Deferral Account – Direct Assigned Capital Projects
In this decision, the AUC considered ENMAX Power Corporation’s (“ENMAX”) application for the disposition of certain 2014 distribution and 2014-2015 transmission deferral account balances (the “Application”).
For the reasons summarized below, the AUC directed ENMAX to file a compliance filing to reflect the AUC’s conclusions and directions in this decision, including:
(a) remove costs related to the Remington relocation project;
(b) reduce gross capital additions for specific distribution driven transmission projects (“DDTPs”) to no more than the applicable Alberta Electric System Operator (“AESO”) maximum investment allowance for each project; and
(c) provide revised effective dates for the disposition of the approved deferral account balances and recalculate carrying costs associated with these deferral amounts.
Application Summary
In the Application:
(a) ENMAX requested to dispose of its distribution related amounts, a net collection of $1.540 million, subject to applicable carrying costs, by way of a distribution access service (“DAS”) adjustment rider; and
(b) ENMAX proposed collecting the transmission true-up by way of a one-time collection effective July 1, 2017, comprised of ENMAX’s 2014-2015 deferral account shortfalls totalling $6.459 million, subject to applicable carrying costs.
ENMAX provided the following summary of the 2014 and 2015 balances of approved deferral accounts:
Common DACDA Matters
Adequacy of Variance Explanations
The AUC found that the materials ENMAX initially filed with the application were not sufficient to allow the AUC to assess the prudence of ENMAX’s expenditures on direct assign projects.
However, the AUC acknowledged that:
(a) actual capital addition amounts for a project in a specific year may be different from the General Tariff Application (“GTA”) forecast for several reasons, including the cancellation or deferral of a project; and
(b) the GTA addition forecast for a given year may not be the best baseline for examining the prudence of ENMAX’s actual expenditures on specific projects.
The AUC found that the proposal to provide services (“PPS”) estimate, which includes a detailed breakdown of specific line items for the estimate, is the preferred baseline for the assessment of the prudence of actuals. The AUC noted that because the PPS stage estimates were ultimately provided by ENMAX in response to information requests, the AUC and other parties had the opportunity to consider the reasonableness of project variances in relation to the completed ENMAX direct assign projects included in the application.
AESO Direct Assigned System Projects
With respect to the $37,609,406 actual capital cost ($5,720,597 above the approved forecasted costs) for Project C20076 – #65 Sub-South Source 240kV Transformer, the AUC found that:
(a) the AESO was fully aware of the delays and associated costs attributed to the Stoney Trail road contractor;
(b) the AESO had sufficient information to have determined that the in-service date for the project should be adjusted if the AESO believed that doing so would have reduced or mitigated cost variances;
(c) accordingly, ENMAX should not be held accountable for failing to pursue more aggressively an in-service date postponement to address this issue;
(d) having regard to the cost and uncertainty of litigation, ENMAX took reasonable actions with the Stoney Trail road contractor to ensure that costs that might be recoverable from that contractor were pursued; and
(e) accordingly, ENMAX’s requested capital addition in respect of Project C20076 in the amount of $37,609,406 should be approved as filed.
With respect to Project C20037, the AUC approved ENMAX’s requested capital addition in the amount of $13,571,471, as filed, based on the following findings:
(a) there would not have been an opportunity to mitigate increases by delaying the project to avoid winter construction because the project had a longer timeline than a standard construction season; and
(b) ENMAX made prudent decisions at the time key decisions had to be made during project planning and execution.
The AUC noted its February 22, 2017 ruling in which the AUC determined that consideration of the prudence of the transmission line portion of the FATD East Project (Project C20103), which included segments located in the service territories of both AltaLink and ENMAX, and which was constructed under AltaLink’s direction, should be considered as part of AltaLink’s DACDA application (Proceeding 22542).
Accordingly, the AUC approved ENMAX’s applied-for aggregate capital addition amount of $34,296,903 on a placeholder basis only, subject to any adjustments that might be applied in the Commission’s decision in respect of AltaLink’s Proceeding 22542.
Generator Interconnection Projects
The AUC noted that it would consider the ECTP – Shepard Project in Proceeding 22542 regarding AltaLink’s 2014-2015 DACDA. The AUC considered it would be more efficient to consider all aspects of the determination of customer contribution amounts related to the ECTP – Shepard Project, including the allocation of the customer contribution as between ENMAX and AltaLink, within a single proceeding.
In light of the consideration of the ECTP – Shepard Project in Proceeding 22542, the AUC approved ENMAX’s applied-for aggregate capital addition amount to December 31, 2015, of $66,449,512, on a placeholder basis only.
Distribution Driven Transmission Projects
Prudence Review
The AUC found that ENMAX’s expenditures on DDTPs between 2014 and 2015 were prudently incurred. Accordingly, the AUC approved ENMAX’s requested capital additions in respect of DDTPs as filed.
Maximum ENMAX transmission investment in DDTPs
In accordance with findings in Decision 22238-D01-2017, the AUC considered that investment in DDTPs should not exceed the maximum available investment under the AESO’s tariff. However, the AUC found that this was not the case for the projects shown in the below table.
The AUC directed ENMAX, as part of its compliance filing, to reduce its gross capital additions for the above projects to no more than the applicable AESO maximum investment allowance.
Remington Relocation Project Beyond Scope of Deferral Accounts
The AUC found that:
(a) whether certain costs are subject to a deferral account treatment should be approved in advance;
(b) the costs sought to be recovered through a deferral account must reflect the scope of the previously approved deferral account; and
(c) in this case, the Remington relocation project costs were not within the scope of the cancelled projects deferral account approved in Decision 2014-347.
Based on the above, the AUC directed ENMAX to remove the costs related to the Remington relocation project in its compliance filing.
Order
The AUC directed ENMAX to submit a compliance filing by February 12, 2018.
