Decision D ATCO Electric Ltd Transmission General Tariff Application. Costs Award

Transcription

1 Decision D January 30, 2017

2 Alberta Utilities Commission Decision D Proceeding January 30, 2017 Published by Alberta Utilities Commission Fifth Avenue Place, Fourth Floor, 425 First Street S.W. Calgary, Alberta T2P 3L8 Telephone: Fax: Website:

3 Contents 1 Introduction Commission findings on the ATCO Electric costs claim The CCA s costs claim ATCO Electric s comments on the CCA s costs claim application Costs directly related to the advancement of interests of the CCA s constituent stakeholders Consultants of the CCA undertook work for ADC and IPCAA Duplication and lack of coordination Conduct that unnecessarily lengthened the original proceeding or resulted in unnecessary costs Commission s findings on the Consumers Coalition of Alberta costs claim Order ii Decision D (January 30, 2017)

4 Alberta Utilities Commission Calgary, Alberta Decision D Proceeding Introduction 1. In this decision, the Alberta Utilities Commission considers applications (the costs claim applications) by (ATCO Electric) and the Consumers Coalition of Alberta (CCA) (collectively, the applicants) for approval and payment of their costs of participation in Proceeding (the original proceeding). The following table sets out the costs claimed and the amounts awarded: Claimant Total Fees Claimed Total Disbursements Claimed Total GST Claimed Total Amount Claimed Total Fees Awarded Total Disbursements Awarded Total GST Awarded Total Amount Awarded ATCO Electric Bennett Jones LLP $1,254, $15, $0.00 $1,269, $1,128, $15, $0.00 $1,144, Gannett Fleming Canada $441, $1, $0.00 $442, $275, $1, $0.00 $276, Mercer (Canada) Limited $28, $0.00 $0.00 $28, $28, $0.00 $0.00 $28, ATCO Electric Ltd. $0.00 $18, $0.00 $18, $0.00 $18, $0.00 $18, Total $1,723, $34,859.1 $0.00 $1,758, $1,432, $34, $0.00 $1,467, CCA Wachowich & Company $163, $10, $8, $182, $163, $10, $8, $182, Regulatory Services Inc. $121, $1, $6, $129, $121, $1, $6, $129, Bema Enterprises Ltd. $300, $10, $15, $326, $255, $9, $13, $278, D. Madsen Consulting Inc.. $230, $4, $11, $246, $230, $4, $11, $246, Grid Power Development and Design Inc. $146, $1, $7, $155, $146, $1, $7, $155, FTI Consulting Inc. $463, $2, $0.00 $465, $264, $2, $0.00 $267, Mr. Ron Mikkelsen $26, $1, $1, $28, $13, $1, $ $14, Diversified Unity Consultants Inc. $96, $3, $0.00 $99, $87, $3, $0.00 $90, Advance Funding Awarded $343, Total $1,549, $34, $50, $1,635, $1,283, $34, $47, $11,021, Total of all amounts claimed and awarded $3,393, $2,489, Proceeding 20272, ATCO Electric s. Decision D (January 30, 2017) 1

5 2. The Commission finds that the applicants respective costs claims are deficient and has awarded reduced costs to both ATCO Electric and the CCA as set out in more detail below. 3. The original proceeding was convened by the Commission to consider ATCO Electric s (GTA). The original proceeding included four rounds of information requests (IRs) and responses, written and oral evidence, crossexamination, argument and reply argument. In addition, ATCO Electric filed numerous updates to its application and the parties filed numerous motions during the course of the proceeding. 4. The close of record for the original proceeding was May 24, 2016 and the Commission issued Decision D on August 22, The CCA submitted its costs claim application on June 23, 2016, within the 30-day timeline permitted by the Commission s rules. The Commission assigned Proceeding and Application A001 to the costs claim application. 6. ATCO Electric submitted its cost claim application on June 24, 2016, within the 30-day timeline permitted by the Commission s rules. Within Proceeding 21747, ATCO Electric s costs claim application was assigned Application A ATCO Electric submitted comments regarding the CCA s costs claim application on July 14, On July 21, 2016, the CCA filed its response to the comments filed by ATCO Electric. 8. On October 19, 2016, the Commission issued IRs to both ATCO Electric and the CCA. IR responses by ATCO Electric and the CCA were filed by the specified deadline, November 2, The Commission considers the close of record for this costs proceeding to be November 2, 2016, the date upon which the CCA and ATCO Electric submitted their IR responses. 2 Commission findings on the ATCO Electric costs claim 10. The Commission s authority to award costs for participation in a utility rates proceeding is found in Section 21 of the Alberta Utilities Commission Act. When considering a claim for costs for a utility rates proceeding, the Commission is also guided by the factors set out in Section 11 of Rule 022: Rules on Costs in Utility Rate Proceedings (Rule 022) which allows the Commission to consider, among other things, whether costs claims are reasonable and directly and necessarily related to the original proceeding, and whether the participants acted responsibly and contributed to a better understanding of the issues before the Commission. Appendix A of Rule 022 prescribes a Scale of Costs applicable to all costs claimed. 11. The following table summarizes ATCO s costs claim: 2 Decision D :, Proceeding 20272, August 22, Decision D (January 30, 2017)

6 Claimant ATCO Hours Preparation Attendance Argument Fees Disbursements GST Total Bennett Jones LLP 3, $1,254, $15, $0.00 $1,269, Gannett Fleming Canada 2, $441, $1, $0.00 $442, Mercer (Canada) Limited $28, $0.00 $0.00 $28, $0.00 $18, $0.00 $18, Total $1,723, $34,859.1 $0.00 $1,758, In assessing the reasonableness of ATCO Electric s claimed costs pursuant to Section 11 of Rule 022, the Commission took into consideration ATCO Electric s overall participation in the original proceeding. As discussed in more detail below, after careful review of the record of the original proceeding, as well as of ATCO Electric s responses to the Commission s IRs on the costs claim application, the Commission finds that ATCO Electric engaged in conduct that unnecessarily lengthened or complicated the original proceeding, including the oral hearing, resulting in unnecessary costs to both ATCO Electric and interveners. 13. As noted above, the Commission issued IRs in this costs proceeding seeking further clarification of ATCO Electric s costs claim application. In AUC-ATCO ELECTRIC-01(b), the Commission asked ATCO Electric to explain why each of its revisions to the application was reasonable and necessary, and whether each of the revisions was filed at the earliest possible date for such a revision. In its response, ATCO Electric maintained that each of the revisions was submitted to reflect the most current information available to ATCO Electric, and was filed at the earliest possible date. 14. The Commission generally accepts ATCO Electric s explanations regarding the reasonableness and timing of each of the revisions to the application. However, the Commission is concerned with the manner in which the revisions were filed and the variety of ways that they were presented on the record of the proceeding. For example, the October 30, 2015 update relating to ATCO Electric s 2015 actual debt financing was not filed on the record of the proceeding in a manner consistent with Commission procedures or efficiency of regulatory proceedings. ATCO Electric maintained that this revision was provided in response to Commission IR AET-AUC-2015OCT16-24(b). However, the IR in question was simply a request for ATCO Electric to provide an updated cost of new debt for ATCO Electric calculated using ENMAX s approach. In response, ATCO Electric provided the information required, but also submitted a revision to its 2015 actual debt financing and filed a 180-page attachment with an update to its applied for revenue requirement reflecting the 2015 actual debt financing revision. Given the magnitude of the update in question, the Commission expects that ATCO Electric would have filed the update as a separate document on the record of the proceeding, accompanied with a covering letter explaining the nature of the update and why it was required. Had ATCO Electric followed this course of action, parties and the Commission would have adequately been made aware of the update and the Commission could have considered whether additional procedural steps (i.e. IRs) were required. The Commission expects ATCO Electric and other applicants to file updates of this magnitude as a separate document on the record of the proceeding, rather than as an attachment to a marginally related IR. This will facilitate the Commission s task of ensuring the orderly, procedurally fair and expeditious completion of lengthy and complex proceedings. ATCO Electric s decision to include this voluminous Decision D (January 30, 2017) 3

7 compilation of information as an attachment to the IR resulted in unnecessary additional work for the Commission and interveners. 15. In addition to its concerns regarding ATCO Electric s October 30, 2015 update, the Commission also observes that the way in which ATCO Electric introduced the numerous changes to its actual and forecast FTEs, whether in response to IRs or by way of other updates, rendered the process of comprehending the full scope of ATCO Electric s application more complex and time consuming for the Commission and interveners than it needed to be. In total, ATCO Electric changed its originally applied for actual and forecast FTEs four times, the last change being included in its revised February 23, 2016 refiling application. An indication of the extent of confusion created, and additional costs imposed, by the unsatisfactory manner in which ATCO Electric presented and explained FTE updates is provided by exhibit This was an aide to cross submitted by the City of Calgary to assist the Commission and other parties in better understanding the substance and import of various FTE updates on ATCO Electric s application, in large part simply by trying to establish a common number which all parties could use to examine the application. The confusion created also led the CCA to miss one of the changes and to submit its evidence on ATCO Electric s actual and forecast FTEs based on erroneous numbers Costs are assessed in part on the basis of the provisions of Section 11.1 of Rule 022. This section requires a participant to act responsibly and to contribute to a better understanding of the issues before the Commission. With respect to the oral hearing, the Commission observes that, on several occasions, the ATCO Electric witnesses failed to provide clear, complete or fully responsive answers to straight-forward questions posed by counsel. 4 The Commission observed that counsel for the interveners and the Commission were required to repeat the same question a number of times in order to obtain an answer from ATCO Electric s witness panel. Further, in many instances, ATCO Electric s witnesses took an inordinate amount of time to answer questions from counsel and frequently caucused before answering even the most basic and direct of questions, which unnecessarily prolonged the hearing. Although the Commission recognizes that at the time of the oral hearing witnesses were allowed to caucus while on the stand, in the Commission s experience, the number of times ATCO Electric s witnesses conferred with each other before providing an answer could not be reasonably justified by the nature of the subject matter or the complexity of the questions asked of them. Nor, in a number of cases, in the Commission s view, did the responses provided by ATCO Electric s witnesses after conferring with each other suggest any material value to have been added by the practice. While not in any way suggesting that were reasonably required, caucusing among witnesses while on the stand should be discouraged, especially where it is required to provide more precise, meaningful or complete responses to questions on complex subjects, the Commission considers that witnesses should not lose sight of the principle of regulatory efficiency while on the stand. On balance, the Commission considers that the ATCO Electric witnesses did not meet the standard required of them for full recovery of hearing related costs. The Commission finds that rather than contributing to a better understanding of the issues before the Commission as required by Section 11.2(h) of Rule 022, the approach taken by ATCO Electric s witness panel in responding to intervener and Commission counsel questions unnecessarily lengthened the hearing and resulted in unnecessary costs to ATCO Electric, interveners and the Commission. 3 4 Exhibit X0789, pages For examples see: Volume 4 of Transcripts, pdf pgs ; Volume 11 of Transcripts, pdf pgs ; Volume 2 of Transcripts, pdf. pgs Decision D (January 30, 2017)

8 17. The Commission further notes that despite the numerous revisions to the application, and numerous IR responses, ATCO Electric either failed to provide relevant information and clarification or the information provided was so dispersed throughout the voluminous record of the original proceeding as not to be readily accessible for, and amenable to, comprehensive review and critical analysis. This made it difficult, and at times exceedingly difficult, for the Commission to assess and make final determinations with respect to a number of issues. In several instances, this resulted in the Commission having to direct ATCO Electric to submit the missing or inadequately compiled information in a compliance filing. One example relates to the information provided by ATCO Electric with respect to the O&M and capital allocation for the FTE forecast and the removal of forecast FTEs as a result of the workforce reduction. In Decision D , the Commission found: 80. The Commission identified in ATCO Electric s response to IR AET-AUC- 2015JUN08-17(i) - February 23 Update, Exhibit X1069, that the O&M and capital allocation for the FTE forecast and the removal of forecast FTEs as a result of the workforce reduction did not match. This issue was canvassed in a discussion that occurred at the oral hearing between Commission counsel and the ATCO Electric witness. [footnote omitted] ( ) 81. The Commission previously understood that the removal of positions a month prior to the end of the year would result in a small fraction of an FTE being removed in However, it finds that Mr. Jansen s response in questioning did not address the apparent discrepancy in the O&M and capital allocations for certain FTEs removed in 2016 and 2017 as part of the workforce reduction. ATCO Electric is directed to correct the response to AET-AUC-2015JUN08-17(i) February 23 update such that the O&M and capital split for a position eliminated in the workforce reduction matches the O&M and capital split previously forecast for that position. ATCO Electric is also directed to update any impact to its O&M and capital forecast costs for the 2016 and 2017 test period as a result of these changes. 18. Another example, relates to the information provided by ATCO Electric with respect to payment of variable pay program (VPP) amounts in 2016 and Referring to an exchange between ATCO Electric s panel and the CCA s counsel, Mr. Wachowich, 5 and later, Commission Member Lyttle, 6 the Commission stated the following in Decision D : 189. It remains unclear to the Commission, based on the above exchange, whether ATCO Electric will pay VPP amounts in 2016 and Mr. DeChamplain confirmed that all decisions with respect to VPP payment amounts at ATCO Electric are subject to [the ATCO Ltd.] CEO s approval based on economic conditions, apparently even if all of the utility s internal performance criteria are otherwise met 19. The Commission also noted in Decision D that several projects identified in the application appeared to have been filed without accompanying business cases. 7 In addition, a number of ATCO Electric s business cases contained insufficient information to support Transcript, Volume 2, page 206, lines Transcript, Volume 10, page 1680, line 16 to page 1681, line 9. Decision D , paragraph 871. Decision D (January 30, 2017) 5

9 approval of the associated forecast. 8 For instance, with respect to the double circuit mitigation project, the Commission found that the business case provided by ATCO Electric did not comply with the Commission s direction in ATCO Electric s previous GTA (Proceeding 1989), where the Commission set out the requirements for a business case that would be sufficient to support a project. 9 As a result, the Commission found as follows: Given the lack of business case support provided by the utility in its application, the Commission is not prepared to approve any of the expenditures forecast for the double circuit project in the test period and directs ATCO Electric to remove the expenditures from its current forecast. ATCO Electric is directed to submit a business case with the requested level of detail in its next GTA. 20. The Commission also found that there was insufficient information on the record of the proceeding to approve the requested rate base additions for 2013 and 2014 for the projects identified in Table 35 of the decision (reproduced below). The Commission indicated that it would re-evaluate the requested capital additions for these projects upon review of the variance explanations and/or business cases to be provided by ATCO Electric in the compliance filing Table (2) 2014 (2) Approved Actual Approved Actual additions additions additions additions ($ million) Telecommunication site power backup SCADA/EMS: Operational information systems Refurbish/replace engines and turbines Transmission isolated operations capital maintenance Reason for disallowance No variance explanation was provided No variance explanation was provided No variance explanation was provided No variance explanation was provided Some costs associated Tools, instruments and equipment (1) with asset management Cost associated with asset Software: Asset management (1) management No variance explanation Software: Technology enhancements was provided Software: Capital and O&M No business case was forecasting project provided No business case was Software: Intelex provided No variance explanation Software: Windows 7 upgrade was provided No business case was Software: Oracle R12 upgrade (1) General leasehold improvement capital division Stettler Service Building provided No business case was provided No variance explanation was provided Decision D , paragraph 849. Decision D , paragraph Decision D , paragraph Decision D (January 30, 2017)

10 Nisku panel shop Nisku fabrication building Total No business case was provided No business case was provided 21. Another example relates to the severance costs of ATCO Electric employees who also provide services to affiliated companies. In Decision D , the Commission stated that transmission rate payers should not be responsible for the entirety of the severance costs that relate to employees who actually provided service or were forecasted to provide services to an affiliate. 11 The Commission also stated: 126 There was little or no evidence in this proceeding addressing which corporate entity, as between ATCO Electric and any of its affiliates that received services from it, is responsible, whether in whole or in part, for the severance costs of ATCO Electric employees providing (or forecasted to provide) services to these same affiliates when their positions were eliminated in The Commission further noted that: 133. ATCO Electric ended 2014 and started 2015 with approximately 20 permanent FTEs in excess of Commission-approved levels for The utility also acknowledged during the oral hearing that it eliminated more than 80 positions at the end of 2015 that had been assigned to provide services to affiliates in 2016 and 2017 and were originally forecasted for termination by the end of The information provided by ATCO Electric leaves it unclear whether the 20 surplus FTEs at the beginning of 2015 included any of the above positions. Consequently, the Commission is unable to determine what proportion of the severance costs for the 337 positions eliminated in 2015 should be ATCO Electric s to bear and what proportion should be recovered from ratepayers. 23. Given the Commission s observations above, the Commission indicated in the decision that it was not persuaded that ATCO Electric had demonstrated that the full amount of severance costs claimed should be borne by ratepayers and considered that it was reasonable to allow ATCO Electric to recover $8.2 million, representing 65 per cent of the total severance costs it had claimed. 24. There was also confusion regarding ATCO Electric s final schedule of transmission taxes other than income with respect to Main Transmission Substations. This confusion became clear at the oral hearing in an exchange between Mr. Wachowich, counsel for the CCA, and Mr. Jansen, who appeared as a witness for ATCO Electric: 2 Q. Thank you. I have one housekeeping area, and then I'm 3 going to turn to an area where I'm going to switch out 4 consultants. In this housekeeping area, can you please 5 refer to Exhibit These are the GTA schedules 11 Decision D , paragraph 126. Decision D (January 30, 2017) 7

11 6 filed on December 16th, So it should be a 7 spreadsheet when you get there. And when you're there, 8 if you could look at Schedule A. MR. JANSEN: Sorry, which schedule? 10 Q And that should be the ATCO Electric Transmission 11 schedule of transmission taxes other than income. 12 A. MR. JANSEN: Yes. I have it. 13 Q. And on the version of this that I've asked you to refer 14 to, the line titled "Main Transmission Substations," 15 Line Number 2, if we go across to the test period, '15, 16 '16, and '17, we see numbers of 16.1 million, 19.7, and respectively. And so as we understood it, that 18 was the company's application as at December. 19 And when we go to Exhibit X1102, which are the 20 updated GTA schedules as of February 23rd, 2016, and 21 look again at Schedule 5-6, the same schedule of 22 transmission taxes other than income. And just let me 23 know when you're there. 24 A. MR. JANSEN: Sorry, this file is taking a 25 little while to open up. ( ) 7 Q. Thank you, Mr. Jansen. And if you look at the same 8 line, "Main Transmission Substations," the test period 9 numbers are 25.2, 49.9, and 51.4 million respectively. 10 And this is a more than doubling of the 2016 year's 11 forecast, transmission taxes other than income on main 12 transmission substations, and nearly a doubling with 8 Decision D (January 30, 2017)

12 13 respect to the And we looked through the filing the narrative 15 accompanying the February 23rd schedules, and we 16 couldn't find an explanation of a driver of that 17 magnitude. 18 A. MR. JANSEN: We'll have to look at that, 19 because if -- this is -- a schedule is supposed to 20 include the original, and you're right, it is higher. 21 And if we go to the Exhibit 1101, the number has not 22 changed. So there must have been something that took 23 place in that document that maybe corrupted that cell 24 or those cells. So we'll have a look at that. 25 Q. Okay. So you'll take that away as an undertaking and 1 advise us as to -- 2 A. MR. JANSEN: It hasn't changed from original to 3 the final. 4 Q. Okay. 5 A. MR. JANSEN: If you go to the final, 6 Exhibit Q. All right. I think we're trying to still understand, 8 sir, which one we should finally rely on. 9 A. MR. JANSEN: Exhibit 1102 was supposed to be 10 showing the original exhibit with highlights of what 11 changed. 12 Q. Okay. 13 A. MR. JANSEN: Highlighted in yellow was what Decision D (January 30, 2017) 9

13 14 that file was supposed to be. 15 Q. Thank you, sir For the above reasons, the Commission finds that ATCO Electric failed to satisfy the requirements of Section 11.1 of Rule 022 in demonstrating that the entirety of its costs claimed are reasonable and that ATCO Electric acted at all times in a responsible manner, contributing to a better understanding of the issues before the Commission. In accordance with section 11.2(h) of Rule 022, the Commission finds that the information gaps and lack of clarity in ATCO Electric s written and oral evidence to have unnecessarily lengthened the duration of the hearing, resulting in an inefficient regulatory process and unnecessary costs for ATCO Electric, interveners, and the Commission. Section 21(1) of the Alberta Utilities Commission Act provides the Commission with the discretion to order by whom, and to whom, the costs incidental to any proceeding of the Commission are to be paid. The Commission is of the view that ATCO Electric should bear responsibility for failing to satisfy the requirements of Section 11.1 of Rule 022, and, therefore, considers that a portion of intervener costs claimed and allowed in this proceeding should be paid by ATCO Electric s shareholder. Accordingly, the Commission finds that 20 per cent of the CCA s awarded costs in the original proceeding should be for the account of ATCO Electric s shareholder with the remaining 80 per cent of the CCA s awarded costs to be recovered by ATCO Electric from ratepayers. 26. The Commission is mindful that the original proceeding was complex, involving an unusually large number of motions, multiple rounds of IRs and multiple requests from various parties for extensions to filing deadlines. This notwithstanding, the Commission required complete, timely and comprehensive production of information by ATCO Electric to facilitate its analysis of the application. ATCO Electric, however, on many occasions either failed to provide the required relevant information or, the information provided was unclear, insufficiently organized or so dispersed throughout the voluminous record of the original proceeding as not to be reasonably accessible and readily comprehensible to interveners and the Commission. Further, the Commission found that, on balance, the excessive amount of time taken by ATCO Electric s witnesses to respond to questions and, more than just occasionally, the inadequacy of the answers actually provided by its witnesses unnecessarily prolonged the hearing. For these reasons, as explained more fully above, the Commission finds it reasonable to assign to ATCO Electric s shareholder responsibility for 20 per cent of the CCA s awarded costs as directed in paragraph 25 above. Bennett Jones LLP 27. ATCO Electric was represented by Bennett Jones LLP (Bennett Jones) in the original proceeding. Eighteen counsel and two students from Bennett Jones provided legal services associated with the original proceeding. The fees claimed by ATCO Electric for the legal services provided by Bennett Jones relate to drafting and reviewing the application, reviewing IRs from interveners and drafting IR responses, corresponding with consultants, drafting motions, drafting and reviewing rebuttal evidence, preparing expert witnesses, drafting crossexamination, preparing for and attending the oral hearing, drafting argument and reply argument, reviewing intervener argument and reply argument, and researching legal issues related to the 12 Transcripts, Vol. 2, pages Decision D (January 30, 2017)

14 original proceeding. As well, 0.8 of the hours claimed relate to administrative tasks performed by two administrative assistants. 28. As discussed in more detail in Section 2 above, the Commission found that ATCO Electric s witnesses did not act entirely responsibly in the original proceeding in that the amount of time they took to respond to questions was, on balance, unreasonable, and the testimony they provided was too often unclear, incomplete or not fully responsive to the questions posed of them, thereby unnecessarily prolonging the original proceeding and resulting in unnecessary costs to both ATCO Electric and interveners. In the Commission s view, given the intrinsic role played by counsel for ATCO Electric throughout the proceeding and hearing, counsel must share some degree of accountability for the delays and associated costs. As confirmed by the time entries in the submitted invoices, Bennett Jones counsel played a key role throughout ATCO Electric s participation in the original proceeding. Bennett Jones counsel not only prepared ATCO Electric s witness panel for the oral hearing, but also coordinated and reviewed the evidence filed on the record of the original proceeding on behalf of ATCO Electric. Accordingly, while the Commission finds that the majority of the services performed by Bennett Jones were directly and necessarily related to ATCO Electric s participation in the original proceeding, the Commission finds that a 10 per cent reduction of ATCO Electric s external legal fees is warranted. 29. The Commission has reviewed the disbursements claimed by Bennett Jones for airfare, accommodation, meals, mileage, taxi, parking, courier fees, photocopying, library computer search, internal printing, and corporate registry, in the amount of $15,475.92, and finds that they are in accordance with the Scale of Costs and are, therefore, approved. 30. Accordingly, the Commission approves ATCO Electric s claim for legal fees for Bennett Jones in the amount of $1,128, and disbursements of $15, for a total of $1,144, Gannett Fleming Canada 31. Gannett Fleming Canada (Gannett Fleming) was retained by ATCO Electric to perform consulting services in the original proceeding. Gannett Fleming prepared a depreciation study that addressed the development of depreciation rates for the relevant test years (the depreciation study). The fees claimed by ATCO Electric for the consulting services provided by Mr. Kennedy, Mr. Janow, Mr. Mah, Ms. Carlucci, Mr. Spanos, Ms. McCormick, and Ms. Rutter relate to their respective roles in reviewing the application, preparing the depreciation study, drafting IR responses, reviewing intervener evidence, drafting rebuttal evidence, drafting crossexamination questions, preparing for and attending the oral hearing as an expert witness, and drafting argument and reply argument on depreciation matters. As well, 2.00 of the hours claimed relate to administrative tasks performed by an administrative assistant. 32. While the Commission finds, as a general proposition, that the consulting services provided by Gannett Fleming were directly and necessarily related to ATCO Electric s participation in the original proceeding, it is of the view that the number of hours claimed is excessive. The Commission notes that in Proceeding 650, 13 the past ATCO Electric GTA, in which Gannett Fleming was retained to prepare a depreciation study, the costs claimed for this 13 Proceeding 650,, General Tariff Application. Decision D (January 30, 2017) 11

15 work were $57,000, 14 and included ATCO Electric s transmission and distribution services. The costs claimed in this application are approximately seven times that amount, and only include ATCO Electric s transmission services. While nothing in this decision hinges on that fact alone, the Commission notes that the ATCO Electric historical data used by Gannett Fleming to prepare the depreciation study would have been relatively unchanged except for the new assets added and any retirements since the last time a depreciation study was prepared for ATCO Electric. In view of this, the Commission does not consider that the issues raised in this proceeding were of such a degree of complexity or the tasks performed by Gannett Fleming in preparing the depreciations study to have been so technical or demanding as could reasonably justify the aggregate number of hours worked and the full quantum of costs being claimed. For this reason, the Commission finds that a 40 per cent reduction of the fees claimed by Gannett Fleming for preparation is warranted. 33. Further, there appears to be unsupported duplication of time spent on similar tasks by the various analysts. The Commission notes that Mr. Kennedy, Mr. Janow and Mr. Mah, recorded a combined total of 1,971 hours of the total 2, claimed for Gannett Fleming in the original proceeding. Given the substantial work performed by these consultants, the need for the services of Mr. Spanos, Mr. McCormick and Ms. Rutter has not been sufficiently justified in the costs claim application. The timesheets of Mr. Spanos, Mr. McCormick and Ms. Rutter only indicate that they performed report review with no additional explanation as to why reliance upon these analysts to perform report review has resulted in any costs savings given that this same task was also performed by Mr. Kennedy, Mr. Janow and Mr. Mah. Therefore, the Commission denies recovery of the costs associated with the hours incurred by Mr. Spanos, Mr. McCormick and Ms. Rutter in the original proceeding. The Commission has removed the costs associated with these individuals prior to making the 40 per cent reduction referred to in paragraph Additionally, a review of the timesheets of Ms. Carlucci, who billed at a rate of $ per hour, revealed that some of her tasks included: creating IR templates, preparing witness binder, and updating witness binder. The Commission finds that these tasks appear to be administrative in nature and, pursuant to the Scale of Costs, should be charged at a rate of $45.00 per hour. Therefore, with respect to the hours incurred by Ms. Carlucci to perform tasks that are more administrative in nature, a total of 26 hours, 15 the Commission has adjusted the rate claimed of $ per hour to the rate of $45.00 per hour to bring them into conformity with the Scale of Costs. 35. The Commission has reviewed the disbursements claimed for Gannett Fleming for accommodation, meals, parking, car rental and external printing, in the amount of $1,255.79, and finds that they are in accordance with the Scale of Costs and are, therefore, approved. 36. Accordingly, the Commission approves ATCO Electric s claim for consulting fees for Gannett Fleming in the amount of $275, and disbursements of $1, for a total of $276, Proceeding 1090, Cost Proceeding for General Tariff Application. Exhibit X0006, PDF pages 250, 259, 287, and Decision D (January 30, 2017)

16 Mercer (Canada) Limited 37. Mercer (Canada) Limited (Mercer) was retained by ATCO Electric to perform consulting services in the original proceeding. Mercer was retained to provide a 2015 Total Remuneration Review study for ATCO Electric s out-of-scope employees. The fees claimed by ATCO Electric for the consulting services provided by Mr. Buhr, Mr. Calder, Mr. Coppola, Mr. Dobson, Mr. Irwin, Ms. McRobbie, Mr. Murphy, Ms. Smith, Mr. Wong and Mr. Yung relate to reviewing the application, drafting IR responses, and preparing the 2015 Total Remuneration Review study. 38. While the Commission finds that the services performed by Mercer were directly and necessarily related to ATCO Electric s participation in the original proceeding, it notes that the majority of Mercer s invoices do not provide a description of the tasks performed by Mercer s consultants and the time recorded for performance of each task. This missing information made it difficult for the Commission to objectively assess the reasonableness of the costs claimed. Therefore, in future costs claim applications, the Commission expects Mercer s invoices to adequately describe the tasks performed and the hours incurred in performing such tasks. 39. The Commission approves ATCO Electric s claim for consulting fees for Mercer in the total amount of $28, Disbursements for 40. ATCO Electric also requested recovery of disbursements for transcript costs and meals. The Commission finds that the disbursements claimed are reasonable because they are directly and necessarily related to the proceeding and ATCO Electric s staff attendance at the oral hearing. The disbursements claimed are in accordance with the Scale of Costs. Accordingly, the Commission approves ATCO Electric s claim for disbursements in the amount of $18, Total amount awarded 41. Accordingly, the Commission approves ATCO Electric s claim for recovery of costs in the total amount of $1,467, This amount is composed of legal fees of $1,128,840.30, consulting fees of $303, and disbursements of $34, The CCA s costs claim 3.1 ATCO Electric s comments on the CCA s costs claim application 42. The Commission has considered both the merits of the CCA s costs claim and the comments advanced by ATCO Electric. In making its determination, the Commission has also taken into account the CCA s responses to the Commission s IRs. The Commission will consider below each of the comments raised by ATCO Electric Costs directly related to the advancement of interests of the CCA s constituent stakeholders 43. ATCO Electric submitted that, based on its review of the invoices, timesheets, disbursements and cross-examination of the CCA s witnesses, it was unable to verify whether the CCA s constituent stakeholders, namely the Consumers Association of Canada (Alberta Decision D (January 30, 2017) 13

17 Division) and the Alberta Council on Aging, had any role in the intervention filed on its behalf in the original proceeding. 44. ATCO Electric, upon review of all of the invoices of Wachowich & Co. to the CCA, was unable to identify any evidence of communication between Wachowich & Co. and any representative of the CCA. Consequently, ATCO Electric maintained that there was no evidence in the CCA s costs claim application that legal counsel and consultants advanced the interests of the CCA s constituent stakeholders and requested that the Commission carefully consider the apparent lack of involvement of the CCA itself in the original proceeding in determining whether to award the costs claimed. 45. In its reply to ATCO Electric s comments, the CCA stated that it has been eligible to receive funding under Rule 022 for many years. The CCA explained that its current practice is that the CCA s legal counsel, Mr. Wachowich, manages the relationship with the CCA and ensures that the interests and concerns of the CCA are addressed in the regulatory proceeding. Further, it has been the practice of Mr. Wachowich to not bill for receiving general client instructions or providing general process updates from or to the CCA. In addition, client instructions are governed by solicitor client privilege and, therefore, are not included in the billing hours for Mr. Wachowich. The CCA explained its practices further, as follows: The CCA does not have the requisite internal funding and resources to support an intervention addressing its interests and concerns in the proceedings that it participates in. Accordingly, it is entirely reasonable for the CCA to rely on an experienced individual such as Mr. Wachowich, who is external legal counsel to the CCA and also operates on a cost recovery basis. Since 1994 Mr. Wachowich has been retained by the CCA to specifically represent the CCA s interests and ensure that their concerns, as communicated to him as outside counsel for the organization, are properly addressed in each proceeding before the utility regulator where the CCA is active The CCA maintained that the broader intervention of the CCA was coordinated by Mr. Levson, and Mr. Wachowich directed Mr. Levson and all retained consultants to review the application for the CCA in their respective areas of expertise and determine any issues to be addressed by the CCA in the original proceeding. Upon determination of the issues, Mr. Wachowich, through his discussions and guidance from the CCA s representatives, provided guidance to the consultants and experts. Further, Mr. Wachowich stated that where appropriate 17 he obtained the necessary engagement letters signed by the CCA s representatives for the services of the CCA s consultants. 47. The CCA also submitted that ATCO Electric appears to suggest that each individual consultant and expert should have had direct contact with the CCA s representatives in order to obtain instructions. According to the CCA, how it chooses to structure its internal communications during its intervention in the Commission s proceedings should be of no concern to ATCO Electric. Commission findings 48. Pursuant to Section 3.1 of Rule 022: Exhibit X0015, paragraph 14. Exhibit X0015, paragraph Decision D (January 30, 2017)

18 3.1 The Commission may award costs to an intervener who has, or represents a group of utility customers that have, a substantial interest in the subject matter of a hearing or other proceeding and who does not have the means to raise sufficient financial resources to enable the intervener to present its interest adequately in the hearing or other proceeding. 49. Although the CCA has been recognized as eligible to recover Commission approved costs of participation in Commission proceedings for a number of years, the Commission expects the CCA to ensure that legal and consulting costs are claimed only in respect of services provided to the CCA and that are necessary for the CCA s participation in Commission proceedings. The costs incurred by the CCA s counsel and consultants, if approved by the Commission, will ultimately be borne by ratepayers and, therefore, the Commission must satisfy itself that the positions being advanced by counsel and consultants on behalf of the CCA reflect instructions received by the CCA s representatives. 50. Mr. Wachowich indicated that it is his practice not to bill for receiving client instructions and communicating with the CCA. The Commission is prepared to accept Mr. Wachowich s explanation for the purposes of this proceeding, as this practice has not been questioned in prior costs applications. However, the Commission agrees with ATCO Electric that the lack of clarity with respect to the engagement of the CCA s constituent members makes it difficult for the Commission, and other participants, to confirm that the positions taken and costs incurred on behalf of the CCA in a particular proceeding have, in fact, been endorsed by the constituent members of the CCA. Therefore, to ensure transparency regarding the CCA s participation and eligibility to recover costs in future Commission proceedings, the Commission directs the CCA to enclose a letter, in all future costs claim applications, confirming that it has retained the services of external legal counsel and external consultants to assist in its participation with respect to a particular proceeding. The letter must clearly indicate: a) the name of the legal counsel and the consultants retained; b) the subject matter to be covered by each of the consultants; c) whether the consultants received instructions directly from the CCA s representatives or from legal counsel; and d) whether the instructions provided were followed by counsel and the consultants to the CCA s satisfaction, including any instructions on how common costs of participating in intervener coalitions should be apportioned. This is consistent with the Commission s findings in paragraph 35 of Decision D , where the Commission stated that all fees and disbursements for which advance funding were claimed must be directly related to the advancement of the interests of the CCA s constituent stakeholders Consultants of the CCA undertook work for ADC and IPCAA 51. In the original proceeding, the CCA, Alberta Direct Connect Consumers Association (ADC) and the Industrial Power Consumers Association of Alberta (IPCAA) formed a coalition named the Ratepayer Group (RPG). In the CCA s costs application, the CCA explained that the RPG was created to avoid duplication of work by participants and their counsel, experts and consultants. The CCA maintained that the Ratepayer Group operated under a division of labour 18 Decision D : General Tariff Application Advance Funding Request from the Consumers Coalition of Alberta, Advance Funding Award, Proceeding 20573, dated September 21, Decision D (January 30, 2017) 15

19 model between the Ratepayer Group and the UCA [Office of the Utilities Consumer Advocate] with each entity substantially focusing on different issues or aspects of issues ATCO Electric submitted that although the RPG includes both interveners that are eligible (CCA) and ineligible (ADC and IPCAA) to recover costs under Rule 022, the RPG relied entirely on the CCA s consultants to advance its collective positions in the original proceeding without any apparent allocation of costs among the three members of the RPG. ATCO Electric referred to time entries in the invoices filed in the CCA s costs claim which indicate that the CCA s consultants worked directly with ADC and IPCAA representatives and assisted them to develop, support and advance the position of these interveners as members of the RPG. ATCO Electric provided examples of these time entries, including the following: Time and charges of Dan Levson, Bema Enterprises Ltd. December 2, [ ] review J. Pous evidence (regarding M. Keen comments). Time and charges of Dan Levson, Bema Enterprises Ltd. January 9, [ ] draft Evidence to ADC, IPCAA & CCA for review... phone call C. Chekerda, phone call V. Bellissimo. Time and charges of Dan Levson, Bema Enterprises Ltd. January 19, [ ] circulate drafts to ADC, IPCAA, CCA & legal counsel. Time and charges of Dan Levson, Bema Enterprises Ltd. January 20, Mr. Keen regarding Evidence, prepare draft Evidence,, reply to s from R. Penn, circulate new draft to ADC, IPCAA, CCA & legal counsel Times and tasks for Jan Thygesen, April 10, Review correspondence from IPCAA and UCA. 53. ATCO Electric also noted that the timesheets of Mr. Levson, a consultant for Bema Enterprises Ltd. retained by the CCA, refer to the preparation of the RPG s evidence and developing the RPG s argument and reply argument. Similarly, Mr. Madsen, who was also retained by the CCA, assisted in the development of the RPG s argument and reply argument. 54. ATCO Electric submitted that neither IPCAA nor ADC had separate consultants represent their respective interests in the original proceeding and, therefore, it is clear both from the invoices submitted by the CCA s consultants and the evidence on the record that these consultants were undertaking work for the benefit of and under the direction of IPCAA and the ADC. 20 In ATCO Electric s view, the CCA s costs claim is an attempt to secure indirectly that which IPCAA and ADC would be ineligible to claim directly under Rule 022, and the Commission should disallow or reduce the costs claimed accordingly. If the Commission is inclined to award costs, ATCO Electric recommended awarding the CCA only 33 per cent of the costs claimed by these consultants, as it would be reasonable to split the costs incurred by the RPG equally between the CCA, IPCAA and ADC. 55. In its reply comments, the CCA submitted that all amounts being claimed for recovery in its costs claim application are directly related to the advancement of the interests of its Exhibit X0002, paragraph 26. Exhibit X0014, paragraph Decision D (January 30, 2017)

20 constituent stakeholders. 21 The CCA further clarified that its consultants did not provide services to either ADC or to IPCAA, stating as follows: No CCA consultant claiming costs within this application was retained by or provided consulting services on any issue for the ADC or IPCAA as it pertained to proceeding ID Instead, and as outlined in the CCA s costs claim, in order to coordinate resources on matters common to all parties involved in the Ratepayer Group, and thus avoid duplication of resources and evidence, the CCA s consultants prepared the evidence and submissions necessary in this proceeding The CCA further maintained that the RPG provided a unified position in relation to all matters pertaining to the original proceeding, avoiding coordination of separate responses for the three otherwise distinct parties to every procedural submission. Notwithstanding this coordinated response, the CCA claimed that all issues addressed by the CCA s consultants in the original proceeding were directly related to the advancement of the interests of the CCA. The CCA stated: To be absolutely clear, no position would have been advanced by the CCA s consultants who performed work on behalf on the Ratepayer Group, if that position did not directly relate to the advancement of the interests of the CCA The CCA submitted that both IPCAA and ADC incurred separate staff and legal costs to advance their interests in this proceeding. The CCA noted that IPCAA funded legal resources to address various issues, particularly depreciation. The CCA claimed that while the RPG s representation required coordination of efforts with IPCAA and ADC by the CCA s consultants, this coordination reduced duplication of evidence, argument, reply argument, the number of motions and cross examination time. The CCA provided the number of hours charged by the CCA s consultants to coordinate work with IPCAA and ADC, as follows: Mr. Levson Sub-total Mr. Madsen Sub-total Total 4.86 hours - with IPCCA and ADC 5.18 hours - with Mr. Keen 3.72 hours - with the UCA 0.10 hours - with the City of Calgary hours 1.25 hours - with IPCCA and ADC 3.45 hours - with Mr. Keen 3.72 hours - with the UCA 0.10 hours - with the City of Calgary 8.52 hours hours Exhibit X0015, paragraph 29. Exhibit X0015, paragraph 30. Exhibit X0015, paragraph 31. Decision D (January 30, 2017) 17