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City of Lethbridge 2021-2023 General Tariff Application Compliance Filing, AUC Decision 27213-D01-2022

Link to Decision Summarized

GTA – Compliance Filing

In this decision, the AUC evaluated the compliance filing of the City of Lethbridge (“Lethbridge”) following Decision 26554-D01-2022 (the “Decision”) regarding Lethbridge’s general tariff application. In this compliance filing decision, the AUC was satisfied that Lethbridge complied with the directions issued in the Decision. The AUC approved Lethbridge’s 2021-2023 revenue requirement on a final basis, as filed.

Introduction

Lethbridge is a transmission facility owner (“TFO”) under the Electric Utilities Act (“EUA”). As a TFO in Alberta, Lethbridge provides regulated transmission services and recovers the transmission service costs through a transmission tariff. The Alberta Electric System Operator must approve this tariff.

In Decision 26554-D01-2022, the AUC considered whether Lethbridge’s tariffs to recover its forecast operating costs for 2021, 2022, and 2023 were just and reasonable and would provide a fair rate of return on and of Lethbridge’s capital investment. The AUC determined that specific costs applied for by Lethbridge were not reasonable or required clarification and directed Lethbridge to provide a compliance filing to address certain directions before the AUC could approve Lethbridge’s 2021-2023 revenue requirements as final.

Compliance with Directions from Decision 26554-D01-2022 and Interim Rates True-up

In the Decision, the AUC issued seven directions for Lethbridge to address before the AUC would approve the applied-for 2021-2023 revenue requirements on a final basis. Two of the seven directions are to be addressed in future applications, while the remaining five directions were required to be addressed in Lethbridge’s compliance filing.

Direction 2 required that Lethbridge treat the approved single aggregated “accumulated net salvage account” in the same manner as Lethbridge’s accumulated depreciation accounts, where the balance of the account determines the rate base. Direction 3 required an adjustment to the Universal System of Accounts (“USA”). The AUC denied the applied-for -45 percent net salvage for USA Account 356.00 – Transmission Lines, and Lethbridge was directed to incorporate the previously approved net salvage of -40 percent for this account.

Direction 4 required that Lethbridge explain the differing December 31, 2019, book (or actual) balances between its depreciation study and minimum filing requirement schedules. Lethbridge was also required to adjust its amortization of reserve differences calculation, and annual true-up provision, if necessary. In Direction 5, the AUC required that Lethbridge reports its December 31, 2019, actual net salvage by USA account. Finally, Direction 7 required that Lethbridge provides clarification regarding the function fleet capital additions for 2022 and 2023.

The AUC found that Lethbridge had complied with directions 2, 3, 4, 5, and 7.

Lethbridge proposed that its total April 2022 payment be $1,098,737, which consists of the sum of the 2022 monthly tariff of $785,202, and a one-time lump sum payment of $313,535 to true up interim rates to the final rates from January 2021 to March 2022.

The AUC found that the annual tariff and monthly rates for the 2021-2023 test period corresponded to the respective revenue requirements and approved the same on a final basis. The AUC also approved a one-time lump sum payment of $313,535 to be collected from the AESO for the revenue shortfall resulting from the difference between Lethbridge’s interim and approved monthly tariffs between January 1, 2021, and March 31, 2022.

Order

The AUC approved Lethbridge’s 2021-2023 revenue requirements of $9,344,977 for 2021, $9,422,427 for 2022 and $9,835,995 for 2023 as final.

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