incorporation of this direction and its effect on the revenue requirement. Accordingly, as a post-disposition filing, AE was required to submit documents incorporating the impact to its revenue requirement of reflecting the use of 2019 actual variables for the year 2020 for the purposes of allocated shared services costs.
Direction 1, 24964-D02-2021
In Direction 1, the AUC directed AE to use internal 2019 actual FTEs as the approved base level FTE complement for all test years. This base level of FTEs is a starting point for 2020 that will be adjusted following the AUC’s findings on incremental FTEs proposed by AE in each of the test years.
The AUC found that AE had generally complied with this direction. It determined that whether AE’s base level of FTEs (set at 2019 actual FTEs) should be adjusted to reflect the same quantum of FTEs used to inform its forecast revenue offset calculation was the outstanding issue.
The Consumers’ Coalition of Alberta (“CCA”) raised the issue that while the AUC did approve AE’s revenue offsets, it was subject to and did not override the AUC’s direction for AE to use its internal 2019 actual FTEs as the approved base level FTE complement for all test years. The CCA indicated that the AUC’s direction required AE to update both its affiliate and non-affiliate FTEs, and accordingly, both its operating costs and revenue offsets.
In an information request (“IR”) response, AE included scenarios addressing the CCA’s concern. In one scenario, AE updates schedules that reflect revenue offsets based on incorporating its 2019 actual FTEs as the approved base level FTE complement for all test years. This scenario results in revenue requirement reductions of $5.140 million in 2020, $5.646 million in 2021, and $5.672 million in 2022. In a second scenario, AE reduced its non-affiliate O&M FTEs, while maintaining its affiliate FTEs for all test years. The impact to the revenue requirement based on this scenario is a reduction of $4.537 million in 2020, $4.964 million in 2021, and $4.986 million in 2022. AE submitted that the second scenario would better align with the AUC’s approval of ATCO Electric Transmission’s revenue offset forecast, notwithstanding AE’s position that no adjustment was needed under either of the scenarios it addressed.
The AUC accepted the second scenario provided by AE. It found that the calculations reasonably reconcile the AUC’s approval of AE’s forecast revenue offset with the corresponding number of FTEs required to complete the work. Accordingly, AE was directed to file documents incorporating the impact to its revenue requirement of removing the 26.5 FTEs that it re-deployed from affiliate-related O&M activities to non-affiliate-related O&M activities (while maintaining affiliate O&M FTEs at 32.9), for the 2020-2022 test years, as discussed in the second scenario.
Calculation of AE’s Approved Revenue Requirement for the Years 2020-2022
In a submission to Proceeding 26477, AE calculated its 2020-2022 revenue requirement adjustments related to its compliance with multiple directions issued in Decision 24964-D01-2021. This submission indicated revenue requirements of $698.639 million, $689.777 million, and $700.732 million for the years 2020, 2021, and 2022, respectively.
The AUC found that these adjustments did not reflect its findings with respect to AE’s compliance with Direction 3 issued in Decision 24964-D01-2021. Accordingly, considering the reductions in the revenue requirements resulting from that direction, the AUC calculated revenue requirements of $698.058 million, $689.745 million, and $700.701 million in 2020, 2021, and 2022, respectively. AE was expected to reflect, in its post-disposition filing, the revenue requirements calculated by the AUC.
