Rates – True-Up – Deferral Account
EPCOR Distribution & Transmission Inc (“EDTI”) applied to the AUC requesting approval of its 2013-2014 Alberta Electric System Operator (“AESO”) deferral account reconciliation (“DAR”) true-up by way of Rider J.
The AUC approved the AESO’s reconciliations for deferral accounts in Decision 3334-D01-2015 for amounts related to transmission access charges, which are in turn included in the annual transmission access charge deferral account (“TACDA”) true-up applications for each distribution facility owner (“DFO”).
EDTI submitted that it received a net refund of $8.99 million to be flowed through to customers in its service area, pursuant to Decision 20866-D01-2016. EDTI submitted that while it would normally include the 2013-2014 AESO DAR true-up amount in its 2015 TACDA true-up application. However, it would refund the amount earlier than originally planned, due to the large amount being refunded constituting more than 25 percent of its forecasted distribution net income for 2015. EDTI also cited financial timing constraints, noting that it would have to book the $8.99 million as revenue for 2016, but that due to the anticipated timing of the 2015 TACDA true-up application, it would not be able to account for the corresponding refund until 2017. EDTI submitted that this would misstate its revenues for both 2016 and 2017.
EDTI proposed to apply Rider J on a per kilowatt-hour (kWh) basis, per rate class. EDTI provided the AUC with calculations for applying Rider J beginning in Q3 2016 and Q4 2016. EDTI expressed a preference for Q3, citing the large size of the refund, and its aforementioned timing concerns.
The AUC noted that in Decision 3334-D01-2015, it had standardized each DFO’s annual TACDA applications, with the purpose of ensuring that the AESO tariff charges paid by a DFO are recovered by the revenues collected by a DFO. Accordingly, as the AESO DAR true-up was one such amount, the AUC stated that it preferred that DFOs collect or refund AESO DAR amounts with their annual TACDA applications. However, considering the circumstances of the application and the timing concerns regarding the refund to customers, the AUC held that it would allow EDTI’s proposal to settle the amounts with its customers in 2016.
In keeping with the principles set out in Decision 3334-D01-2015 however, the AUC directed EDTI to bring the $8.99 million refund amount to the attention of the parties in its 2015 TACDA application, to be filed in August 2016.
The AUC held that EDTI’s proposal and methodology for allocating the refund to be reasonable, and consistent with EDTI’s past practice. The AUC also agreed with EDTI’s preference to institute the refund in Q3 2015, holding that the principles of rate stability favoured instituting the change over the summer months, when billing determinants were forecast to be at their peak. Accordingly, the AUC held that a refund over this period would naturally smooth out customer billings. The AUC therefore approved EDTI’s proposed Rider J in the amount of a refund of $8.99 million, effective July 1, 2016 to September 30, 2016.
