Audit of Problem Areas – Compliance with Decision 24763-D01-2019
In this decision, the AUC approved AltaGas Utilities Inc.’s (“AltaGas”) application to recover amounts associated with unaccounted-for gas (“UFG”) rate riders E and H.
Introduction
AltaGas rate riders E recovers the amount of UFG associated with producer transportation service and Rider H recovers the amount of UFG associated with Natural Gas Settlement System (“NGSS”) processes. AltaGas proposed decreasing Rider E from 1.10 percent to 0.98 percent, and decreasing Rider H from 1.11 percent to 0.99 percent. Rider E and Rider H are designed to recover amounts associated with UFG.
In past UFG decisions, most recently in Decision 24763-D01-2019, the AUC stated that while not all causes of UFG can be eliminated, it expected the percentages to decrease over time as a result of AltaGas’s initiatives to reduce UFG. The AUC directed AltaGas to quantify the causes of UFG, to provide reasons for any increases or decreases in UFG, to continue to take action to reduce UFG fluctuations and UFG amounts overall, and to provide historical monthly data for the receipt and delivery volumes and UFG percentage losses or gains and a regional UFG breakdown.
Compliance with Previous AUC Directions
In its application, AltaGas provided information regarding monthly data for the period of June 2010 to May 2020, UFG by region, and the most significant causes of UFG on its system, in compliance with the direction in Decision 24763-D01-2019. It further included a description of actions taken to reduce UFG and UFG fluctuations, which included ongoing review and monitoring, AltaGas’s system betterment program, meter testing, the retirement and replacement of assets known to contribute to UFG, continual support of damage prevention efforts, and continual improvement of processes that identify and reduce UFG.
AltaGas provided UFG data separated into north, central, and south regions from June 2019 to May 2020. AltaGas stated there were 128 pipeline incidents in the Barrhead/Westlock/Morinville (“BWM”) area of the north region during the first half of the 2019-2020 reporting period. The full 2018-2019 reporting period showed 80 incidents in the same area. As leaks were identified and repaired earlier in the reporting period, the leaks occurred for shorter periods and contributed to the reduction of overall gas lost from the system compared to the prior year.
The most significant contributors to a reduction in UFG in the north region were the identification and reparation of many of the leaks early in the reporting period and the absence of high-pressure leaks. AltaGas attributed the moderate increase in UFG in the central region between the 2018-2019 and 2019-2020 periods to the normal year-to-year fluctuations in UFG.
AltaGas’s south region showed a net UFG gain, consistent with the last three years. AltaGas had conducted multiple investigations and efforts yielding no substantial explanation of the variance.
In 2020, AltaGas advised it would conduct an in-depth physical audit of the problem areas. This will include a thorough physical examination of a large sample of receipt and delivery sites in the area.
Findings
The AUC was satisfied that the calculations of rate Rider E and rate Rider H were accurate and consistent with the methodology approved in previous decisions. The AUC was satisfied that the proposed rate riders fall within the historical range of UFG percentages. The AUC noted its expectation that UFG fluctuations and overall UFG percentages should decrease over time as a result of AltaGas’s ongoing initiatives and expenditures to reduce UFG. It further noted its expectation that AltaGas would, over time, improve its ability to identify and quantify the causes of UFG.
AltaGas was directed to provide the data and results of the audit of the UFG problem areas in the south region in its 2021-2022 UFG application to be submitted no later than July 30, 2021. The AUC was satisfied that AltaGas’ proposed adjustments to Rider E and Rider H were reasonable and approved the application.
