Electricity – Rates
Application
The Alberta Electric System Operator (“AESO”) requested approval of:
(a) updated 2023 rate calculations; and
(b) proposed 2023 independent system operator (“ISO”) tariff rates for demand transmission service (“DTS”), Fort Nelson demand transmission service (“FTS”), demand opportunity service (“OTS”), export opportunity merchant service (“XOS”), primary service credit (“PSC”), supply transmission service, Rider J and generating unit owner’s contribution (“GUOC”).
Decision
The AUC approved the AESO’s request for the 2023 update to the ISO tariff, including the proposed changes to the GUOC rates and the annual process to update GUOC rates.
Applicable Legislation
Electric Utilities Act, SA 2003, c E-5.1 – s 14(3).
Pertinent Issues
Decision 2010-606, in which the AUC approved the AESO’s proposal to file major tariff updates in multi-year intervals and much simpler updates on an annual basis, sets out that the annual ISO tariff updates must consist of three components.
The update filing is required to include an annual revenue requirement update using the wires cost forecast methodology approved in Decision 2010-606 and updated in Decision 22093-D02-2017, plus forecasts for ancillary services costs, losses costs and administration costs approved by the AESO’s board for the forecast year.
The update must also include revised rate levels for each AESO rate calculated from the forecast revenue requirement and forecast billing determinants using rate calculations and the rate design approved in the most recent comprehensive tariff application.
To calculate the 2023 rates, the AESO used the 2023 forecast revenue requirement, the functionalization and classification of wires costs and the point-of-delivery costs function approved for 2020, and the 2023 forecast billing determinants prepared by the AESO.
The final component of the update requires annual updates to investment amounts approved in the most recent comprehensive tariff, reflecting an escalation factor based on the most recent Conference Board of Canada’s forecast of Alberta’s Consumer Price Index (“CPI”).
The AESO also proposed updates to the GUOC rates for 2023 using the approved method. The AESO developed the proposed 2023 GUOC rates and separated the rates by region depending on the presence of near-term generation integration capability in the region and the associated development interest
The AUC was satisfied that the revenue requirement forecast was prepared following the approved method.
The AUC found that the AESO’s use of its 2021 Long-term Outlook, which forecasts relatively flat load growth in 2023, as the basis to determine 2023 billing determinants in the tariff update was reasonable and approved the applied-for 2023 ISO tariff rates.
The AUC was satisfied that the AESO’s submission of maximum investment level amounts escalated by a factor of 1.0979, based on a composite of specified recent inflation indices, is consistent with the rate calculation methodology previously approved by the AUC.
Finally, the AUC approved the applied-for GUOC rates.
