Decision D FortisAlberta Inc. Light-Emitting Diode (LED) Lighting Conversion Maintenance Multiplier Filing for 30 Customers in 2018

Transcription

1 Decision D Light-Emitting Diode (LED) Lighting Conversion Maintenance Multiplier Filing for 30 Customers in 2018 September 7, 2018

2 Alberta Utilities Commission Decision D Light-Emitting Diode (LED) Lighting Conversion Maintenance Multiplier Filing for 30 Customers in 2018 Proceeding September 7, 2018 Published by the: Alberta Utilities Commission Eau Claire Tower, 1400, 600 Third Avenue S.W. Calgary, Alberta T2P 0G5 Telephone: Fax: Website:

3 Contents 1 Decision summary Introduction Background Discussion of issues Commission findings Order... 7 Appendix 1 Proceeding participants... 9 Appendix 2 Summary of Commission directions Appendix 3 List of 30 customers to which the LED conversion multiplier of 1.09 will apply List of tables Table 1. Summary of Fortis maintenance multiplier decisions... 3 Decision D (September 7, 2018) i

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5 Alberta Utilities Commission Calgary, Alberta Light-Emitting Diode (LED) Lighting Conversion Maintenance Multiplier Filing for Decision D Customers in 2018 Proceeding Decision summary 1. For the reasons set out in this decision, the Alberta Utilities Commission acknowledges and accepts s light-emitting diode (LED) lighting conversion maintenance multiplier (LED conversion multiplier) of 1.09 for 15 municipal and 15 non-municipal customers within a municipality, to be in effect in A list of the affected customers to which the multiplier will apply is provided in Appendix 3 to this decision. 2 Introduction 2. On July 11, 2018, Fortis submitted its LED conversion multiplier tariff mechanism filing, seeking the Commission s acknowledgement of, and approval for, the application of its LED conversion multiplier of for 15 municipal and 15 non-municipal customers within a municipality in Fortis provided a list of the affected customers as an attachment to the application, 3 reproduced in Appendix 3 to this decision. 3. The Commission issued notice of the application on July 13, 2018, asking interested parties who may be affected by this application to register their concerns or support for the application to the Commission by July 27, Notice of the application was posted on the Commission s website and delivered to all parties subscribing to the global notifications in the Commission s efiling System. 4. On July 13, 2018, the Commission issued a letter to Fortis noting that one of the signatures of the affected customers was missing in the application, and directing Fortis to file the signed customer acknowledgement letter for the Town of Bon Accord. 4 Additionally, the Commission directed Fortis to forward the notice of application issued by the Commission to all affected customers and to confirm that it had complied with both directions by July 18, On July 17, 2018, Fortis filed a letter confirming that the notice of application was forwarded to all customers via . Fortis also enclosed the signed acknowledgement letter from the Town of Bon Accord The Commission did not receive any statements of intent to participate. 1 Exhibit X0001, Application, paragraphs 14 and Exhibit X0001, Application, paragraph 1. 3 Exhibit X0001, Application, Appendix A, PDF page Exhibit X0005, AUC letter Preliminary Matters, July 13, Exhibit X0006, FortisAlberta Confirmation of Preliminary Matters with Enclosure, July 17, Decision D (September 7, 2018) 1

6 7. The Commission has reviewed this filing as a notice only process, as outlined in Commission Bulletin , 6 and issued a letter on August 2, 2018, 7 stating that the Commission considers the record of this proceeding to have closed on July 27, In reaching the determination set out in this decision, the Commission has considered all relevant materials comprising the record of this proceeding, as well as related information and decisions. 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 9. In Decision , 8 the Alberta Energy and Utilities Board (board), the Commission s predecessor, approved the inclusion of a maintenance multiplier mechanism in Fortis distribution tariff. This mechanism is included in the currently approved rate sheet for Rate 31 (street lighting service) and is applied to the distribution component charges ($/fixture-day) for a relevant customer s street lighting fixtures The maintenance multiplier mechanism was approved by the board to enable external lighting customers who desired a higher than usual level of service to receive that service, provided the costs incurred to provide the higher level of service were paid for by the customer making the request. The initial multiplier was set to a default value of 1.0 with a different multiplier to be calculated and applied to each customer request In Decision , the board directed Fortis as follows: The Board directs [Fortis], upon preliminary agreement with a customer requesting maintenance or operation levels above the standard service level, to prepare an analysis and multiplier calculation which examines the specific and direct costs of providing that service. The Board directs [Fortis] to confer with customers requesting the higher service levels upon completion of their multiplier calculation, provide information regarding the cost of the higher service level, and confirm customer acceptance. If the customer agrees with the multiplier proposal, the information should be filed with the Board for information purposes. Preparation of the detailed analysis should ensure other customers will not subsidize the customer with the special request. This analysis should also ensure the customer with the special request will not be double charged by way of the multiplier as they are already entitled to the standard level of service through their current rates Bulletin , Performance standards for processing rate-related applications, March 26, Exhibit X0007, AUC letter Close of record, August 2, Decision :, 2006/2007 Distribution Tariff Phase II and Other Matters, Proceeding 15136, Application , October 16, Exhibit X0001, Application, Appendix C, PDF page Decision , Section 9.3.1, PDF pages Decision , Section 9.3.1, PDF page Decision D (September 7, 2018)

7 12. The current proceeding is the fifth time Fortis has proposed to use the LED conversion multiplier for LED conversions. Table 1 provides a summary of the previous LED conversion multiplier filings Fortis has submitted to the Commission. In all previous decisions, the Commission determined that the directions issued to Fortis by the board in Decision were still applicable to Fortis approved tariff and found that Fortis had complied with each of the directions. Table 1. Summary of Fortis maintenance multiplier decisions Decision :, 2006/2007 Distribution Tariff, Phase II and Other Matters, October 16, Approval of Multiplier Mechanism Decision D :, Light-Emitting Diode Lighting Conversion Maintenance Multiplier, June 15, Decision D : Light-Emitting Diode Lighting Conversion Maintenance Multiplier for the City of St. Albert, August 11, Decision D : Light-Emitting Diode Lighting Conversion Maintenance Multiplier Filing for a Further 130 Municipalities in 2017, March 31, Decision D : Light-Emitting Diode Lighting Conversion Maintenance Multiplier Filing for a Further 57 Communities in 2018, January 30, First LED Conversion Multiplier Second LED Conversion Multiplier Third LED Conversion Multiplier Fourth LED Conversion Multiplier 13. In Decision D and Decision D , 13 the Commission considered Fortis first two proposals to use the LED conversion multiplier and acknowledged and accepted the LED conversion multiplier of In Decision D , the Commission acknowledged and accepted the downward adjustment of the LED conversion multiplier from 1.10 to Fortis stated that the new lower value of 1.09 arose because the unchanged net incremental costs represented a smaller percentage of the 2017 approved Rate 31 distribution charge, which increased by 6.5 per cent. 15. In Decision D , the Commission acknowledged and accepted Fortis revised LED conversion multiplier of 1.09 to be applicable to an additional 57 communities Decision D :, Light-Emitting Diode Lighting Conversion Maintenance Multiplier, Proceeding 21512, June 15, 2016, paragraphs 8 and Decision D :, Light-Emitting Diode Lighting Conversion Maintenance Multiplier for the City of St. Albert, Proceeding 21754, August 11, 2016, paragraphs 12 and Decision D :, Light-Emitting Diode Lighting Conversion Maintenance Multiplier Filing for a Further 130 Municipalities in 2017, Proceeding 22381, March 31, 2017, paragraph Decision D :, 2017 Annual Performance-Based Regulation Rate Adjustment Filing, Proceeding 21980, December 23, Decision D , paragraphs 13 and Decision D :, Light-Emitting Diode Lighting Conversion Maintenance Multiplier Filing for a Further 57 Communities in 2018, January 30, 2018, paragraph 27. Decision D (September 7, 2018) 3

8 4 Discussion of issues 16. In its filing for this proceeding, Fortis stated that the 15 municipal and 15 non-municipal customers (listed in Appendix 3 to this decision) within a municipality had requested a conversion to LED lighting in 2018 under the maintenance multiplier mechanism Fortis provided customer acknowledgement letters from 29 of the 30 customers (an acknowledgement letter was provided by the Town of Bon Accord at a later date, as noted above) as an attachment to its application. The acknowledgement letters demonstrated that Fortis provided information regarding the higher cost of the service, the maintenance multiplier calculation itself, and the conditions under which the calculation and associated charges to the LED lighting customer can change Fortis calculated the LED conversion multiplier to be 1.09 under the Rate 31 distribution charge to be applied until it is modified by subsequent Commission approval. 20 The LED conversion multiplier adjusts the approved distribution component charges, corresponding to the standard level of service, to account for incremental costs (net of any savings) associated with the higher service level resulting from LED lighting conversion. These net incremental costs reflect the estimated revenue requirement, on an average annualized per-fixture basis, composed of: (i) (ii) (iii) total LED installation costs; cost of LED removal, based on useful life; and maintenance savings due to the reduced need for street light patrols to identify and replace high-pressure sodium (HPS) fixtures that are no longer working, and the avoidance of capital costs related to the re-lamping of the old HPS fixtures Fortis stated that in determining the LED conversion multiplier, it held constant its cost assumptions for the incremental distribution capital cost and maintenance cost savings with estimates in its original cost analysis, as relied upon in the 2016 customer consultations. Fortis also stated that the 2016 cost analysis was completed on an average annualized per-fixture basis, assuming that an estimated 79,720 fixtures would be converted to LED lighting technology over a period of three to five years. Fortis explained that, because the LED conversion costs are relatively recent, it is reasonable to continue to use the incremental distribution capital costs and maintenance cost savings that were estimated in its 2016 cost analysis for the purposes of calculating the LED conversion multiplier Exhibit X0001, Application, paragraph Exhibit X0001, Application, appendices A-1 to A-30, Appendix B-1, Appendix B-2, PDF pages Exhibit X0001, Application, paragraphs and Exhibit X0001, Application, paragraphs Exhibit X0001, Application, paragraphs 19 and Decision D (September 7, 2018)

9 20. The Commission approved 2018 rates for Fortis on an interim basis in Decision D (Errata), effective April 1, In its current filing, Fortis stated that the calculation of the LED conversion multiplier was based on the 2018 interim PBR rates Under Fortis Rate 31 distribution charges, Fortis is approved to collect $ per fixture-day, which amounts to $ per fixture-year, for a 365-day year. Fortis stated that, if it holds the cost analysis provided in 2016 constant for calculating all costs and benefits of LED conversions, that it needs to recover $23.32 per fixture-year more than the current default rate of $ per fixture-year. The $23.32 per fixture-year stems from an additional cost of $40.65 per fixture-year less $17.33 per fixture-year in maintenance savings. The addition of $23.32 per fixture-year to the standard $ per fixture-year currently approved by the Commission leaves the LED conversion multiplier unchanged at 1.09 in the current proceeding Fortis estimated the 2018 annual total bundled bill impact for a new typical LED conversion customer subject to the proposed LED conversion multiplier, with 100-watt HPS fixtures converted to LED fixtures, to be approximately 1.54 per cent lower. It explained that although the LED conversion customers will experience a nine per cent increase in their distribution component charges due to the LED conversion multiplier, the same customers are expected to experience a reduction in their retail energy (68 per cent) and transmission system access charges (58 per cent) (generally calculated based on the energy consumption) because LED fixtures and drivers consume substantially less energy than HPS lamps and ballasts In Decision , the board directed Fortis: to report on the level of administrative burden and effectiveness of the maintenance multiplier process, at the time of the next DTA [distribution tariff application]. The Board is interested in reviewing how the process has worked, and directs Fortis to provide information on the maintenance multipliers in use at the time of the next DTA where the use of the maintenance multiplier will be reviewed as to its continued appropriateness Fortis confirmed that it will respond to the above direction from Decision in its next Phase II DTA Decision D (Errata): April 1, 2018 Interim Distribution Rates for each of AltaGas Utilities Inc., ATCO Electric Ltd., ATCO Gas and Pipelines Ltd., ENMAX Power Corporation, EPCOR Distribution & Transmission Inc., and, Errata to Decision D , March 29, 2018, paragraph Exhibit X0001, Application, paragraph Exhibit X0001, Application, paragraphs 18 and Exhibit X0001, Application, paragraphs Decision , page Exhibit X0001, Application, paragraph 23. Decision D (September 7, 2018) 5

10 5 Commission findings 25. The directions issued to Fortis by the board in Decision relating to the calculation and application of the LED conversion multiplier 29 continue to apply to Fortis currently approved tariff. 26. The Commission finds that Fortis has complied, or has confirmed its future intent to comply, with each of the directions issued by the board in Decision Specifically: Fortis provided an analysis and LED conversion multiplier calculation which examines the specific and direct costs of providing the LED conversion service. The customer acknowledgement letters demonstrate that Fortis provided information regarding the higher cost of the service, the maintenance multiplier calculation itself, and the conditions under which the calculation and associated charges to the customer requesting the higher service level can change. The 15 municipal and 15 non-municipal customers have accepted the conditions of service as demonstrated by the customer signature on each of the acknowledgement letters received by Fortis and filed with the Commission. The letters included an acknowledgment by the customer that Fortis presented all material required by the customer to make an informed decision. The Commission is satisfied by the explanation and analysis provided by Fortis that other customers will not be subsidizing the 15 municipal and 15 non-municipal customers with the special (LED) request, nor will any of the 15 municipal and 15 non-municipal customers with the special request be double charged by way of the maintenance multiplier for the standard level of service. Fortis confirmed that it will report on the level of administrative burden and effectiveness of the maintenance multiplier process at the time of the next Phase II DTA. 27. The Commission acknowledges and accepts Fortis LED conversion multiplier of 1.09 under its distribution tariff, to be applied to the 30 customers listed in Appendix 3. If Fortis wishes to change this rate, it is directed to obtain the Commission s approval by means of an updated filing. 28. For purposes of regulatory efficiency, in future LED conversion multiplier filings, the Commission directs Fortis to: (i) (ii) forward the notice of application issued by the Commission to the affected customers in such filings; and provide written confirmation to the Commission of having done so within three business days of the issuance of the notice of application. 29 Decision :, 2006/2007 Distribution Tariff Phase II and Other Matters, Proceeding 15136, Application , October 16, 2006, page Decision D (September 7, 2018)

11 29. In its previous filing in Proceeding 23063, Fortis indicated that the LED lighting conversion program is approaching full deployment 30 and that Fortis expects to complete a further cost analysis in its upcoming Phase II DTA to determine the ongoing suitability of the multiplier approach. The Commission directs Fortis, in its subsequent LED conversion multiplier filings to provide the percentage of all eligible fixtures in its service area that have been converted to LED fixtures. 30. Further, the Commission directs Fortis, in its next Phase II DTA, to provide an Excel schedule to the Commission with a list of all affected communities or customers, eligible and converted fixtures for each, as well as communities or customers who have not yet requested to be converted. The Commission expects a full account of all 79,720 eligible fixtures. 6 Order 31. It is hereby ordered that: (1) The Commission acknowledges and accepts the LED conversion multiplier of 1.09 for the 15 municipal and 15 non-municipal customers within a municipality listed in Appendix 3. Dated on September 7, Alberta Utilities Commission (original signed by) Kristi Sebalj Commission Member 30 Decision D , paragraph 17. Decision D (September 7, 2018) 7

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13 Appendix 1 Proceeding participants Name of organization (abbreviation) Company name of counsel or representative (Fortis or FAI) Alberta Utilities Commission Commission panel K. Sebalj, Commission Member Commission staff S. Sajnovics (Commission counsel) G. Bourque E. Deryabina Decision D (September 7, 2018) 9

14 Appendix 2 Summary of Commission directions This section is provided for the convenience of readers. In the event of any difference between the directions in this section and those in the main body of the decision, the wording in the main body of the decision shall prevail. 1. For purposes of regulatory efficiency, in future LED conversion multiplier filings, the Commission directs Fortis to: (i) forward the notice of application issued by the Commission to the affected customers in such filings; and (ii) provide written confirmation to the Commission of having done so within three business days of the issuance of the notice of application.... Paragraph In its previous filing in Proceeding 23063, Fortis indicated that the LED lighting conversion program is approaching full deployment and that Fortis expects to complete a further cost analysis in its upcoming Phase II DTA to determine the ongoing suitability of the multiplier approach. The Commission directs Fortis, in its subsequent LED conversion multiplier filings to provide the percentage of all eligible fixtures in its service area that have been converted to LED fixtures.... Paragraph Further, the Commission directs Fortis, in its next Phase II DTA, to provide an Excel schedule to the Commission with a list of all affected communities or customers, eligible and converted fixtures for each, as well as communities or customers who have not yet requested to be converted. The Commission expects a full account of all 79,720 eligible fixtures... Paragraph Decision D (September 7, 2018)

15 Appendix 3 List of 30 customers to which the LED conversion multiplier of 1.09 will apply (return to text) Customer Name Customer Type (Don Speed Parts) Non-Municipality Alberta Ltd. Non-Municipality 3 Baltac Investments Non-Municipality 4 Banff Town 5 Bighorn Municipal District 6 Bon Accord Town 7 Brazeau County 8 Castle Island Summer Village 9 Century Crossing Inc. Non-Municipality 10 CFB Edmonton Non-Municipality 11 CFB Suffield Non-Municipality 12 CFB Wainwright Non-Municipality 13 Douglas Bergen Non-Municipality 14 Drayton Valley Town 15 Edson Town 16 Enersul Non-Municipality 17 Island Lake Summer Village 18 JOMA Enterprises Non-Municipality 19 Kainai (Blood) First Nation 20 Lac La Biche County 21 MD of Opportunity Municipal District 22 Parkbridge Lifestyle Community Non-Municipality 23 Parks Canada (Banff) Improvement District # 9 24 Parks Canada (Waterton) Improvement District #04 25 Red Deer County 26 Redwood Meadows First Nation 27 Spring Lake Village 28 Summerlea Homes Non-Municipality 29 TransAlta Utilities Non-Municipality 30 WW Importers Exporters Ltd. Non-Municipality Decision D (September 7, 2018) 11