Rates – Electricity
Application
ENMAX Power Corporation (“EPC”) applied to the AUC for approval of its 2023 interim transmission facility owner (“TFO”) tariff. EPC applied for approval on an interim refundable basis until the AUC approved and implemented EPC’s final 2023 TFO tariff.
EPC proposed that its 2023 interim tariff recover 60 percent of the forecast revenue shortfall calculated as the difference between the approved 2022 transmission tariff and the proposed 2023 transmission tariff. In its 2023-2025 transmission general tariff application (“GTA”), EPC applied for revenue requirements for 2023, 2024, and 2025 of $129.5 million, $138.4 million, and $156.6 million, respectively.
Decision
The AUC approved EPC’s interim tariff based on a recovery of 50 percent of the revenue shortfall between its approved 2022 tariff and its forecast 2023 revenue requirement.
Applicable Legislation
Transmission Regulation, Alta Reg 86/2007 – ss. 8, 15-17, 21, 22, 30 and 31.
Pertinent Issues
The AUC applies a two-part test when evaluating interim rate applications. The first part relates to quantum and need factors, and the second part relates to the public interest.
The AUC found that the application of the two-part test to EPC’s requested rate increase of 60 per cent of the anticipated revenue shortfall does not favour approval of EPC’s application. The AUC was of the view that a portion of the requested interim tariff increase is contentious. The AUC was not persuaded that approval of the requested interim rate increase, in full, is in the public interest, given that determinations on the contentious items remain uncertain. The AUC noted that if it were to approve EPC’s requested 2023 interim tariff in full, the expected increase would amount to approximately 14 per cent in 2023. The AUC found that approval of an interim tariff increase would assist to smooth out any potential increase in rates for 2023 and reduce potential rate shock to ratepayers when the final 2023 tariff is approved.
The AUC therefore deemed that a recovery of 50 per cent of the revenue shortfall is just and reasonable.
