Electricity – Rates
Application
The Alberta Electric System Operator (“AESO”) applied to the AUC for approval of (i) its 2022 deferral account reconciliation (“DAR”) and (ii) changes to the deferral account balances from 2018 to 2022. The AESO also requested approval to revise its DAR methodology. On August 1, 2023, the AUC issued Decision 28293-D01-2023, approving the AESO’s 2022 DAR, deferring its decision on the DAR methodology revision.
Decision
This decision relates to the AESO’s request to revise its DAR methodology, which the AUC approved.
Pertinent Issues
The AESO may undercollect or overcollect its forecast revenue requirement through the Independent System Operator (“ISO”) tariff for three of its rate classes. To ensure that, on an annual basis, no profit or loss results from its operation, the AESO has a deferral account that is subject to AUC approval.
The AESO applied for approval of revisions to the DAR methodology to restrict retrospective DAR adjustments to a maximum of five years for future DAR applications. The AESO explained that adjustments that occur in year six and beyond would be consolidated and included in the year five deferral calculation.
The amounts that are collected through a DAR are generally relatively small when compared to the amounts collected through annual rates and Rider C. In particular, the AUC noted that the year six and beyond DAR amounts have, in recent years, made up a negligible portion of the AESO’s annual transmission revenue. Therefore, the AUC accepted that the proposed revisions are unlikely to create material and deleterious changes in individual adjustment amounts for market participants.
Further, the AUC accepted the AESO’s submission that the current DAR methodology is not efficient, because it requires the AESO to expend a disproportionate amount of resources to reconcile small adjustments for a potentially infinite number of years that provide little or no benefit to market participants. The AUC agreed that the proposed revision will provide benefits, including cost savings and efficiencies for the AESO in preparing the DAR applications, and simplicity for market participants in understanding their bills.
