AltaLink Management Ltd.

Transcription

1 Decision D General Tariff Application (Proceeding 2044-Reopened for Midgard Audit) March 7, 2016

2

3 Alberta Utilities Commission Decision D : Proceeding March 7, 2016 Published by Alberta Utilities Commission Fifth Avenue Place, Fourth Floor, 425 First Street S.W. Calgary, Alberta T2P 3L8 Telephone: Fax: Website:

4 Contents 1 Introduction Commission s authority to award costs Commission Findings Borden Ladner Gervais Knowles Consultancy Services AltaLink Disbursements Consumers Coalition of Alberta Wachowich & Company Bema Enterprises Ltd FTI Consulting, Inc GST Order... 8 ii Decision D (March 7, 2016)

5 Alberta Utilities Commission Calgary, Alberta General Tariff Application (Proceeding 2044-Reopened for Midgard Audit) Decision D Proceeding Introduction 1. On July 30, 2012, (AltaLink), in its capacity as general partner of AltaLink L.P., filed an application with the Commission for approval of its general tariff application (general tariff application). In the same application, AltaLink also sought approval of its direct assign capital deferral account (DACDA) for the years 2010 and Proceeding 2044 was assigned to the general tariff application. 2. AltaLink s DACDA included a request for approval of the final project costs for the 240 kilovolt (kv) transmission line portion of its Southwest 240 kv Project (the SW project). 3. The Commission established an evidentiary process for the application, which included information requests (IRs) and an oral hearing held from June 3 to June 20, On November 12, 2013, the Commission released Decision regarding the general tariff application. 4. In Decision , the Commission made preliminary findings regarding the prudence of the SW project costs, but determined that the evidence on the record of Proceeding 2044 with respect to the SW project was not sufficiently detailed for it to make a final prudence assessment about the project. The Commission ordered an independent audit to be conducted for the SW project. 5. The Commission retained Midgard Consulting Inc. (Midgard) to perform the audit, and the audit report was completed on March 31, The audit report was filed on the record of Proceeding 2044 on April 17, On April 17, 2015, the Commission issued a notice to parties already registered for the proceeding of the re-establishment of the proceeding to finalize the SW project costs. 7. In the notice, the Commission established further process steps regarding the testing of the Midgard audit report including IRs. In addition, interested parties were requested to provide submissions on the need for further process, including the need for an oral hearing, on or before May 28, Decision :, General Tariff Application, Proceeding 2044, Application , November 12, Exhibit 2044-X0048, Midgard Audit Report: Assessment of AltaLink s Planning and Execution of the Southwest Transmission Development Project, Midgard Consulting Inc., March 31, Decision D (March 7, 2016) 1

6 8. The Commission received a submission from the Consumers Coalition of Alberta (CCA) on April 23, 2015, in which the CCA advised that it would not be able to meet the deadline for preparing IRs to Midgard. The Commission received submissions from AltaLink dated April 24, 2015, and again from the CCA on April 28, 2015, which provided suggestions on processes to be followed in considering the Midgard audit report. 9. The Commission updated its process schedule in response to these submissions. On June 1, 2015, the Commission received correspondence from Midgard requesting a further change to the Commission s process schedule. In consideration of this request, and an AltaLink submission on this matter dated June 2, 2015, the Commission again updated its process schedule. 10. On July 6, 2015, the Commission advised parties that an oral hearing would be held on Friday, October 2, Supplemental argument was filed by AltaLink, Piikani Resource Development Ltd., and the CCA on October 15, 2015, and supplemental reply argument was filed by AltaLink and the CCA on October 22, The record for the proceeding regarding the finalization of SW project costs closed on October 22, 2015 and on January 20, 2016, the Commission issued Decision 2044-D finalizing the costs for the SW project. 12. On November 20, 2015 the Commission received a costs claim application from AltaLink. The Commission assigned Proceeding and Application A001 to the costs claim application. 13. On November 23, 2015, the CCA submitted its cost claim application to the Commission. In Proceeding 21054, the Commission assigned Application A002 to the CCA s costs claim application. 14. The Commission circulated a summary of costs claimed to interested parties on November 24, 2015, and requested comments regarding the figures listed in the summary, or on the merits of costs claimed, by December 8, The CCA submitted an amended costs claim to the Commission on November 27, 2015, to reflect the fees for FTI Consulting Inc. A revised summary of costs claimed and requests for comments was circulated by the Commission on December 1, The Commission requested comments regarding the figures listed, or on the merits of the amended costs claimed on or before December 15, No comments were received from parties. 16. The close of record for this costs claim proceeding was December 15, Commission s authority to award costs 17. When assessing costs claims pursuant to Section 21 of the Alberta Utilities Commission Act, SA 2007, c. A-37.2, the Commission applies AUC Rule 022: Rules on Costs in Utility Rate Proceedings (AUC Rule 022). Appendix A of AUC Rule 022 also prescribes a Scale of Costs applicable to all costs claimed. 18. In exercising its discretion to award costs, the Commission will, in accordance with Section 11 of AUC Rule 022, consider whether an eligible participant s costs are reasonable and directly and necessarily related to the proceeding, and whether the eligible participant acted 2 Decision D (March 7, 2016)

7 responsibly in the proceeding and contributed to a better understanding of the issues before the Commission. The Commission will be mindful of a participant s willingness to co-operate with the Commission and other participants to promote an efficient and cost-effective proceeding. 19. As the costs of a utility proceeding are generally passed on to customers, it is the Commission s duty to ensure that the customers receive fair value for a party s contribution. The Commission only approves those costs that are reasonable and directly and necessarily related to the party s participation in the proceeding. 3 Commission findings AltaLink submitted a costs claim for recovery of costs paid in the total amount of $137, The costs claim requested approval for recovery of the following legal and consulting costs: $120, for Borden Ladner Gervais LLP, comprising legal fees of $110, and $10, in disbursements. $16, for Knowles Consultancy Services Inc., comprising consulting fees of $16, and disbursements of $ $ for AltaLink s disbursements for transcript and meal costs Borden Ladner Gervais 21. The claim for Borden Ladner Gervais LLP (BLG) relates to hours of legal services performed by Mr. Randall Block, Mr. Michael Massicotte, Ms. Karen Salmon, Mr. Daniel Johnson, and Mr. Andrew Pozzobon. The hours claimed relate to hours of preparation, hours for attendance at the oral hearing, and 114 hours for preparation of the supplemental argument and supplemental reply argument. The activities included legal services provided in connection with the review of information requests and responses, preparation and cross examination of the Midgard witness and filing of supplemental argument and reply. 22. The Commission has assessed the costs claim for legal services for BLG and, subject to the findings below, finds that the tasks described and hours claimed are reasonable, directly and necessarily related to the proceeding and in accordance with the Scale of Costs. 23. Included within the legal costs claimed is an invoice dated April 22, 2015 for legal services provided from March 2, 2015 to March 19, 2105, a period that predates the resumption of this proceeding. The invoice concerns matters related to the interaction between Midgard and AltaLink as it relates to the draft audit report and AltaLink s response to the draft audit report. AltaLink s response to the draft audit report was not before the Commission and although Midgard would have reflected AltaLink s response prior to issuing its final report for consideration by the Commission, the Commission is not persuaded by the cost claimant that the activities related to these costs contributed to a better understanding of the issues before the Commission as set out in section 11.1 of Rule 022. Accordingly, the Commission does not approve the hours for legal services claimed in this invoice. The adjustment by counsel is Decision D (March 7, 2016) 3

8 a reduction of hours for Mr. Block, hours for Mr. Massicotte, hours for Mr. Pozzobon, and 0.70 hours for Ms. Salmon. 24. Other than the claim for Quicklaw searches in the amount of $4, included in the May 19, 2015 invoice and the disbursements claimed for the April 22, 2015 invoice, the Commission finds the remaining disbursements claimed for courier fees, photocopying, postage and Quicklaw and Westlaw searches to be reasonable and in accordance with the Scale of Costs. 25. With respect to the disbursements in the amount of $ claimed in the April 22, 2015 invoice, as the Commission has determined that the legal fees claimed in this invoice are not recoverable, the associated disbursements are likewise not recoverable. 26. With respect to the disbursement for $4, for Quicklaw searches included in the May 19, 2015 invoice, which covered the period from April 17, 2015 to April 27, 2015, a review of the legal services provided in that invoice does not reveal any legal research hours. However, as the date associated with the disbursement was April 10, 2015, the Commission has assumed that the time entries in the April 22, 2015 invoice, which included 14.5 hours of research by Mr. Pozzobon, related to the Quicklaw search charges. The area of research identified in that invoice was prudence, a legal concept that would be familiar to counsel for BLG and well-known to the Commission. In comparison, in its invoice dated October 19, 2015, BLG conducted legal research related to collateral attack and Band Council consent, areas that would not be commonly before the Commission and incurred Quicklaw disbursements of $ Further, in its November 18, 2015 invoice, a Quicklaw search disbursement for $ was claimed. The onus is on the cost claimant to demonstrate the reasonableness of the costs claimed. With regard to the Quicklaw disbursement of $4,438.02, the Commission finds that this amount is not reasonable and is disproportionate to other Quicklaw search costs on issues that are not as familiar to either the applicant or the Commission. Moreover, as this disbursement cost relates to the research activity set out in the April 22, 2015 invoice, this disbursement, which is associated with this unrecoverable cost, is denied in its entirety. 27. The Commission notes that there are free search services, such as CanLII, available to parties to use. As the costs of a utility proceeding are generally passed on to customers, in future, where a cost applicant chooses to use services that require an access fee, that cost applicant is expected to demonstrate why it was necessary to use that service rather than using a non-fee service such as CanLII. 28. Accordingly, the Commission approves the claim for legal services in the total amount of $103,210.13, which is composed of legal fees of $97, and disbursements of $5, Knowles Consultancy Services 29. The claim for Knowles Consultancy Services Inc. (Knowles) relates to hours of consulting services provided by Ms. Andrea Robinson and Mr. Roger Bridges. In its cost submission, AltaLink advised that the services of Knowles Consultancy Services Inc. were used to review project execution. 3 Apart from this sentence and the time sheets, which describe the services as reviewing the Midgard Report and drafting a reply, no additional information was provided to support the requirement for Knowles services. 3 Exhibit , AML Costs Claim Submission, page 1, November 20, Decision D (March 7, 2016)

9 30. The Commission was not provided with any documentation to indicate who Knowles is or what expertise it brought to the proceeding. Absent this information, the Commission is not persuaded that the costs incurred resulted in a better understanding of the issues before the Commission. Further, AltaLink has not demonstrated why it needed this expert assistance to take part in the proceeding. 31. The onus is on the participant claiming costs to demonstrate that the costs are reasonable and necessary and resulted in a better understanding of the issues before the Commission. AltaLink has not met this onus regarding the costs claimed by Knowles and these costs and any associated disbursements are denied in their entirety AltaLink Disbursements 32. AltaLink claimed disbursements in the amount of $ The amount claimed consists of $ for transcript services from AMICUS Reporting Group Ltd., and $60.00 for meals during the oral hearing. 33. The Commission finds the disbursements claimed to be reasonable and in accordance with the Scale of Costs. AltaLink s Total costs awarded 34. In accordance with the above findings, the Commission approves recovery of costs for AltaLink in the total amount of $104,123.33, which includes $97, in legal fees and $6, in disbursements. 3.2 Consumers Coalition of Alberta 35. The Consumers Coalition of Alberta submitted a costs claim in the total amount of $71, The costs claim requested approval of the following costs: $26, for Wachowich & Company, comprising legal fees of $23,800, disbursements of $1, and GST of $1, $39, for Bema Enterprises Ltd., comprising consulting fees of $38, and GST of $1, $5, for FTI Consulting Inc., comprising consulting fees of $5, The claim did not include amounts attributable to either disbursements or GST Wachowich & Company 36. The claim for Wachowich & Company relates to hours of legal services provided by Mr. James Wachowich and Ms. Shauna Gibbons. The hours claimed relate to hours for review of the Midgard audit, preparation of IRs and review of IR responses, and preparation of cross examination, 5.00 hours for attendance at the hearing, and hours for preparation of the supplemental argument and supplemental reply argument. 37. The Commission has assessed the costs claim for legal services for Wachowich & Company and finds that the tasks described and hours claimed are reasonable, directly and necessarily related to the proceeding and in accordance with the Scale of Costs. The Commission Decision D (March 7, 2016) 5

10 also finds the disbursements claimed for accommodation, mileage, transcripts and parking fees to be reasonable and in accordance with the Scale of Costs. 38. The Commission, therefore, approves recovery of costs for Wachowich & Company in the amount of $26,162.14, which is composed of legal fees of $23,800, disbursements of $1, and GST of $1, Bema Enterprises Ltd. 39. The claim for Bema Enterprises Ltd. relates to hours of consulting services provided by Mr. Dan Levson and Ms. Sally Langston. The hours claimed relate to hours for review of the audit, preparation of IRs, review of IR responses, and assisting in the preparation of cross examination, 6.05 hours for attendance at the hearing, and hours for preparation of the supplemental argument and supplemental reply argument. A further hours were claimed for administrative and clerical services provided by Ms. Nancy Thomas. The Commission observes that the majority of the hours spent, of the hours claimed, related to work done by Ms. Langston, who is legally trained and is able to provide these services at a lower cost than senior counsel or a senior consultant. 40. The Commission has assessed the costs claim for consulting services provided by Bema Enterprises Inc. and finds that the tasks described, hours claimed, and services provided by the respective individuals are reasonable, directly and necessarily related to the proceeding and are in accordance with the Scale of Costs. 41. The Commission, therefore, approves recovery of costs for Bema Enterprises Ltd. in the amount of $39,911.29, which is composed of consulting fees of $38, and GST of $1, FTI Consulting, Inc. 42. The claim for FTI Consulting Inc. relates to 15 hours of consulting work performed by Mr. Todd Mohr and Mr. William Tusa. The hours claimed relate to review of the Midgard audit and providing input to counsel and other consultants to allow a better appreciation of the points of value in the Midgard audit The Commission has assessed the costs claim for consulting services provided by FTI Consulting Inc. and finds, subject to the comments below, that the hours incurred are reasonable given the tasks described in the costs applications. The fees have not been claimed in accordance with the Scale of Costs. Submitted supporting documentation indicates that Mr. Mohr and Mr. Tusa provided consulting services at an hourly rate of $ The Commission s Scale of Costs currently limits recovery of costs for consultants with more than 12 years of experience to $ an hour. 44. The Commission may award costs in excess of the Scale of Costs if the cost claimant can advance persuasive argument that the scale is inadequate given the complexity of the case. In this cost application, the request for costs in excess of the scale was made on the basis of the expertise that FTI brought to this proceeding. The CCA did not demonstrate that this proceeding was of such a complex nature that costs above scale for these particular consultants was required. 4 Exhibit X0009, Amended CCA Cost Claim, paragraph Decision D (March 7, 2016)

11 Rather, it appears from the submissions that the request for costs above scale was premised primarily on the fact that FTI is a US company and the exchange rate had an effect on the remuneration received. The Commission is not persuaded that costs in excess of the scale of costs are warranted for these consultants. In addition, the Commission has reviewed the description of tasks performed by each of Mr. Mohr and Mr. Tusa and is not persuaded that there was no duplication of the services they provided. A review of the invoices reveals that Mr. Tusa spent 4 hours reviewing and analyzing the Midgard report on April 17, Thereafter, Mr. Tusa spent no further time on this project. Rather, Mr. Mohr appears to have assumed carriage of the matter, and, on April 22, 2015, also claimed 4.50 hours to initially review the audit report. 45. The amounts associated with FTI s fees have been adjusted to bring them into conformity with the Scale of Costs and the total hours claimed have been reduced by 4 hours. This adjustment decreases the original amount claimed by $2, and results in a new total of $2, in fees for services provided. 46. The Commission, therefore, approves recovery of costs for FTI Consulting, Inc. in the amount of $2,970.00, which is composed solely of consulting fees. Consumers Coalition of Alberta Total costs awarded 47. Accordingly, the Commission approves the recovery of the CCA s costs claim in the total amount of $69,043.43, which is composed of legal fees of $23,800, consulting fees of $40,980.75, disbursements of $1,133.24, and GST of $3, GST 48. In accordance with the Commission s treatment of GST on cost awards, AltaLink is required to pay only that portion of GST paid by interveners that may not be recoverable through the GST credit mechanism. Accordingly, the Commission approves the eligible GST in the amount of $3, The Commission emphasizes that its treatment of the GST claimed in no way relieves participants or their consultants from their GST obligations pursuant to the Excise Tax Act, RSC 1985, c. E-15. Decision D (March 7, 2016) 7

12 5 Order 50. It is hereby ordered that: 1) shall pay external costs in the amount of $104, ) shall pay intervener costs to the Consumers Coalition of Alberta in the amount of $69, Dated on March 7, Alberta Utilities Commission (Original signed by) Bohdan (Don) Romaniuk Acting Commission Member (original signed by) Henry van Egteren Commission Member (original signed by) Kate Coolidge Acting Commission Member 8 Decision D (March 7, 2016)