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Alberta Electric System Operator Approval of Proposed Amended Section 501.3 of the ISO Rules, AUC Decision 26992-D01-2022

Link to Decision Summarized

Abbreviated Needs Approvals – ISO Rules

In this decision, the AUC approved amendments to Section 501.3 of the Independent System Operator (“ISO”) Rules, Abbreviated Needs Approval Process as applied for by the Alberta Electric System Operator (“AESO”) pursuant to subsection 20.2(1) of the Electric Utilities Act (“EUA”).

Since the implementation of Section 501.3 in July 2015, only 13 percent of connection and system projects have satisfied the eligibility criteria for the abbreviated process. The AESO concluded that the criteria in Section 501.3 were too stringent. The proposed amendments expand the existing eligibility requirements. The proposed amendments included:

(a)     removing detailed scope-based eligibility requirements for transmission facility projects based on system access service requests and increasing the cost threshold to include all transmission facility projects with up to $25 million in total costs, of which system costs are not expected to exceed $15 million; and

(b)     providing a less prescriptive approach with respect to the factors that must be considered prior to approving a project.


Criteria of Section 20.21

The AUC determined that the proposed amendments to the ISO Rule resulted in a rule that is not technically deficient, supports the fair, efficient, and openly competitive operation of the market to which it relates, and is in the public interest. Therefore, the AUC found that the amended Section 501.3 complies with the requirements of Section 20.21(a) of the EUA.

The AUC noted that the proposed amendments maintain a transparent approval process, as notice of all projects under consideration for the process under Section 501.3 will be posted to the AESO’s website, and stakeholders are given 14 days to review the projects. As previously stated, the AESO may restrict eligibility if there are significant stakeholder questions or concerns.

Did the AESO Fulfill its Obligation to Adequately Consult with Stakeholders?

The AESO began its consultation process with the initial proposal of the amendments to Section 501.3 in September 2021. The AUC was satisfied with the AESO’s consultations and all comments and the AESO’s replies to the comments posted on the AESO’s website. Stakeholders raised two principal issues.

(a)     The eligibility criteria should be further altered

Stakeholders suggested that the proposed eligibility criteria should be driven by limitations of the scope of the project rather than specific dollar figures. Further, stakeholders were concerned that the inclusion of point of delivery substation projects that include higher costs and impact the interconnected electrical system (“IES”) more extensively would remove the AUC from the approval process of many connection projects.

The AESO replied that imposing monetary limits allows for a more efficient and flexible approach, as listing specific project scope criteria would be prescriptive and rigid, with excessive regulatory burden and costs associated with it. Because historical costs of point of delivery substation projects exceed $25 million, the AESO noted its expectation that these projects will not be eligible, and the AUC will not be removed from the process. The AESO also pointed out that the amendments will not give it absolute authority. Disputes regarding its decision can be submitted to the AUC under subsection 11.2(4) of the Transmission Regulation.

(b)     The amendments would impair the ability of a legal owner of an electric distribution system to plan and maintain an appropriate level of service

Stakeholders suggested that the abbreviated process should be limited to point of delivery substation development projects that have a minor impact on the IES because the reliability criteria that align with longer-term distribution plans could cause impairment. The AESO responded that the requirements set out in the proposed amended Section 501.3 align with the AESO’s mandate under the EUA and the Transmission Regulation.

AUC Decision and Order

The AUC was satisfied that the information and consultation requirements established by Rule 017 have been met. The AUC approved the proposed amended Section 501.3 of the ISO Rules, Abbreviated Needs Approval Process, to be effective February 9, 2022, the date of this decision.

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