NID Application – Substation and Interconnection Facility Applications – Facility Siting
In this decision, the AUC had considered a needs identification document (“NID”) application from the Alberta Electric System Operator (“AESO”) (the “NID Application”) and facility applications from AltaLink Management Ltd. (“AltaLink”) to construct and operate a new Chestermere 419S Substation, connect the substation to the Alberta Interconnected Electric System via two single-circuit 138-kilovolt (kV) transmission lines, and alter the Balzac 391S Substation (the “Facility Applications”).
AESO NID Application
The AUC explained that the AESO is responsible for preparing and filing the NID Application with the AUC for approval. Section 11 of the Transmission Regulation (“T-Reg”) and Section 6.1 of AUC Rule 007: Applications for Power Plants, Substations, Transmission Lines, Industrial System Designations and Hydro Developments (“Rule 007) prescribe the application informational requirements, including:
(a) an assessment of current transmission capacity;
(b) load and generation forecasts;
(c) studies and analysis that identify the timing and nature of the need for new transmission; and
(d) a technical and economic comparison of the technical solutions considered by the AESO, and the AESO’s preferred solution.
The AUC explained that:
(a) Subsection 34(1)(c) of the Electric Utilities Act (the “EUA”) requires the AESO to file a NID application on request for system access service from a market participant;
(b) Subsection 38(e) of the T-Reg requires the AUC to consider the AESO’s assessment of need to be correct, unless an interested person establishes that the assessment is technically deficient, or that approval of the need application would not be in the public interest; and
(c) Section 34(3) of the EUA provides the AUC three options when deciding a need application: approve the application, deny it, or refer it back to the AESO with directions or suggestions for changes or additions.
The AUC addressed two key issues subject to dispute with respect to the AESO’s assessment of the need for the facilities in this case:
(a) First, the AUC had to determine whether the AESO’s NID Application was technically deficient (i.e. not complete); and
(b) Second, the AUC had to consider the opposing views of the Office of the Utilities Consumer Advocate (the “UCA”) and the AESO regarding the AESO’s statutory mandate and responsibilities relating to NID applications and approval processes, and whether the public interest had been served in this instance.
The UCA argued that the NID Application was technically deficient because it did not contain actual peak demand data for 2014 through 2016 at the time it was filed, and did not include actuals for 2016 as of the date of the hearing.
The AUC explained that Rule 007 requires NID applications to include “the last five-year summer and winter peak substation loads applicable to the development area.” The AUC agreed with the AESO’s submission that a reasonable interpretation of this requirement is to include the last five years of available data, which in this case would not include 2016 actuals.
The AUC found that all parties had an opportunity to review the updated information. The AUC concluded that the NID Application was not technically deficient and complied with Rule 007 requirements.
The AUC found that the AESO’s assessment of the need was not based purely on the need to serve future forecast loads, but also on evidence showing a need for existing development in the area. The AUC found that the proposed transmission development is needed and that it is in the public interest to ensure that the transmission system is reliable.
AESO’s Mandate re NID Application
The UCA argued that a higher level of scrutiny is required for the NID Application resulting from Fortis Alberta Inc.’s (“Fortis”) request for system access service than the level of review that the AESO undertook. The UCA was also concerned that because Fortis is subject to a form of cost-of-service regulation for projects eligible for capital tracker treatment, that Fortis is incentivized to build a larger rate base upon which to earn a return.
The AESO submitted that a market participant’s request for system access service is distinct from the scenarios contemplated in sections 34(1)(a) and 34(1)(b) of the EUA, in which the AESO independently identifies a need to expand or enhance the transmission system to address constraints or conditions affecting the operation of the system, or to improve the efficiency of the transmission system.
The AUC agreed with the UCA’s assertion that Fortis’ planning decisions can be subject to questioning and oversight. However, in this case, the AUC found the project to be in the public interest, given the oversight provided in the capital tracker true-up process and the effect of transitioning to expected stronger incentives under the next generation of performance-based regulation. However, the AUC stated that these matters may be reviewed by the AUC in the context of contribution policy provisions in a future AESO tariff proceeding.
Facility Applications
With respect to AltaLink’s Facility Applications, the AUC found that:
(a) the facilities proposed in the Facility Applications were consistent with the need identified in the AESO’s NID Application; and
(b) the Facility Applications, filed by AltaLink pursuant to sections 14 and 15 of the Hydro and Electric Energy Act, comply with the information requirements prescribed in Rule 007.
Siting of Proposed Substation
With respect to land use, the AUC found that:
(a) the current land use is an important factor in weighing the overall impacts of a proposed site;
(b) the alternative sites A and C were currently in use by private landowners engaged in agricultural operations;
(c) maintaining agricultural land and minimizing impacts on agricultural operations when a suitable industrial site is available, is in the public interest;
(d) the preferred Site E was located on lands slated for light industrial development; and
(e) this was a significant factor weighing in favour of Site E.
With respect to flood risk, the AUC found that:
(a) Site E was at a greater risk for flooding because it is located much closer to Chestermere Lake than Site A or Site C; and
(b) even in the unlikely event of a dam breach, the substation lands and facilities at Site E would be elevated above the inundation zone through proper design, engineering and construction.
The AUC considered that the flood risk factor weakly favoured Sites A or C.
With respect to impacts on residents in the vicinity, the AUC found that while Site E has more residences within 800 metres than either alternate site, the City of Chestermere had committed to planting trees along the west side of the project to create a visual buffer for the closest residences. In addition, the AUC noted that AltaLink had also committed to installing slats along the west and south sides of the substation fence.
The AUC found that:
(a) given the distance to residences, existing conditions, and proposed mitigation measures, the visual impact of Site E would be reduced in the short-term;
(b) the lands around Site E would be developed into a business park in the future, which would further reduce visual impacts of the substation; and
(c) in the long-term, the visual impacts of the proposed development at Site E would be less than at Site A or Site C.
With respect to environmental impacts, the AUC found that:
(a) Site A was marginally better than Site E with respect to potential impacts on wetlands and to wildlife;
(b) differences between the sites were not significant and that the impacts associated with Site E could be effectively mitigated; and
(c) approval of Site E would not result in significant effects to the local environment.
The AUC concluded that approval of the preferred Site E location would result in lesser overall impacts than approval of either of the alternate locations.
The AUC therefore found that construction of the proposed Chestermere 419S Substation at Site E was in the public interest, pursuant to Section 17 of the Alberta Utilities Commission Act, having regard to the social and economic effects of the facilities, and their effects on the environment.
138-kilovolt transmission lines 765L and 691L
Having approved the proposed substation at the Site E location, the AUC went on to consider the associated 35-metre-long proposed 138-kV transmission line. The AUC noted that the new transmission line would be strung on single-pole, include wood structures and all structures would be located either within a road allowance or on AltaLink-owned property.
The Commission found that:
(a) the potential environmental effects of the proposed transmission line developments would be minimal with the implementation of the mitigations itemized in the Environmental Specifications and Requirements;
(b) the proposed transmission lines were consistent with the need identified in the NID Application; and
(c) the Facility Applications complied with the information requirements prescribed in Rule 007.
The AUC found the proposed transmission line developments to be in the public interest pursuant to Section 17 of the Alberta Utilities Commission Act.
