R&V – Rates
In this decision, the AUC denied an application by ATCO Electric Ltd. (“AE”) to review and vary Decision 26477-D01-2021 (the “Compliance Decision”), a decision on the compliance filing for its 2019 general tariff application.
AE submitted its application for review and variance (“R&V”), arguing that the AUC made errors of fact, or mixed fact and law with respect to the calculation of labour costs and the corresponding number of approved full-time equivalents (“FTEs”).
The GTA Decision
In its 2019 general tariff application, AE applied for approval of its revenue requirement for the 2020-2022 test period, Decision 24964-D02-2021 (the “GTA Decision”). The first part of the GTA Decision relevant to this review application is the findings and directions of the panel for the general tariff application (the “GTA panel”) with respect to FTEs.
In the GTA Decision, the GTA panel found that AE did not justify its claimed need for most of the additional applied-for FTEs, compared to its 2019 actual FTE complement. AE was directed to use its internal 2019 actual FTEs as the approved base level FTE complement for the 2020-2022 test years. Further, the GTA panel approved AE’s applied-for forecast revenue offset.
The Compliance Decision
In the Compliance Decision, the AUC examined whether AE used the internal 2019 actual FTEs as directed. In response, AE submitted that it had reclassified specific FTEs. In 2019, AE had 59.4 FTEs that provided operations and maintenance (“O&M”) services to affiliates and outside parties on an actual basis. In its compliance filing, AE submitted a base FTE complement that included 32.9 affiliate and outside party O&M FTEs instead of 59.4. As a result, AE’s revenue requirements were only being offset by 32.9 affiliate and outside party O&M FTEs instead of 59.4.
The compliance panel noted that the GTA Decision did not approve a reallocation or “re-deployment” of 26.5 FTEs from affiliate O&M work to non-affiliate O&M work for this test period as submitted by AE.
The Review Application
AE relied on Section 5(1)(a) of Rule 016 (Review of Commission Decisions) as the grounds for its application and also broadly alleges that the manner in which the compliance decision was made was procedurally unfair. The onus of demonstrating the existence of an error under Rule 016 lies with the applicant. The AUC may grant an application for review if it determines the applicant has demonstrated that the AUC “made an error of fact, or mixed fact and law where the legal principle is not readily extricable, which is material to the decision and exists on a balance of probabilities.”
The AUC noted that AE did not identify if the alleged errors are errors of fact or mixed fact and law, or whether its procedural fairness argument forms the basis for all three. As procedural error is no longer within the scope of Rule 016, the AUC dismissed the application to the extent that it was based on allegations regarding procedural fairness. The review panel commented that a general reference to all types of errors is not helpful.
(a) Alleged error 1: the compliance panel rendered decisions that seek to overturn, reverse and alter decisions rendered in the underlying decision.
The AUC interpreted AE’s submissions to argue that the cumulative result of the GTA Decision was that the total FTEs for the test period would be higher than 2019 actuals, but the result of the compliance decision is that the total FTEs approved for the test period is lower than 2019 actuals. As a result, the compliance decision would reverse and conflict with the base decision. If this was the case, AE argued that it could not have known that the AUC would render inconsistent decisions and therefore did not have an opportunity to address this outcome.
The AUC did not accept that the compliance decision reverses the GTA Decision. AE had an opportunity to address the potential interdependency of the GTA Decision directions based on which it conducted the FTE reallocation in its information response, its argument, and its reply argument in the compliance proceeding. AE had and used this opportunity but failed to convince the AUC of its position.
(b) Alleged error 2: the compliance panel relied on a purported interdependency of decisions when none was established, shown to be necessary or proved to exist.
AE took issue with the basis for the compliance panel’s finding that AE’s compliance filing did not accurately reflect the implementation of Direction 1 of Decision 24964-D02-2021. It challenged the compliance panel’s assessment of the interdependent nature of Direction 1 – establishing the base level for FTEs – and AE’s forecast revenue offset calculation and associated affiliate FTEs.
The AUC noted that AE’s revenue offsets track the costs of resources that are used to provide services to affiliates and outside parties. It found that these revenue offsets are, by their nature, linked to FTEs. The AUC determined that the compliance panel’s interpretation of the GTA Decision meant that all directions of that decision are subject to all findings and other directions made elsewhere. Further, finding that the original compliance filing did not accurately reflect the implementation of the directions as it pertains to revenue offsets did not constitute an error.
(c) Alleged error 3: the compliance panel rendered decisions unsupported by the evidence and contrary to the evidence on the record.
AE argued that the Compliance Decision resulted in AE having 26 fewer FTEs than its total 2019 actual FTE complement. The AUC found it unclear what error AE was alleging with this statement. Regardless, the AUC determined that there was no basis for the claim that the decrease was inconsistent with or reversed the original GTA Decision.
The review panel observed that the base FTE complement approved in the compliance decision was consistent with AE’s actual 2019 FTE complement when affiliate/services to outside party FTEs are offset against AE’s total FTEs. If the compliance panel approved the FTE complement that ATCO Electric originally filed in its compliance filing, the result would have been that AE would have 26.5 more FTEs providing transmission utility O&M services than it did in 2019.
This would have been an error. AE can only recover the costs from ratepayers of FTEs that provide services to the regulated transmission utility. This would have been inconsistent with the GTA panel’s original decision that, subject to a select number of FTE additions and reallocations, AE had not justified that it needed more FTEs, relative to its 2019 actual FTE complement, to provide services to Alberta customers in the 2020 – 2022 period. The review panel determined that it was within the compliance panel’s purview to interpret the directions in the GTA Decision to give effect to what was clearly the intent of the original findings, and the compliance panel was in the best position to do so, having been on the original GTA panel.
The AUC held that AE failed to demonstrate that the compliance panel made an error, whether of fact or mixed fact and law.
AE’s application for review and variance was dismissed.