Deferral Accounts
In this decision, the AUC considered AltaLink Management Ltd. (“AltaLink”)’s 2014 and 2015 Deferral Accounts application requesting final cost approval for 202 transmission capital projects. AltaLink requested approval final approval of costs which would result in gross capital additions to its rate base of approximately $3.8 billion, net customer contributions.
Summary
The AUC found AltaLink to have prudently planned and executed the majority of these capital projects. These findings included approval of the majority of costs for AltaLink’s major system projects, including the Western Alberta Transmission Line (“WATL”) project, the Christina Lake projects, the Southern Alberta Transmission Reinforcement (“SATR”) projects, the Foothills Area Transmission Development (“FATD”) projects and the Red Deer Area Transmission Development projects. As well, the AUC considered final project costs for the Heartland project and the SATR Cassils to Bowmanton projects.
The AUC did not approve costs in the WATL project related to some of the charges for tower inspections. Regarding some of the other major projects, the AUC also found that a portion of AltaLink’s execution costs relating to the use of access mats were not prudent and these costs were disallowed. The AUC also disallowed certain costs arising from the completion of AltaLink’s resale of some of the properties acquired in the Heartland project.
Further, the AUC determined that a settlement agreement reached between AltaLink and its EPCm service provider, SNC-Lavalin ATP Inc. (“SNC-ATP”), regarding the services performed by SNC-ATP, was unreasonable and disallowed a portion of the agreed-to amounts that were the subject of this settlement.
The total amount of costs disallowed in the decision was approximately $30.5 million, which represented less than 1 percent of the total net capital additions requested.
The final costs approved by the AUC in this decision would result in an additional charge of approximately $81.4 million to the Alberta Electric System Operator (“AESO”).
The AUC ordered AltaLink to refile its 2014-2015 deferral accounts reconciliation application to reflect the findings, conclusions and directions set out in this decision in a compliance filing application by February 15, 2019.
Filing Requirements – Compliance with Direction 9
The AUC found the project summary reports prepared for the current application were extremely useful. In addition to providing essential descriptions and a high-level explanation of primary cost variances, the project summary reports provided linkages to AltaLink change notice and subcontract amendments evidence. The AUC directed AltaLink to continue to provide project summary reports in its next direct assign capital deferral account (“DACDA”) application.
Decision and Order
As the AUC did not approve the full amount of the rate base addition amounts requested by AltaLink for all projects in the application, AltaLink was directed to file a compliance application to reflect the capital addition amounts approved by the AUC.
The AUC directed AltaLink to refile its 2014 and 2015 deferral accounts reconciliation application to reflect the findings conclusions and directions arising from this decision on or before February 15, 2019.
