AltaLink Management Ltd General Tariff Application

Transcription

1 Decision D General Tariff Application July 7, 2016

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3 Alberta Utilities Commission Decision D General Tariff Application Proceeding July 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 findings Consumers Coalition of Alberta Order ii Decision D (July 7, 2016)

5 Alberta Utilities Commission Calgary, Alberta General Tariff Application Decision D Proceeding Introduction 1. In this decision, the Alberta Utilities Commission considers applications by AltaLink Management Ltd. (AML) and the Consumers Coalition of Alberta (CCA) for approval and payment of their costs of participation in Proceeding 3524 (the original proceeding). The costs claimed and costs awarded are provided in the following table: Claimant Total Fees Claimed Total Disbursements Claimed Total GST Claimed Total Amount Claimed Total Fees Awarded Total Disbursement s Awarded Total GST Awarded Total Amount Awarded AltaLink Borden Ladner Gervais LLP $471, $7, $0.00 $478, $400, $7, $0.00 $408, Gannett Fleming Canada ULC $344, $ $0.00 $344, $230, $ $0.00 $230, Mercer (Canada) Limited $61, $0.00 $0.00 $61, $61, $0.00 $0.00 $61, PowerAdvocate Inc. $206, $3, $0.00 $209, $181, $3, $0.00 $185, PriceWaterhouse Cooper $133, $0.00 $0.00 $133, $133, $0.00 $0.00 $133, AltaLink Management Ltd. $0.00 $9, $0.00 $9, $0.00 $9, $0.00 $9, Total $1,216, $20, $0.00 $1,237, $1,121, $20, $0.00 $1,141, CCA Wachowich & Company $129, $9, $6, $146, $129, $9, $6, $146, Regulatory Services Inc. $75, $ $3, $79, $75, $ $3, $79, McLennan Ross LLP $18, $ $ $19, $18, $ $ $19, Bema Enterprises Ltd. $243,210.7 $0.00 $12, $255, $241, $0.00 $12, $253, FTI Consulting $362, $10, $0.00 $372, $206, $3, $0.00 $210, Grid Power Development and Design $103, $ $5, $109, $103, $ $5, $109, David Butler & Associates $4, $0.00 $ $4, $4,200 $0.00 $ $4, RM Regulatory Consulting $30, $ $1, $32, $30, $ $1, $32, Diversified Utility Consultants $12, $54.70 $0.00 $12, $12, $54.70 $0.00 $12, Total $980, $21, $30, $1,032, $823, $14, $30, $867, The Commission has awarded reduced costs to AltaLink and to the CCA for the reasons set out below. Decision D (July 7, 2016) 1

6 3. Proceeding 3524 was convened by the Commission to consider AML s general tariff application. The original proceeding included information requests (IRs) and responses, written and oral evidence, cross-examination, argument and reply argument. The close of record for the original proceeding was February 9, 2016 and the Commission issued Decision 3524-D on May 9, AltaLink submitted its costs claim application on March 8, within the 30 day timeline permitted by the Commission s rules. The Commission assigned Proceeding (the costs claim application) and Application A001 to the costs claim application. 5. The CCA submitted its costs claim application on March 10, 2016, within the 30 day timeline permitted by the Commission s rules. Within Proceeding 21413, the CCA s costs claim application was assigned Application A No comments were filed with respect to the costs application. The Commission s review of the supporting documentation for AltaLink s costs claim application revealed that a supporting invoice was missing. The Commission requested AltaLink provide this material. AltaLink provided the invoice on April 8, The Commission considers the close of record for this proceeding to be April 8, 2016, the date at which the record supporting the costs claimed arising from participation in the original proceeding was completed. 2 Commission findings 7. 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 AUC Rule 022. Appendix A of AUC Rule 022 prescribes a Scale of Costs applicable to all costs claimed. 8. In ATCO Gas and Pipelines Ltd. v. Alberta (Utilities Commission) 2, Mr. Justice Cote, in his concurring reasons for judgment, stated at paragraph 139: [138] Even if one does not adopt the model of costs advocated by the Commission in appeal #0069, there is no reason to think that the respondent Commission is obliged to let anyone recover any unreasonable amount or degree of expenses incurred. No counsel before us suggested that the Commission should do that. It is doubtful that any such suggestion could be made, as the Commission s R 022, s 11 expressly adopts a test of reasonableness. So does case law and Commission practice: see Phillips, Regulation of Public Utilities 245 ff (2d ed 1988); Troxel, Economics of Public Utilities 237 ff (1947). [139] In my view, that test of reasonableness includes whether the work was done at all; the work done was excessive; the people chosen to do the work were too expensive (e.g. too senior); 1 2 Decision 3524-D : General Tariff Application, Proceeding 3524, Application, May 9, ATCO Gas and Pipelines Ltd. v Alberta (Utilities Commission) 2014 ABCA Decision D (July 7, 2016)

7 too many people were put to work; or the charges of those working (e.g. hourly rates) were too high. That is implied in the nature of rate regulation, and the legislation on regulating costs makes it explicit. 9. The Commission has considered these factors in its assessment of the reasonableness of the costs claimed for recovery The following table summarizes AltaLink s costs claim: Claimant Hours Preparation Attendance Argument Fees Disbursements GST Total AltaLink Borden Ladner Gervais LLP 1, $471, $7, $0.00 $478, Gannett Fleming Canada ULC 1, $344, $ $0.00 $344, Mercer (Canada) Limited $61, $0.00 $0.00 $61, PowerAdvocate Inc. 1, $206, $3, $0.00 $209, PriceWaterhouse Cooper $133, $0.00 $0.00 $133, AltaLink Management Ltd $0.00 $9, $0.00 $9, Total 4, $1,216, $20, $0.00 $1,237, The Commission finds that AltaLink acted responsibly in the original proceeding and contributed to the Commission s understanding of the relevant issues. However, the Commission is unable to approve the full amount of the costs claimed in respect of the services performed by Borden Ladner Gervais, Gannett Fleming Canada ULC. and PowerAdvocate Inc. for the reasons set out below. Borden Ladner Gervais LLP 12. AltaLink was represented by Borden Ladner Gervais LLP (BLG) in the original proceeding. The fees claimed by AltaLink for the legal services provided by Ms. Karen Salmon, Mr. Michael Massicotte, Mr. Daniel Johnson, Mr. Randall Block, Mr. Scott Wilson, Ms. Leanna Desbarats and Ms. Sandi Shannon relate to: reviewing the draft application, reviewing IRs from interveners and draft IR responses, corresponding with consultants, reviewing intervener evidence, reviewing draft rebuttal evidence, preparing expert witnesses, drafting crossexamination, preparing for and attending the oral hearing, drafting argument and reply argument, and reviewing intervener argument and reply argument. As well, 1.50 of the hours claimed relate to administrative tasks performed by three administrative assistants. 13. While the Commission finds that the services performed by Ms. Salmon, Mr. Massicotte, Mr. Johnson, Mr. Block, Mr. Wilson, Ms. Desbarats and Ms. Shannon were directly and necessarily related to AltaLink s participation in the original proceeding, it is of the view that the Decision D (July 7, 2016) 3

8 number of hours claimed for legal services is excessive for the following reasons. Seven counsel were used for the proceeding, four of whom billed at senior counsel rates, the highest rate permitted by the Scale of Costs. Given the nature of the application, which was AltaLink s seventh GTA proceeding and did not include a capital deferral account reconciliation, the need for the legal services of four senior counsel and numerous intermediate and junior counsel is not evident and has not been sufficiently justified in the costs claim application. 14. Further, on review, the Commission notes with regard to invoice , 3 that some of the time spent relates to drafting a forward-looking advisory that was provided in the beginning of the application. The Commission does not consider this work to be necessary for the purposes of its testing of the tariff application nor does it consider that this forward looking advisory of costs has contributed to a better understanding of the issues before the Commission, as set out in section 11.1 of Rule The use of the legal services of intermediate and junior counsel does not appear to have resulted in costs savings, given the hours claimed and the tasks performed by senior legal counsel. For example, in AltaLink s invoice for December 31, 2015, Mr. Johnson, with 2 years experience, billed hours for hearing preparation work related to preparing draft cross examination questions. Mr. Block and Ms. Salmon, both senior counsel who were actively participating in the hearing, also incurred hours and hours, respectively, to review and prepare this cross examination. Likewise, Mr. Johnson and Mr. Block each billed over 100 hours for work on argument and reply argument, while Ms. Salmon also billed 71 hours. 16. Further, AltaLink indicated in its cost application that it relied on in-house counsel to assure costs were reasonable; however, the cost savings resulting from this reliance is not evident from the costs claim application. 17. The Commission has considered that one of the more significant issues in the original proceeding was the request to provide some rate relief through the refund of the construction work in progress (CWIP) balance, while also maintaining credit metric support. As such, the Commission recognizes that Mr. Wilson, who has not generally provided legal assistance on AltaLink GTA s, was retained to provide legal advice regarding elements of AltaLink s proposal, including the debt financing portion of the application. Given his limited involvement early in the proceeding, the Commission finds his costs to be reasonably incurred. 18. For the above reasons, the Commission finds a 15 per cent reduction of the fees claimed by BLG to be warranted, resulting in approved legal fees in the amount of $400, The Commission has reviewed the fees and disbursements claimed for BLG and notes that they were claimed in accordance with the Scale of Costs for such services. The Commission finds these to be reasonably incurred and approves AltaLink s claim for disbursements of $7, Accordingly, the total approved BLG costs and disbursements are $408, Gannett Fleming Canada ULC 20. Gannett Fleming Canada ULC was retained by AltaLink to perform consulting services in the original proceeding. The fees claimed by AltaLink for the consulting services provided by Ms. Amanda Nori, Ms. Cheryl Rutter, Mr. Garry Mah, Mr. Gerald Janow, Ms. Hilary Carlucci, 3 Exhibit X0001 page 57 4 Decision D (July 7, 2016)

9 Mr. John Spanos, Ms. Krista McCormick and Mr. Larry Kennedy relate to reviewing the application, preparing a depreciation study, reviewing IRs and drafting IR responses, reviewing intervener evidence, preparing rebuttal evidence, preparing cross-examination, preparing for and attending the oral hearing as an expert witness, and drafting argument and reply argument. Review of the invoices supplied shows that the majority of the hours claimed were spent on the preparation of the depreciation study. 21. The Commission notes that Mr. Kennedy s time, 590 hours of the 1526 hours in total, represented more than half of the total costs claimed. Given the substantial work performed by Mr. Kennedy, the need for the services of five additional senior consultants and two intermediate consultants is not evident and has not been sufficiently justified in the costs claim application. 22. The Commission accepts that it was reasonable to employ the services of additional analysts to analyse the data and conduct the modeling to prepare the depreciation study. However, the use of these analysts in the development of information requests, preparation of evidence and argument and reply tasks does not appear to have resulted in costs savings given the hours claimed and the tasks performed by Mr. Kennedy. For example, in Gannett Fleming s December 21, 2015 invoice, time related to performing tasks with respect to witness preparation and preparation of rebuttal evidence are claimed by both Mr. Kennedy, who was the only Gannett Fleming witness to appear in the oral proceeding, and by at least two other analysts in supporting roles. The submitted invoices do not offer any detailed explanation for this apparent duplication of tasks. 23. The Commission notes that in past AltaLink general tariff applications that also employed the services of Gannet Fleming to prepare a depreciation study, the costs claimed for this work were in the range of $150, The costs claimed in this application are approximately twice this amount. In the original proceeding, Mr. Kennedy advised that following the release of the Utility Asset Disposition (UAD) Decision , an increased emphasis of depreciation parameters to fully reflect the future expectations of average service life and net salvage expectations and the ability to incorporate long periods of gradualism and moderate change to depreciation rates is no longer possible. 5 Consequently, Gannet Fleming completed a new depreciation study through to December 2016 and, as a consequence of that new study, proposed service life and/or survivor curve adjustments for nine of its 15 depreciation study accounts and proposed salvage rate adjustments for nine of its 15 depreciation study accounts. Additionally, Mr. Kennedy proposed using judgment and management perspective as the main determining factors for net salvage recommendations, rather than the traditional best fit practices advocated by Mr. Gorman and Mr. Pous, who had filed evidence opposing Gannet Fleming s proposals. All of these activities contributed to the additional work performed by Gannet Fleming as compared to work performed in the past. 24. The Commission notes that the 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 had been prepared for AltaLink. Accordingly, the Commission does not consider that the issues raised and the work performed 4 5 See Decision : General Tariff Application Costs Claim, Proceeding 1445, Application , November 23, 2011 and Decision : AltaLink Management Ltd., General Tariff Application, Proceeding 2829, Applications and , February 28, Decision 3524-D at paragraph 237. Decision D (July 7, 2016) 5

10 would reasonably result in a doubling of these costs. Additionally, as noted above, there appears to be unsupported duplication of time spent on similar tasks by the various analysts. For all of these reasons, the Commission finds a 33 per cent reduction of the fees claimed by Gannett Fleming to be warranted, resulting in approved consulting fees in the amount of $230, and disbursements for parking, photocopying and postage in the amount of $ for a total of $230, Mercer (Canada) Limited 25. Mercer (Canada) Limited was retained by AltaLink to perform consulting services in the original proceeding. The fees claimed by AltaLink for the consulting services provided by eighteen individuals relate to: data collection and analysis, preparing a compensation review of non-unionized employees, completing a forecast on the salary escalation for the application period, reviewing health and dental benefit cost trends, summarizing AltaLink s Defined Benefit pension plan wind up, preparing a study on the value of AltaLink s benefits, drafting IR responses, reviewing intervener evidence and intervener IR responses, preparing rebuttal evidence, and attendance at the oral hearing hours were claimed for administrative tasks. 26. Compensation was a significant issue in the original proceeding due to the decline in the Alberta economy. Many of the assumptions behind AltaLink s compensation forecast in its application were challenged by intervener evidence, necessitating the filing of evidence and rebuttal evidence by Mercer and the appearance of the Mercer witness during part of the oral hearing. 27. The Commission notes that the costs claimed and awarded to Mercer for its participation in AltaLink s last GTA were $21, The costs claimed in this proceeding are three times this amount. The difference can be attributed to the additional costs required to prepare rebuttal evidence and hearing attendance, neither of which was required during the last AltaLink GTA proceeding. Additionally, AltaLink did not have to address compensation in the context of a declining Alberta economy. 28. For all of the above reasons, the Commission has reviewed the invoices and finds the overall bill to be reasonable. Most of the preliminary and hearing preparation work was done by junior analysts, and hearing attendance was minimized. The Commission finds that the services performed by Mercer were directly and necessarily related to AltaLink s participation in the original proceeding, and that the fees and disbursements, which were claimed in accordance with the Scale of Costs for those services, are reasonable. Accordingly, the Commission approves AltaLink s claim for consulting fees for Mercer in the total amount of $61, PowerAdvocate Inc. 29. PowerAdvocate Inc. was retained by AltaLink to prepare a report on the direct assign capital escalation utilized in AltaLink s GTA. AltaLink engaged PowerAdvocate to evaluate the escalation rates for the period. PowerAdvocate developed customized cost models to reflect AltaLink s capital project portfolio in order to deliver a dynamic and accurate escalation forecast Decision at paragraph 20. Exhibit X0001, AltaLink cost claim, pdf page 4. 6 Decision D (July 7, 2016)

11 30. The fees claimed by AltaLink for the consulting services provided by Mr. Andrew Jean- Louis, Ms. Bailey James, Mr. Charles Korn, Ms. Christine Oumansour, Ms. Emily Chang, Ms. Kathryn Biegel, Mr. Maciek Wojdakowski and Mr. Reese Rogers relate to reviewing the application, preparing a report on the direct assign capital escalation, drafting IR responses, attending the oral hearing, and drafting argument and reply argument. 31. AltaLink s labour escalation rate components within its capital escalation rates were challenged by interveners and examined by interveners and the Commission during the original proceeding. Interveners filed evidence that necessitated the filing of rebuttal evidence by PowerAdvocate and the appearance of the PowerAdvocate witness during part of the oral hearing. 32. When exercising its discretion to award costs, the Commission will, in accordance with Section 11 of AUC Rule 022, consider if the eligible participant acted responsibly in the proceeding and contributed to a better understanding of the issues before the Commission. 33. In Decision 3524-D , the Commission found that it was not possible: 64 for interested parties to determine exactly how the value of this capital escalator is determined in any historical or forecast year. As previously noted, in defending its methodology against alternatives suggested by interveners, AltaLink emphasized that its methodology can be substantiated through publically-available indices. While they may be publically available, the indexes that are used in forming the capital escalator, and the sources from which they are drawn, are not specified. Consequently, neither the exact definitions of the indexes that are used, nor the historical values of these indexes, can be ascertained, thereby diminishing their usefulness in this context. Although PowerAdvocate provided considerable detail about the way in which some of the component indexes, such as labour, are obtained, and indicated the weighting scheme, showing how indexes for various aggregate components (labour, materials, etc., as in Table 3) are further aggregated into the overall index for each year, and provided all the components needed to reproduce the CAGR values from these overall index values for each year, it did not list the individual indexes that are combined to make up these aggregate component indexes, or the source for each, or the weight for each individual index that was used when they were combined. 65. In addition to not providing detail about how historical values of various indexes or other data series were combined to form the series from which the escalator is obtained, PowerAdvocate provided no information about how forecasts were obtained. 34. In view of these limitations, the Commission considers that a reduction in costs for the evidence provided by PowerAdvocate is warranted. 35. Additionally, with regard to the numerous individuals who performed work for PowerAdvocate, the Commission also finds that the need for the services of all of these consultants has not been sufficiently justified in the costs claim application. For example, in PowerAdvocate s November 30, 2105 invoice, time is charged for the task of reviewing submittal data, drafting responses to intervenor questions by Mr. Charles Korn, Ms. Christine Oumansour, and Ms. Emily Chang. While the bulk of the work was done by Ms. Oumansour, who was the managing director with years experience, Mr. Korn, another managing director with 30 years experience and Ms.Chang, a director with 10 years experience all claimed for time spent doing these tasks. Additional invoices reviewed have similar duplicate Decision D (July 7, 2016) 7

12 task entries performed by various directors, managing directors, and managers. The submitted invoices do not offer any detailed explanation that would allow the Commission to particularize and adjudicate this apparent duplication of tasks. 36. For all of these reasons, the Commission finds that a reduction of 12 per cent of the fees claimed by PowerAdvocate is warranted. 37. The Commission has reviewed the disbursements claimed for PowerAdvocate for airfare, accommodation, meals, taxi and transportation in the amount of $3, The Commission finds that the disbursements claimed are reasonable and in accordance with the Scale of Costs and, therefore, are approved. 37. Accordingly, the Commission approves AltaLink s claim for consulting fees for PowerAdvocate in the amount of $181, and disbursements of $3, for a total of $185, PriceWaterhouse Cooper 38. PriceWaterhouse Cooper (PwC) was retained by AltaLink to prepare a report on the Direct Assign Capital Forecast Probabilistic Modeling approach utilized in AltaLink s GTA. The fees claimed by AltaLink for the consulting services provided by Mr. Paul Sharp, Mr. Christopher Dalton and Mr. Manuel Werner relate to reviewing IRs, drafting IR responses, preparing a report on the Direct Assign Capital Forecast Probabilistic Modeling approach utilized in the GTA, reviewing intervener evidence and drafting rebuttal evidence. 39. In Decision , AltaLink s GTA, the Commission approved AltaLink s use of a probabilistic model to forecast its direct assigned capital projects. AltaLink retained PwC to prepare the model. As it was new, it was subject to considerable scrutiny. Consequently, the Commission awarded proceeding costs for PwC s participation in the amount of $254, Although the Commission approved the use of the probabilistic model, AltaLink explained in its GTA application that it retained PwC to provide improvements to the previous model. In particular, AltaLink stated that PwC had removed the bias inherent in the aggregation of the individual project assessments and has replaced it with a pragmatic statistical portfolio scenario based approach. 9 The use of the model was challenged by interveners in the original proceeding. As a result, PwC filed rebuttal evidence and appeared as a witness during the oral hearing. 41. Having considered the additional improvements implemented by PwC to its existing model and the resultant requirement to respond to intervener challenges to the model changes in the original proceeding, the Commission finds that the services performed by Mr. Sharp, Mr. Dalton, and Mr. Werner were directly and necessarily related to AltaLink s participation in the original proceeding, and that the fees, which were claimed in accordance with the Scale of Costs for those services, are reasonable. Accordingly, the Commission approves AltaLink s claim for consulting fees for PwC in the total amount of $133, Decision paragraph 21. Exhibit AML-3524 at paragraph Decision D (July 7, 2016)

13 42. AltaLink also requested recovery of disbursements for transcript costs, courier fees, and meals. The Commission finds that the disbursements claimed are reasonable because they are directly and necessarily related to the proceeding and AltaLink s staff attendance at the oral hearing. The disbursements claimed are in accordance with the Scale of Costs. Accordingly, the Commission approves AltaLink s claim for disbursements in the amount of $9, Consumers Coalition of Alberta 43. The following table summarizes the CCA s costs claim: Claimant CCA Hours Preparation Attendance Argument Fees Disbursements GST Total Wachowich & Company $129, $9, $6, $146, Regulatory Services Inc $75, $ $3, $79, McLennan Ross LLP $18, $ $ $19, Bema Enterprises Ltd. 1, $243,210.7 $0.00 $12, $255, FTI Consulting Inc $362, $10, $0.00 $372, Grid Power Development and Design $103, $ $5, $109, David Butler & Associates $4, $0.00 $ $4, RM Regulatory Consulting $30, $ $1, $32, Diversified Utility Consultants $12, $54.70 $0.00 $12, Total 3, $980, $21, $30, $1,032, The Commission finds that the CCA acted responsibly in the original proceeding and contributed to the Commission s understanding of the relevant issues. However, the Commission is unable to approve the full amount of the costs claimed in respect of the services performed by Wachowich & Company, BEMA Enterprises Ltd., and FTI Consulting Inc. for the reasons set out below. Wachowich & Company 45. The CCA was represented by Wachowich & Company in the original proceeding. The fees claimed by the CCA for the legal services provided by Mr. James Wachowich relate to reviewing the application, corresponding with consultants, reviewing draft IRs and IR responses, reviewing evidence, preparing for and attending the oral hearing, and reviewing argument and reply argument. 46. The Commission finds that the services performed by Mr. Wachowich were directly and necessarily related to the CCA s participation in the original proceeding, and that the fees claimed in accordance with the Scale of Costs for those services are reasonable. 10 The Commission has noted that these hours should all be allocated to Argument time. Decision D (July 7, 2016) 9

14 47. The Commission has reviewed the disbursements claimed for Wachowich & Company and not all the amounts claimed for disbursements are in accordance with the Scale of Costs. The claims made for accommodation by Mr. Wachowich are not in accordance with the rates permitted by the Scale of Costs. The Commission has, therefore, determined that a reduction in the daily rate for accommodation from the claimed rate of $ to $ for eleven days is warranted. 48. The Commission approves the remaining claims for disbursements for mileage, parking and transcript costs in the amount of $7, Consequently, the Commission approves total disbursements for Wachowich & Company in the amount of $9,323.87, inclusive of the accommodation costs approved. 49. Accordingly, the Commission approves the CCA s claim for legal fees for Wachowich & Company in the amount of $129,850.00, disbursements of $9, and GST of $6, for a total of $146, McLennan Ross LLP 50. McLennan Ross LLP was retained by the CCA to perform consulting services in the original proceeding. The fees claimed by the CCA for the services provided by Mr. Gavin Fitch relate to reviewing the application and evidence in order to prepare the CCA s written argument, drafting the written argument, reviewing AltaLink s argument, and drafting the CCA s reply argument. 51. The Commission notes that Mr. Fitch was retained by Mr. Wachowich during the argument and reply stage of this proceeding in order to provide relief to Mr. Wachowich given the overlapping timing of this proceeding and AltaLink s DACDA proceeding along with other regulatory proceedings before the AUC. The Commission further observes that Mr. Wachowich s time for argument and reply argument was minimal. Consequently, the Commission finds the retention of experienced counsel such as Mr. Fitch to be a reasonable course of action taken by the CCA. 52. The Commission finds that the services performed by Mr. Fitch were directly and necessarily related to the CCA s participation in the original proceeding, and that the fees and disbursements, which were claimed in accordance with the Scale of Costs for those services, are reasonable. Accordingly, the Commission approves the CCA s claim for consulting fees for McLennan Ross in the amount of $18,130.00, disbursements of $ and GST of $ for a total of $19, Regulatory Services Inc. 53. Regulatory Services Inc. was retained by the CCA to provide analysis in the areas of project risk management, O&M metrics, the refund of the cash return on CWIP and the discontinuance of the future income tax (FIT) method. The fees claimed by the CCA for the consulting services provided by Mr. Raj Retnanandan relate to reviewing the application, drafting IRs and IR responses, reviewing IR responses, preparing evidence, reviewing rebuttal evidence, drafting cross-examination, preparing for and attending the oral hearing as a witness, and drafting argument and reply argument. 54. The Commission finds that the services performed by Mr. Retnanandan were directly and necessarily related to the CCA s participation in the original proceeding, assisted the 10 Decision D (July 7, 2016)

15 Commission s understanding of the issues addressed by him, and that the fees and disbursements, which were claimed in accordance with the Scale of Costs for those services, are reasonable. Accordingly, the Commission approves the CCA s claim for consulting fees for Regulatory Services in the amount of $75,937.50, disbursements of $136.57, and GST of $3, for a total of $79, Bema Enterprises Ltd. 55. Bema Enterprises Ltd. was retained by the CCA to perform consulting services in the original proceeding. The fees claimed by the CCA for the consulting services provided by Bema reflect services provided by Mr. Dan Levson, Ms. Sally Langston, Mr. Kris de Palezieux, Ms. Nancy Thomas and Ms. Katelyn Smith. As set out in the CCA cost application, Mr. Levson served in a leadership role to assist Mr. Wachowich in the coordination of the Ratepayer Group s intervention. 11 In this role, the Commission notes from its review of Mr. Levson s invoices that a portion of the total hours claimed was spent discussing strategy and interacting with IPCAA and the ADC, parties who are not eligible for costs. The CCA has argued in its cost application that the Ratepayer Group coalition substantially reduces duplication and repetition of evidence, and leverages the insight and coverage which the resulting coalition witness panel can give to any issue before the Commission The Commission notes that witnesses for the ADC and IPCAA testified during the oral hearing for the original proceeding and, therefore, it was necessary to coordinate participation to avoid duplication of effort and evidence. It then follows that the costs of the coordination with IPCAA and the ADC are necessary. Similar coordination work was conducted regarding the participation of the UCA, who also does not claim intervener costs. 57. In general, the services performed by Bema relate to reviewing the application, drafting IRs, reviewing IR responses, developing evidence, preparing for and attending the oral hearing, and drafting argument and reply argument. 58. Bema took a similar role in AltaLink s last GTA. The Commission notes that the costs claimed by Bema for its participation in that proceeding, Proceeding 2044, were $298, The costs claimed in this instance are in a similar range, notwithstanding that the original proceeding included two major AltaLink application updates, four rounds of IRs and numerous motions. With the exception of the services performed by Mr. de Palezieux, the Commission finds that the services provided by Mr. Levson, Ms. Langston, Ms. Thomas and Ms. Smith were directly and necessarily related to the CCA s participation in the original proceeding, and that the fees, which were claimed in accordance with the Scale of Costs for those services, are reasonable. 59. With regard to the services provided by Mr. de Palezieux, the Commission notes that of the claimed costs associated with hours spent on the application overall, he has claimed hours 14 related to his appearance as a witness, including hours attending the hearing The CCA cooperated with IPCAA and ADC as members of the load coalition known as the Ratepayer Group. Neither IPCAA nor ADC are eligible to claim intervener costs. Exhibit X0005 at paragraph 35. Decision at paragraphs 25 and 26. The Commission reduced Bema s cost by one-third to account for non-eligible costs and immoderate hours spent in preparation. Awarded costs were $197, Exhibit X0010 starting at pdf 61. Decision D (July 7, 2016) 11

16 as a witness. As stated in paragraph 32 above, the Commission, when exercising its discretion to award costs, considers whether the participant contributed to a better understanding of the issues before the Commission. The Commission finds that Mr. de Palezieux did not yet have the background, qualifications and experience to appear as an expert witness on the subject matter for which he was presenting evidence. He was at times unprepared and unable to answer questions put to him by Commission counsel. For these reasons, the Commission finds a 30 per cent reduction to the fees associated with Mr. de Palezieux s hearing attendance is warranted. The adjustment reduces the original amount claimed by $1, and results in a total of $24, in fees for the services provided by Mr. de Palezieux. 60. Accordingly, the Commission approves the CCA s claim for consulting fees for Bema in the amount of $241, and GST of $12, for a total of $253, FTI Consulting Inc. 61. FTI Consulting Inc. (FTI) was retained by the CCA to perform consulting services in the original proceeding. In the CCA s cost application, the CCA explained that FTI, principally through the work of Mr. Tusa, provided evidence to assist the Commission in its understanding of AML s uncertainty adjusted forecast of capital expenditures and capital additions, the forecast reduction to direct assign capital for the EPCm rate differential and excess project management/project control costs, and the Application and reasonableness of a 2.0 labour multiplier The fees claimed by the CCA for the consulting services provided by FTI include services provided by Mr. William Tusa, Mr. Todd Mohr, Ms. Gwen Elkins, Mr. Christopher Gray, Mr. Grant Hoey, and Mr. Brad Fossen and relate to reviewing the application, drafting IRs and IR responses, reviewing IR responses, developing evidence, reviewing rebuttal evidence, drafting cross-examination, preparing for and attending the oral hearing, and drafting argument and reply argument. 63. The following table summarizes the hourly fees claimed by FTI, which were not within the Scale of Costs, and the hourly fees allowed by the Scale of Costs: Individual Years of Experience Hourly Wage in USD Hourly wage converted to CDN Wage permitted by Scale of Costs Mr. William Tusa 24 $ $ $ Mr. Todd Mohr 28 $ $ $ Ms. Gwen Elkins 20 $ $ $ Mr. Christopher Gray 20 $ $ $ Mr. Grant Hoey 5.5 $ $ $ Mr. Brad Fossen 10 $ $ $ Mr. Tanner Weil 2 $ $ $ The Commission may award costs in excess of the Scale of Costs if the costs claimant can advance persuasive argument that the scale is inadequate given the complexity of the case. In this costs application, the request for costs in excess of the scale was made on the basis of the 15 Exhibit X0005 at paragraph Decision D (July 7, 2016)

17 expertise that FTI brought to this proceeding, the tools available through FTI to sift through massive amounts of data, the fact that hourly rates have not increased for six years, the fact that the AUC scale is 35-40% lower than FTI s standard rates, and the impact of the decline in the Canadian dollar as compared to the United States dollar. 16 While the volume of information in this application was substantial, the issues in the original proceeding that were pursued by FTI were not of such a complex nature that costs above the scale for these particular consultants is warranted. Rather, FTI has provided evidence on these issues before this Commission in a past proceeding and, as such, is familiar with the issues. 65. The amounts associated with FTI s fees have been adjusted to bring them into conformity with the Scale of Costs. This adjustment decreases the original amount claimed by $116, and results in a new total of $246, in fees for services provided overall. 66. In its review of the services performed by Mr. Tusa and Mr. Mohr, the Commission notes that the CCA has argued that Mr. Mohr s participation was necessary to ensure continuity among the original proceeding and past AltaLink GTA proceedings. However, the Commission notes that both Mr. Tusa and Mr. Mohr provided services on behalf of the CCA in AltaLink s last GTA proceeding, Proceeding The cost claim for FTI s participation in Proceeding 2044 reveals that Mr. Tusa and Mr. Mohr claimed costs reflecting and hours, respectively In the circumstances, the Commission has not been convinced of the need to have both Mr. Tusa and Mr. Mohr in attendance at the hearing on the basis of continuity. A review of the invoices reveals that Mr. Tusa participated in cross-examination, while Mr. Mohr assessed the CCA s cross-examination of AltaLink s witness panel and listened to the cross-examination of the Rate Payer Group. The Commission finds that Mr. Mohr did not need to be in attendance at the hearing to accomplish these tasks. The Commission disallows all disbursements claimed for Mr. Mohr s attendance at the hearing. 68. Additionally, with regard to the tasks performed by the various consultants from FTI, the Commission has reviewed both the invoices and the CCA s outline of the background qualifications of these individuals and the areas of work each performed. The Commission finds that the need for the services of all these consultants has not been sufficiently justified in the costs claim application. For example, Mr. Tusa, Mr. Mohr and Mr. Gray each spent upwards of 200 hours on preparation. Mr. Gray, located in Calgary, is a director with FTI s Forensic and Litigation Consulting practice with 20 years of experience. The time spent by Mr. Gray was to assist with the preparation of 1st and 2nd round information requests, reviewing and assessing AML s responses to information requests, identifying deficiencies or incomplete responses to information requests, providing assistance in the assessment and analysis of Alberta economic conditions and their impact on the EPC market, providing assistance in the assessment and analysis of EPC labour rates & multipliers, and assistance with preparation of cross examination for AML s witness panels. 18 Descriptions regarding the work performed by Mr. Mohr, an executive in the same practice group with 27 years experience, are similar. The submitted invoices do not offer any detailed explanation for this apparent duplication of tasks. Moreover, one of the justifications brought forward by the CCA in support of its request for costs above scale was the tools available through FTI to sift through massive amounts of data. However, Exhibit X0005 at paragraphs 90 and 91. Exhibit CCA-2829 at pdf 1. Exhibit X0005 at paragraph 56. Decision D (July 7, 2016) 13

18 there does not appear to be any evidence of any cost savings resulting from the use of these tools, or the use of multiple experts with like experience. 69. For all of these reasons, the Commission finds a reduction of Mr. Gray and Mr. Mohr s fees by 30 per cent is warranted in this instance. This results in a new total for Mr. Gray s fees of $40,105.80, and a new total for Mr. Mohr s fees of $51, FTI submitted its disbursements at a standardized conversion rate of $ CDN per $1.00 USD. Where applicable, the Commission has reviewed the claimed disbursements at the amount FTI was originally charged in Canadian dollars, not the converted rate claimed. If the disbursement was made in US dollars, the Commission has reviewed the amount claimed at the conversion rate supplied by FTI. 71. As stated above, the Commission has disallowed the claims for disbursements made by Mr. Mohr for attendance at the hearing. The amount, as claimed in the application, was $4, The Commission has reviewed the disbursements claimed for FTI and not all the amounts claimed for disbursements are in accordance with the Scale of Costs. The claims made for accommodation by Mr. Tusa are not in accordance with the rates permitted by the Scale of Costs. The Commission has, therefore, determined that a reduction in the daily rate for accommodation from the claimed rate to $ for seven days for Mr. Tusa, is warranted. 73. The claims made for meals are not in accordance with the rates permitted by the Scale of Costs. Appendix A allows for a claim of $40.00 per day for meals for the duration of an oral hearing. Accordingly, the Commission awards $400 for Mr. Tusa for meal disbursements. 74. Finally, the claim made by Mr. Tusa for dry cleaning in the amount of $48.35 has been disallowed as there is no provision for this disbursement in Appendix A of Rule Accordingly, the Commission approves the CCA s claim for consulting fees for FTI in the amount of $206, and disbursements of $3, for a total of $210, Grid Power Development & Design Inc. 76. Grid Power Development & Design Inc. was retained by the CCA to perform consulting services in the original proceeding. The fees claimed by the CCA for the consulting services provided by Mr. Trevor Cline relate to reviewing the application, drafting IRs, reviewing IR responses, preparing evidence, preparing for and attending the oral hearing as an expert witness, and drafting argument and reply argument of the hours claimed relate to administrative services performed by Mr. Liam Cline, EIT. 77. In its cost application, the CCA argued that it was necessary to review transmission line and tower design to ensure that ratepayer interests are taken into account and it referenced the Commission s findings from Decision in support of this assertion. 19 Decision addressed both AltaLink s GTA and its DACDA. 78. In the original proceeding, Mr. Cline testified that as part of the Rate Payer Group, he was responsible for preparing evidence on capital replacement and upgrades; operations and 19 Exhibit at pdf Decision D (July 7, 2016)

19 maintenance reductions; and depreciation towers and fixtures; and well as Appendix B, buyversus-build generation The issue of capital replacement expenditures and reliability trade-offs was extensively examined in the original proceeding. Activities included the filing of rebuttal evidence from AltaLink and the requirement for Mr. Cline to appear as a witness as part of the Rate Payer Group witness panel to speak to his evidence on these issues. 80. With regard to Mr. Cline s evidence regarding depreciation for towers and fixtures, his position was that with the application of ISO Rule 502.2, the steel tower account should be separated between those assets that were built before ISO Rule and those assets that later met those rule requirements. Mr. Cline acknowledged that he was not a depreciation expert and could not comment on what the service lives for those assets would be; however, he did consider that he had the necessary experience and background to understand that towers built under the new ISO Rule requirements would be more robust As with the issue of capital replacement expenditures, depreciation was a contested matter during the original proceeding, including the effect on service lives as a consequence of the new assets being constructed in accordance with ISO Rule Included in the costs claimed was 9.2 hours for the services of Liam Cline, EIT, to provide administrative assistance. The services performed were described as convert PDF to spreadsheets, tabulate business cases The Commission finds that the services performed by Grid Power were directly and necessarily related to the CCA s participation in the original proceeding, assisted the Commission s understanding of the issues addressed by Grid Power, and that the fees and disbursements, which were claimed in accordance with the Scale of Costs for those services, are reasonable. Accordingly, the Commission approves the CCA s claim for consulting fees for Grid Power in the amount of $103,805.66, disbursements of $303.03, and GST of $5, for a total of $109, David Butler & Associates 84. David Butler & Associates was retained by the CCA to perform consulting services in the original proceeding. The fees claimed by the CCA for the consulting services provided by Mr. David Butler relate to generation and transmission modelling and drafting IRs. This analysis was provided to support the CCA s evidence to provide some insight into these cost concerns which could become a serious threat to the long-term sustainability of Alberta s integrated electric system. The results of this analysis can also guide the approval of the level of charges related to more discretionary areas of AltaLink s revenue requirement such as O&M costs and capital maintenance The Commission finds that the services performed by Mr. Butler were directly and necessarily related to the CCA s participation in the original proceeding, and that the fees, which Proceeding 3524, Transcript Volume 8 pdf page 30. Proceeding 3524, Transcript Volume 8, pdf pages Exhibit X0013 at pdf 6. Exhibit X0005 at paragraph 48. Decision D (July 7, 2016) 15

20 were claimed in accordance with the Scale of Costs for those services, are reasonable. Accordingly, the Commission approves the CCA s claim for consulting fees for David Butler in the amount of $4, and GST of $ for a total of $4, RM Regulatory Consulting 86. RM Regulatory Consulting was retained by the CCA to examine financial issues in the application related to credit metrics and AltaLink s request for an increase in equity thickness to support AltaLink s requested FFO-to-debt ratio of 13%. The fees claimed by the CCA for the consulting services provided by Mr. Ron Mikkelsen relate to reviewing the application, drafting IRs, preparing evidence on debt/equity ratios and credit metric support, preparing and reviewing IR responses, reviewing rebuttal evidence, preparing cross-examination, preparing for and attending the oral hearing as an expert witness, and drafting argument and reply argument. 87. Credit metrics and considerations regarding the FFO-to-debt ratio necessary to support AltaLink s credit rating were significant issues in the original proceeding. The Commission finds that the services performed by Mr. Mikkelsen were directly and necessarily related to the CCA s participation in the original proceeding, and that the fees, which were claimed in accordance with the Scale of Costs for those services, are reasonable. 88. However, the Commission has reviewed the disbursements claimed by Mr. Mikkelsen and finds that not all of the disbursements are eligible for recovery under Rule 022. Mr. Mikkelsen included a disbursement for airfare from Calgary to Toronto. According to the billing invoices, Mr. Mikkelsen resides in Victoria. Accordingly, the Commission denies this disbursement of $ for airfare from Calgary to Toronto because its relationship to the proceeding is unexplained. The Commission will allow recovery of the cost of airfare back to Victoria from Calgary and has calculated this by doubling the disbursement charge shown in his attached invoice for airfare from Victoria to Calgary of $ for an approved total remaining disbursement for airfare in the amount of $ Accordingly, the Commission approves the CCA s claim for consulting fees for RM Regulatory in the amount of $30,437.50, disbursements of $ and GST of $1, for a total of $32, Diversified Utility Consultants Inc. 90. Diversified Utility Consultants Inc. was retained initially by the CCA to review the application-related depreciation issues and to prepare information requests. Following the completion of these activities, the UCA retained the services of Diversified Utility Consultants Inc. for the remainder of the original proceeding. The fees claimed by the CCA for the consulting services provided by Diversified Utility Consultants Inc. s included services provided by Mr. Jack Pous, Ms. Sara Coleman and Ms. Jessica Showalt. Mr. Pous s time comprised 42.5 hours of the 53 total hours of service provided. Ms. Coleman and Ms. Showalt, both analysts, provided assistance through the development of spreadsheets and analysis of observed life tables and average service lives. 91. The Commission finds that the services performed by Mr. Pous, Ms. Coleman and Ms. Showalt were directly and necessarily related to the CCA s participation in the original proceeding, and that the fees and disbursements, which were claimed in accordance with the Scale of Costs for those services, are reasonable. Accordingly, the Commission approves the 16 Decision D (July 7, 2016)