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FortisAlberta Inc. Inter-Affiliate Code of Conduct Compliance Plan – Extension to Communication and Training Exemption, AUC Decision 27887-D01-2023

Link to Decision Summarized

Facilities – Consultation

Application

FortisAlberta Inc. (“FortisAB”) applied for an extension of the conditional exemption granted in Decision 23089-D01-2018 from section 7.2 of the FortisAlberta Inc. Inter-Affiliate Code of Conduct Compliance Plan (“Compliance Plan”).

Decision

The AUC approved the application from FortisAB to extend the conditional exemption granted in Decision 23089-D01-2018.

Applicable Legislation

Red Tape Reduction Act, SC 2015, c-12.

FortisAlberta Inc. Inter-Affiliate Code of Conduct Compliance Plan.

Pertinent Issues

FortisAB must apply its inter-affiliate code of conduct when conducting inter-affiliate transactions. The code of conduct is meant to prevent the occurrence of cross-subsidization between FortisAB and its regulated and unregulated affiliates. It is also intended to prevent other circumstances that could cause harm to customers. FortisAB’s code of conduct requires that it develop and implement a plan for compliance with the code of conduct’s provisions.

In Decision 2006-012, FortisAB’s current Compliance Plan was approved. FortisAB was granted a conditional exemption from the requirement under s 7.2 of the Compliance Plan to communicate the contents to all employees and contractors. The exemption allowed FortisAB to train only employees and contractors with “meaningful involvement” in inter-affiliate transactions.

In response to an order issued to FortisAB in Decision 23089-D01-2018, FortisAB filed a letter outlining its formal criteria to require all members of its executive team and certain employees to complete inter-affiliate code of conduct training. The AUC approved the criteria provided by FortisAB to determine which employees have “meaningful involvement” in inter-affiliate transactions and would, accordingly, be required to complete the training under s 7.2 of the Compliance Plan.

FortisAB was also required to include the number of employees and contractors who received training under s 7.2 of the Compliance Plan in its Inter-Affiliate Code of Conduct Annual Compliance Report.

The AUC determined that FortisAB did not fulfill this obligation in its 2020 and 2021 annual reports. FortisAB self-reported these instances of non-compliance to the AUC’s Market Oversight and Enforcement Division. The AUC deemed the omission of information from the annual reports to be inadvertent. It was satisfied that appropriate corrective action was taken to avoid the possibility of this omission in the future.

The AUC further evaluated whether continuing the exemption would be reasonable and appropriate. FortisAB indicated that the circumstances under which the exemption was granted in Decision 23089-D01-2018 remained the same. FortisAB also stated that it continues to operate independently of its utility affiliates. All inter-affiliate transactions and compliance certifications would continue to be submitted to the AUC as part of FortisAB’s Inter-Affiliate Code of Conduct Annual Compliance Report.

The AUC extended FortisAB’s exemption from s 7.2 of its Compliance Plan until FortisAB is required to apply for a review of the exemption, subject to the following conditions:

(a)     FortisAB must include the number of employees and contractors who have received training under s 7.2 of the Compliance Plan in its Inter-Affiliate Code of Conduct Annual Compliance Report: and

(b)     if FortisAB acquires or creates an Alberta affiliate, it must immediately apply to the AUC for a review of its conditional exemption, at which point the AUC will decide if FortisAB may continue to benefit from the exemption. Similarly, if there are any changes to FortisAB that could materially affect the nature of inter-affiliate transactions, FortisAB must apply to the AUC for review of its conditional exemption.

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