Compliance Filing – Transmission Facilities Owner – General Tariff Application
The City of Red Deer (“Red Deer”) filed an application for confirmation of compliance with Decision 3599-D01-2015, which was issued in respect of Red Deer’s 2015-2017 transmission facilities owner (“TFO”) general tariff application (“GTA”).
In Decision 3599-D01-2015, the AUC directed Red Deer to make several revisions and adjustments to its application, to be accompanied by a compliance filing. The AUC directed Red Deer as follows:
(a) Apply an overall inflationary increase of 3.75 percent for union employees, and apply a 0.25 percent step increase;
(b) Apply an inflationary increase of 3.5 percent for contractor escalation rates, without a step increase;
(c) Apply a vacancy rate of 1.0 percent to reflect vacancies;
(d) Apply a compounded inflationary escalator for property taxes of 4.0 percent through 2015-2017, including adjustments for the addition of substation 209S;
(e) Adjust Red Deer’s recognition of contributions in its revenue requirement calculation so that contributions are recognized from the start of construction, and are accumulated as an offset to project expenditures, for the purpose of calculating its allowance for funds used during construction (“AFUDC”), and to make adjustments to its contribution amortization rate accordingly;
(f) Apply the most recent actual interest rate recorded by the Alberta Capital Finance Authority in forecasting its 15-year rolling average, being 2.235 percent for 2015-2017;
(g) Provide detailed costing for each component of its allocation methodology, originally approved in Decision 2005-149, as part of its next GTA;
(h) Refile its corporate costs based on its 2014 actual allocators and to provide a detailed explanation of any changes;
(i) Revise Red Deer’s gross asset allocator to reflect directions to remove $2.679 million in 2016 capital additions and $13,000 related to land costs and other AFUDC costs held by AltaLink Management Ltd.;
(j) Provide updated timing of contributions for substation 209S and an updated AFUDC schedule for the impact of Decision 2191-D01-2015 (the generic cost of capital decision); and
(k) Update all schedules to reflect the new capital structure and return on equity amounts set by Decision 2191-D01-2015, regardless of the materiality.
Red Deer submitted a table indicating the overall impacts of its compliance with each AUC direction on its monthly tariff and revenue requirement as follows:
The AUC was satisfied that Red Deer had complied with all directions from Decision 3599-D01-2015, and approved Red Deer’s GTA compliance filing as filed. The AUC therefore approved Red Deer’s final TFO revenue requirements of $3,453,000 for 2015, $3,885,000 for 2016, and $4,300,600 for 2017.
The AUC noted that a reconciliation of Red Deer’s interim rates and its final approved rates was in order, given that Decision 2014-305 approved the continuation of Red Deer’s existing 2014 tariff at $323,715 per month on an interim basis for the first nine months of 2015. The AUC noted that Red Deer’s final approved monthly tariff amount for 2015 was $287,751. Therefore, the AUC determined that Red Deer had collected excess tariff revenues of $35,964 per month, or $323,676 on an annual basis. The AUC directed Red Deer to remit to the Alberta Electric System Operator $323,676 to true up its 2015 interim TFO rate to the 2015 final approved TFO rate for costs collected between January 1, 2015 and September 30, 2015.
