Alberta Electric System Operator 2016 ISO Tariff Update March 31, 2016

Decision 21302-D01-2016
Alberta Electric System Operator
2016 ISO Tariff Update
March 31, 2016
Alberta Utilities Commission
Decision 21302-D01-2016
Alberta Electric System Operator
2016 ISO Tariff Update
Proceeding 21302
March 31, 2016
Published by the:
Alberta Utilities Commission
Fifth Avenue Place, Fourth Floor, 425 First Street S.W.
Calgary, Alberta
T2P 3L8
Telephone: 403-592-8845
Fax: 403-592-4406
Website: www.auc.ab.ca
Alberta Utilities Commission
Calgary, Alberta
Alberta Electric System Operator
2016 ISO Tariff Update
1
Decision 21302-D01-2016
Proceeding 21302
Decision
1.
The Alberta Utilities Commission approves the Alberta Electric System Operator
(AESO) 2016 update to its annual tariff. The approved update does not change the structure of
the rates or the provisions of the terms and conditions, other than maximum investment levels,
previously approved in the 2015 Independent System Operator (ISO) tariff. The tariff updates are
approved effective April 1, 2016.
2
Introduction and process
2.
On February 2, 2016, the AESO filed an application with the Commission, pursuant to
sections 30 and 119 of the Electric Utilities Act, SA 2003, c. E-5.1, seeking approval of its 2016
ISO tariff update effective April 1, 2016.
3.
On February 3, 2016, the Commission issued notice of the application. The notice
required any party who wished to participate in this proceeding to submit a statement of intent to
participate (SIP) to the Commission by February 16, 2016. In response to the notice, SIPs were
received from:




EPCOR Distribution & Transmission Inc. (EDTI)
Alberta Direct Connect Consumers Association (ADC)
ENMAX Energy Corporation (EEC)
the Consumers’ Coalition of Alberta (CCA)
4.
In its SIP, EDTI requested that the Commission approve the application prior to March 1,
2016, with an effective date of April 1, 2016, to allow distribution facility owners an opportunity
to reflect the new rates in their Quarter (Q) 2 quarterly AESO demand transmission service
(DTS) deferral account rider applications. In the alternative, EDTI requested that the
Commission approve the application prior to June 1, 2016, with an effective date of July 1, 2016,
to allow distribution facility owners an opportunity to reflect the new rates in their Q3 quarterly
AESO DTS deferral account rider applications.1
5.
The ADC supported the AESO’s application in its SIP, and supported an April 1, 2016
effective date. The ADC stated: “… having the tariff become effective April 1, 2016, the DTS
tariff will be better reflective of the AESO costs minimizing Rider C collections. Lower Rider C
amounts benefit all DTS customers as there will be less dollars shifting between DTS customers
when the AESO settles their 2016 deferral account.”2 Additionally, it asserted that further
process was unnecessary.
1
2
Exhibit 21302-X0012.
Exhibit 21302-X0013.
Decision 21302-D01-2016 (March 31, 2016) • 1
2016 ISO Tariff Update
Alberta Electric System Operator
6.
EEC stated that it would fully participate in this proceeding, without preference for an
oral or written hearing, including information requests, submission of evidence, and attendance
at the hearings. As well, it supported the submission of EDTI regarding the timing of issuance of
the decision. Further, EEC outlined its issues with the AESO’s application that it considered
required further information:

Update on the costs related to Critical Infrastructure Protection standards: EEC referred
to a December 9, 2015 proceeding disposition letter3 directing the AESO to address as
part of its next general tariff application, the issue of cost responsibility for compliance
with the Critical Infrastructure Protection standards.

Update on accelerated costs by generators on transmission development.

Whether imports would be subject to carbon taxes, similar to internal Alberta generators,
based on the new climate change policy.4
7.
The CCA stated it would like the opportunity to test the application with a process of
written information requests before commenting on whether or not it objected to the application.5
8.
On February 23, 2016, the Commission issued a process and schedule letter that, among
other matters, established an information request and argument process. Information requests to
the AESO were due March 1, 2016. Argument was due March 14, 2016. Additionally, the letter
clarified in response to the EEC submission, that issues related to Critical Infrastructure
Protection standards are to be addressed in the next AESO general tariff application, and not in
the subject tariff update application.
9.
No party other than the Commission issued information requests. No party other than the
AESO filed argument. No party filed reply argument; therefore, the close of record was
March 14, 2016, the date on which the AESO filed its argument.
10.
In reaching the determinations set out within this decision, the Commission has
considered all relevant materials comprising the record of this proceeding. References in this
decision to specific parts of the record are intended to assist the reader in understanding the
Commission’s reasoning relating to a particular matter and should not be taken as an indication
that the Commission did not consider all relevant portions of the record with respect to this
matter.
3
Background
11.
In Decision 2010-606,6 the Commission approved the AESO’s proposed methodology to
complete annual tariff update filings. The AESO included a 2011 tariff update in its compliance
filing, pursuant to that decision and the 2011 tariff update was subsequently approved by the
3
4
5
6
Proceeding 3443, Request for a determination of the cost allocation of the Critical Infrastructure Protection
Alberta reliability standards, disposition letter, December 9, 2015.
Exhibit 21302-X0014.
Exhibit 21302-X0015.
Decision 2010-606: Alberta Electric System Operator, 2010 ISO Tariff, Proceeding 530, Application 1605961-1,
December 22, 2010.
2 • Decision 21302-D01-2016 (March 31, 2016)
2016 ISO Tariff Update
Alberta Electric System Operator
Commission in Decision 2011-275.7 The AESO did not file a tariff update application in 2012 in
response to the Department of Energy’s request that the Commission limit increases in the
current rates or charges for transmission and distribution service.8 The request was lifted on
January 29, 2013.
12.
The AESO’s most recent major tariff application was filed on July 17, 2013, by which
the AESO sought approval from the Commission for the 2014 ISO tariff. Following a
compliance filing process, the Commission approved the current form of the 2014 ISO tariff,
effective July 1, 2015, by way of Decision 3473-D01-2015.9 The 2014 ISO tariff approved in
that decision reflected costs and billing determinants for the 2014 calendar year. The AESO filed
a 2015 annual tariff update application on August 18, 2015, to reflect costs and billing
determinants for the 2015 calendar year. The 2015 annual tariff update application was approved
effective January 1, 2016 on an interim basis by way of Decision 20753-D01-201510 and
approved on a final basis in Decision 20753-D02-2015.11
13.
The AESO filed this application to reflect costs and billing determinants for the 2016
calendar year.
4
Details of the application
14.
The AESO requested approval of its 2016 tariff update application, including the
amounts set out in its Appendix C to the application12 and the proposed 2016 ISO tariff Rate
DTS (demand transmission service), Rate FTS (Fort Nelson demand transmission service), Rate
DOS (demand opportunity service), Rate XOS (export opportunity service), Rate XOM (export
opportunity merchant service), Rate PSC (primary service credit), Rate STS (supply transmission
service), Rider J and Section 8 set out in Appendix E13 to its application.14
15.
The AESO requested that the application be approved effective April 1, 2016; however,
if the timing of the application did not permit the granting of final approval prior to April 1,
2016, the AESO requested that the Commission approve the application on an interim basis
effective April 1, 2016. The AESO also requested that the Commission issue its approval,
whether on an interim or final basis, on or before March 31, 2016.15
7
8
9
10
11
12
13
14
15
Decision 2011-275: Alberta Electric System Operator, Compliance Filing Pursuant to Decision 2010-606 and
2011 Tariff Update, Proceeding 1074, Application 1607003-1, June 24, 2011.
Bulletin 2012-03, Government of Alberta request regarding electricity rates, March 13, 2012.
Decision 3473-D01-2015: Alberta Electric System Operator, 2014 ISO Tariff Compliance Filing Pursuant to
Decision 2014-242, Module 1, Proceeding 3473, Application 1610935-1, June 2, 2015. Decision 3473-D01-2015
(Errata) was issued on June 17, 2015.
Decision 20753-D01-2015: Alberta Electric System Operator, 2015 ISO Tariff Update – Interim Approval,
Proceeding 20753, November 16, 2015.
Decision 20753-D02-2015: Alberta Electric System Operator, 2015 ISO Tariff Update, Proceeding 20753,
December 21, 2015.
Exhibit 21302-X0005.
Exhibit 21302-X0003.
Exhibit 21302-X0008, application, paragraph 88.
Exhibit 21302-X0008, application, paragraph 11.
Decision 21302-D01-2016 (March 31, 2016) • 3
2016 ISO Tariff Update
Alberta Electric System Operator
16.
The AESO stated that it required at least one month to program and test approved rates,
and that it would begin programming and testing the applied-for rates in advance to be able to
implement them consistent with an April 1, 2016 effective date.16
17.
The AESO noted that the updated rates proposed in the application would apply on a goforward basis only, commencing from the effective date approved by the Commission.17
18.
The AESO stated that the 2016 updated forecast costs represented an increase of
$214.0 million, or 11.5 per cent, over the 2015 updated forecast costs. The increase primarily
resulted from a forecast increase of $161.4 million, or 10.6 per cent, in wires costs reflecting
recent applications for transmission facility owner tariffs. Ancillary service costs were forecast to
increase $19.6 million, or 12.1 per cent, while losses were forecast to increase $35.5 million, or
46.5 per cent. Administrative costs were forecast to decrease $2.6 million, or 2.6 per cent.18
19.
The AESO submitted that it considers that timely tariff updates reduce Rider C charges
and the associated issue of inter-customer transfers in deferral account reconciliations.19
20.
In accordance with the methodology approved in Decision 2010-606, the AESO’s 2016
ISO tariff update used the rate calculation methodology approved by the Commission in Decision
3473-D01-2015 in conjunction with the AESO’s 2014 ISO tariff application. Specifically, the
AESO used the 2014 rate calculations provided in Appendix B of the AESO 2014 ISO tariff
compliance filing as the template for the 2016 rate calculations.20 The rate calculations use the
following inputs:



2016 forecast revenue requirement
functionalization of wires costs approved for 2016 in Decision 2013-42121
2016 forecast billing determinants prepared by the AESO22
21.
The AESO’s 2016 forecast costs were approved by the AESO board on December 16,
2015, and the board decision document was provided as Appendix A23 to the application.
22.
The methodology approved in Decision 2010-606 included a process to update maximum
investment amounts approved in the most recent comprehensive tariff application by an
escalation factor based on a composite of specified recent inflation indices. Accordingly, the
AESO updated the composite inflation index used for developing the point of delivery cost
function to 2016, using additional Statistics Canada cost index values and the most recent
Conference Board of Canada forecast of the Alberta consumer price index. The AESO applied
the resulting escalation factor to the 2014 Rate DTS maximum investment levels to determine
16
17
18
19
20
21
22
23
Exhibit 21302-X0008, application, paragraph 12.
Exhibit 21302-X0008, application, paragraph 11.
Exhibit 21302-X0008, application, paragraph 14.
Exhibit 21302-X0008, application, paragraph 66.
Exhibit 21302-X0008, application, paragraph 51.
Decision 2013-421: Alberta Electric System Operator, 2014 ISO Tariff Application and 2013 ISO Tariff Update
Negotiated Settlement – Cost Causation Study, Proceeding 2718, Application 1609765-1, November 27, 2013.
Exhibit 21302-X0008, application, paragraph 52.
Exhibit 21302-X0003.
4 • Decision 21302-D01-2016 (March 31, 2016)
2016 ISO Tariff Update
Alberta Electric System Operator
the 2016 Rate DTS maximum investment levels, which resulted in a small increase to the 2016
maximum investment levels.24
23.
The AESO submitted that the tariff updates proposed in the application are just and
reasonable25 and consist of formulaic updates to the AESO’s annual revenue requirement, based
on the AESO’s updated forecast costs for the 2016 rate, rider, and maximum investment level
amounts using the rate calculation methodology already approved by the Commission in
Decision 3473-D01-2015; and the investment amounts approved in Decision 3473-D01-2015
and updated in Decision 20753-D01-2015.26
24.
5
EDTI and the ADC supported the application. No parties objected to the application.
Commission findings
25.
In Decision 2010-606, the Commission stated that it considered an annual revenue
requirement and rate update may benefit customers by limiting potential misallocations that
might occur if the AESO were to rely on Rider C exclusively to allocate periodic revenue and
cost imbalances to its customers.27
26.
The AESO’s 2016 forecast costs were approved by the AESO board on December 16,
2015, and the AESO’s 2016 ISO tariff update uses the rate calculation methodology approved by
the Commission in Decision 3473-D01-2015, the AESO’s 2014 ISO tariff application.
27.
The Commission considers that the AESO’s 2016 tariff update, including the AESO
board approved costs for 2016 related to ancillary services, transmission line losses, and the
AESO’s own administration and updated transmission facility owner revenue requirements for
2016, is consistent with the tariff update approach approved in Decision 2010-606.
28.
The Commission approves the AESO’s 2016 tariff update application, including the
amounts set out in its Appendix C to the application28 and the proposed 2016 ISO tariff Rate
DTS, Rate FTS, Rate DOS, Rate XOS, Rate XOM, Rate PSC, Rate STS, Rider J and Section 8
set out in Appendix E29 to its application.30
24
25
26
27
28
29
30
Exhibit 21302-X0008, application, paragraph 85.
Exhibit 21302-X0008, application, paragraph 10.
Exhibit 21302-X0008, application, paragraph 7.
Decision 2010-606, paragraph 547.
Exhibit 21302-X0005.
Exhibit 21302-X0003.
Exhibit 21302-X0008, application, paragraph 88.
Decision 21302-D01-2016 (March 31, 2016) • 5
2016 ISO Tariff Update
6
29.
Alberta Electric System Operator
Order
It is hereby ordered that:
(1)
The Alberta Electric System Operator’s 2016 ISO Tariff update application is
approved effective April 1, 2016.
Dated on March 31, 2016.
The Alberta Utilities Commission
(original signed by)
Mark Kolesar
Vice-Chair
(original signed by)
Bill Lyttle
Commission Member
(original signed by)
Henry van Egteren
Commission Member
6 • Decision 21302-D01-2016 (March 31, 2016)
2016 ISO Tariff Update
Alberta Electric System Operator
Appendix 1 – Proceeding participants
Name of organization (abbreviation)
Company name of counsel or representative
Alberta Electric System Operator (AESO)
Alberta Direct Connect Consumers Association (ADC)
Consumers’ Coalition of Alberta (CCA)
ENMAX Energy Corporation (EEC)
EPCOR Distribution & Transmission Inc. (EDTI)
Alberta Utilities Commission
Commission panel
M. Kolesar, Vice-Chair
B. Lyttle, Commission Member
H. van Egteren, Commission Member
Commission staff
C. Wall (Commission counsel)
T. Wilde
S. Karim
C. Strasser
Decision 21302-D01-2016 (March 31, 2016) • 7