Deferral Account Reconciliation – System Access Service
In this decision, the AUC approved FortisAlberta Inc. (“Fortis”)’s 2017 annual transmission access charge deferral account (“TACDA”) and the 2017 TACDA true-up net refund amount of $10.927 million.
Background
All electric distribution companies accessing the electric transmission system in Alberta are charged by the Alberta Electric System Operator (the “AESO”) for transmission services provided in relation to customers in their distribution service areas.
2017 TACDA True-Up Amount
The 2017 TACDA true-up amount included the true-up of a 2015 rider related to the AESO charges, the true-up of the four amounts arising from the various 2017 AESO charges (i.e., the system access service deferral true-up, AESO deferral account reconciliation true-up, Balancing Pool true-up and border customer deferral account true-up), and carrying costs associated with those amounts.
2015 TACDA Rider True-Up
The AUC explained that the purpose of a deferral account rider true-up is to ensure that, for each of the AESO charges, the amounts actually collected or refunded equal the amounts approved by the AUC. Fortis calculated the amount of the rider true-up as the difference between the 2015 annual TACDA true-up refund of $2.899 million, approved in Decision 21787-D01-2016, and the actual amount refunded of $1.956 million, resulting in the true-up of $0.943 million on an aggregate basis. The deferral account rider true-up amount was determined for each rate class as the difference between the amount approved for collection or refund by rate class and the amount actually collected or refunded for each rate class.
The majority of the $0.943 million 2015 TACDA rider true-up amount was driven by the difference between forecast and actual consumption for the irrigation rate class in 2017 when the 2015 TACDA rider was in place.
System Access Service Deferral True-Up
The AUC explained that the purpose of a system access service deferral true-up is to reconcile the actual transmission access revenue received from customers to the actual transmission access costs paid to the AESO.
Fortis indicated that its 2017 actual transmission access costs, excluding transmission costs for transmission-connected Rate 65 customers, were $579.019 million, while its actual transmission access revenues for distribution connected customers, including revenues received through its quarterly TACDA riders, were $588.847 million. Therefore, Fortis applied to refund $9.829 million to customers.
AESO Deferral Account Reconciliation True-Up
Under section 14(3) of the Electric Utilities Act (“EUA”), “the Independent System Operator [(“ISO”)] must be managed so that, on an annual basis, no profit or loss results from its operation.” Accordingly, any variances between the actual costs the AESO incurs and the forecast amounts, are refunded to or recovered from market participants by way of the AESO deferral account reconciliation, typically undertaken on an annual basis. In turn, the electric distribution companies flow-through these collections or refunds to customers in their service areas.
Balancing Pool True-Up
Under section 82 of the EUA, each year, the Balancing Pool is required to forecast its revenues and expenses to determine any excess (or shortfall) of funds. Based on this forecast, the Balancing Pool determines an annualized amount that will be refunded to (or collected from) electricity consumers over the year. This is “… so that no profit or loss results, after accounting for the annualized amount under section 82(7) as a revenue or expense of the Balancing Pool.” This consumer allocation amount applies to all market participants who receive system access service from the AESO and is recovered through Rider F of the ISO tariff. The consumer allocation is based on the amount of electric energy consumed annually. In 2017, the Balancing Pool collected a consumer allocation of $1.10 per megawatt hour (“MWh”).
Border Customer Deferral Account
Border customers are customers in Fortis’ service area that receive energy through a connection to a distribution or transmission system located outside Alberta. The purpose of the border customer deferral account is to capture the net differences between Fortis’ receipts and payments pertaining to transactions related to the extra-provincial supply of energy and wires services to border customers in accordance with section 16 of the Isolated Generating Units and Customer Choice Regulation.
Fortis allocated the border customer deferral account amounts to all rate classes based on their 2017 actual energy consumption.
Carrying Costs
Fortis calculated carrying costs on outstanding amounts related to the true-up balances in accordance with Rule 023: Rules Respecting Payment of Interest. The rate used was the Bank of Canada monthly bank rate plus 1.5 percent. Fortis calculated a weighted average Bank of Canada rate for months in which the interest rates changed. The total carrying costs amounted to a net refund of $0.548 million. Fortis allocated carrying costs to rate classes in proportion to their deferral account balances.
Findings
The AUC approved a net refund of $10.927 million, as calculated by Fortis and the resulting true-up amount for each rate class.
The AUC found Fortis’ application to be consistent with the framework previously approved in Decision 3334-D01-2015. The AUC found Fortis’ calculation of the amounts comprising the 2017 annual TACDA true-up were reasonable. The AUC also found the individual components of the 2017 TACDA true-up to rate classes consistent with previously approved methodologies and were reasonable.
