Gas – Application for Review
The City of Calgary (“Calgary”) applied for a review and variance of Decision 26616-D01-2023 regarding the ATCO Gas (“AG”) and Apex Utilities Inc. (“Apex”) 2023 cost-of-service applications (the “Decision”).
The AUC denied the application from Calgary. Calgary failed to demonstrate that there were changed circumstances material to the Decision, which occurred since its issuance, as required under s 5(1)(c) of Rule 016: Review of Commission Decisions (“Rule 016”).
In its application, Calgary relied solely on s 5 (1)(c) of Rule 016, which requires the applicant to demonstrate that there are changed circumstances material to a decision that occurred since its issuance. In the Decision, the hearing panel assessed AG’s forecast 2023 revenue requirement, approving certain forecast costs and denying or directing adjustments to the calculation of others, without the benefit of data showing AG’s 2022 actual financial performance. According to Calgary, AG exceeded the achieved return on equity (“ROE”) thresholds for a reopener proceeding as set out in Decision 20414-D01-2016 (Errata).
Calgary submitted that the following are changed circumstances that were material to the Decision and occurred since the Decision was issued:
- AG’s 2022 ROE;
- AG’s exceedance of the +/-500 basis point reopener threshold for 2022;
- AG’s exceedance of the +/-300 basis point reopener threshold for 2021 and 2022; and
- the events described in (b) and (c) are the second time that AG has exceeded those reopener thresholds in the final two years of a performance-based regulation (“PBR”) term, having also done so in the last two years of the first generation PBR term.
Although Calgary exceeded the 30-day deadline for filing a review application, the AUC exercised its discretion to consider the application.
The review panel determined that the circumstances set out above in paragraphs (b) through (d) are the regulatory consequences of the circumstance set out above in paragraph (a), which is AG’s achieved 2022 ROE. AG’s exceedance of its performance based regulation (“PBR2”) plan reopener thresholds triggers its own regulatory mechanism. As a result, the only item the AUC could consider a changed circumstance for a reason for review was AG’ 2022 achieved ROE.
The review panel was satisfied that AG’ 2022 achieved ROE is a changed circumstance that has occurred since the Decision was issued. The review panel agreed with the finding of the hearing panel that AG’ 2022 actual results may differ from what was forecast. It acknowledged that AG had earned more than its approved ROE in each of the years of the PBR2 term up to the time the Decision was issued and recognized that AG was entitled to do so under PBR incentives. The hearing panel concluded that what AG earned or did not earn in the past has no bearing on its statutory right to a reasonable opportunity to earn the approved rate of return in the future. As a result, the review panel determined that AG’ 2022 ROE was not a circumstance material to the Decision.