Decision D Alberta PowerLine L.P. Tariff Application. January 23, 2018

Transcription

1 Decision D Alberta PowerLine L.P. Tariff Application January 23, 2018

2 Alberta Utilities Commission Decision D Alberta PowerLine L.P. Tariff Application Proceeding January 23, 2018 Published by the: Alberta Utilities Commission Fifth Avenue Place, Fourth Floor, 425 First Street S.W. Calgary, Alberta T2P 3L8 Telephone: Fax: Website:

3 Alberta Utilities Commission Calgary, Alberta Alberta PowerLine L.P. Decision D Tariff Application Proceeding Introduction 1. On November 30, 2017, Alberta PowerLine L.P. (Alberta PowerLine) submitted a tariff application as owner of the Fort McMurray West 500-kilovolt (kv) Transmission (WFMAC) Project. 2. On December 1, 2017, the Alberta Utilities Commission issued a notice of application that required interested parties to submit a statement of intent to participate (SIP) by December 15, The Commission received SIPs from the Office of the Utilities Consumer Advocate (UCA), the Consumers Coalition of Alberta (CCA), and the Alberta Electric System Operator (AESO). The UCA reserved the right to actively participate should it be deemed necessary. The CCA intended to review the application to determine whether any further process was warranted and advised that it would actively participate if issues were raised that were of interest to the CCA. The AESO indicated that it generally supported the application and did not intend to actively participate unless an issue was identified that could impact its roles and responsibilities under the Electric Utilities Act. 4. Based on the comments provided by parties and a review of the application, the Commission determined 1 that the application was to be considered by way of a notice-only process as outlined in Commission Bulletin The Commission considers the close of record for this proceeding to be December 15, In reaching the determinations set out within this decision, the Commission has considered all relevant materials comprising the record of this proceeding. Accordingly, references in this decision to specific parts of the record are intended to assist the reader in understanding the Commission s reasoning related to a particular matter and should not be taken as an indication that the Commission did not consider all relevant portions of the record with respect to a particular matter. 1 Exhibit X0009, AUC process letter dated December 22, Bulletin , Performance standards for processing rate-related applications, March 26, Decision D (January 23, 2018) 1

4 2 Background 6. Alberta PowerLine submitted that the legislature of Alberta has designated the WFMAC Project as critical transmission infrastructure 3 (CTI) under Part 2.1 and Section 4 of the schedule of the Electric Utilities Act. 7. Under subsections 24.2(2) and 24.2(3) of the Transmission Regulation, the Independent System Operator (ISO) (which operates as the AESO) must develop and obtain Commission approval for a competitive process to determine who is eligible to apply to the Commission for the construction and operation of CTI. In Proceeding 1449, the Commission considered the AESO s application for approval of a competitive process. In Decision , 4 the Commission approved the AESO s competitive process with conditions. 8. In May 2013, the AESO initiated the Commission-approved competitive process and, in December 2014, Alberta PowerLine was selected as the successful bidder for the WFMAC Project In Proceeding 20130, Alberta PowerLine applied to construct and operate the WFMAC Project, with its general partner Alberta PowerLine General Partner Ltd. (as incorporated under the Business Corporations Act) holding the approval, if granted, in accordance with Section 23 of the Hydro and Electric Energy Act. 6 In Decision D , 7 the Commission, pursuant to sections 14, 15 and 19 of the Hydro and Electric Energy Act, approved the application for the WFMAC Project and granted Alberta PowerLine General Partner Ltd. permits and licences to construct the applied-for transmission facilities subject to a number of conditions. As set out in that decision, the Commission found the following facilities to be CTI as defined in the Electric Utilities Act and approved these facilities for the WFMAC Project: Alberta PowerLine s 500-kV transmission line 12L41, including the repeater sites, from AltaLink Management Ltd. s transmission line 1241L to Livock 939S Substation, following the west route option and Alberta PowerLine s west route amendments. Alberta PowerLine s 500-kV transmission line 12L44, from Livock 939S Substation to Thickwood Hills 951S Substation, following the common route and common route variation 1. Alberta PowerLine s 500-kV switchyard at Livock 939S Substation. Alberta PowerLine s Thickwood Hills 951S Substation. A connection order between Alberta PowerLine s 12L41 and AltaLink Management Ltd. s transmission line 1241L. 3 According to Section 1(1)(f.1) of the Electric Utilities Act, critical transmission infrastructure means a transmission facility designated under the Schedule as critical transmission infrastructure. 4 Decision : Alberta Electric System Operator, Competitive Process Pursuant to Section 24.2(2) of the Transmission Regulation Part B: Final Determination, February 14, Exhibit X0002, Attachment 01 - Application Text Final, paragraph 3. 6 Exhibit X0648, APL-AUC-2016FEB01-001, PDF page 2. 7 Decision D : Alberta PowerLine General Partner Ltd., Fort McMurray West 500-Kilovolt Transmission Project, February 10, Decision D (January 23, 2018)

5 A connection order between Alberta PowerLine s Thickwood Hills 951S Substation to ATCO Electric Ltd. s Thickwood Hills 951S Substation. 8 3 Application 10. Alberta PowerLine submitted that pursuant to Section 37 of the Electric Utilities Act, each owner of an electric transmission facility must submit to the Commission for approval a tariff setting out the rates to be paid by the AESO for the use of the owner s transmission facility. Alberta PowerLine requested approval of the terms and conditions and pricing of the arrangements resulting from the competitive process as set out in the project agreement, except for any payments that exceed the materiality thresholds in the project agreement and that require Commission approval, commencing on the energization date of the WFMAC Project and continuing until the expiry of the term of the project agreement. 11. Alberta PowerLine attached the project agreement as Appendix 1 of the application. The project agreement, dated September 28, 2017, is between the ISO, operating as the AESO, and Alberta PowerLine. The target energization date for the WFMAC Project is June 27, The expiry of the term of the project agreement is the earlier of the 35th anniversary of the target energization date and the 90th day following the 35th anniversary of the energization date. 12. Alberta PowerLine explained that the payments owing to Alberta PowerLine for designing, building, financing and maintaining the applicable transmission facilities are determined by the project agreement. The project agreement provides for monthly payments from the AESO to Alberta PowerLine over the operating period of the project agreement. The monthly payment schedule is set out in Appendix 1, Schedule 11, of the application. Alberta PowerLine advised that the monthly payments are equal to the sum of a capital, operations and maintenance (O&M), and insurance payment. Alberta PowerLine indicated that there are mechanisms that may result in adjustments to the monthly payments (price adjustment mechanisms), such as annual adjustments to monthly O&M payments for inflation. 13. In addition to the monthly payments and the price adjustment mechanisms described above, Alberta PowerLine explained that the project agreement sets out comprehensive mechanisms to address certain events that may arise over the operating term. Alberta PowerLine submitted that the project agreement provides that if circumstances give rise to a payment in excess of materiality thresholds in the project agreement, such payments will be subject to review and final approval by the Commission. 14. Alberta PowerLine advised that the Transmission Regulation sets out the scope of the Commission s review of this application. Alberta PowerLine submitted that once the Commission approves a competitive process pursuant to subsections 24.2(2) and (3) of the Transmission Regulation, the Commission must consider the resulting arrangements as prudent pursuant to subsection 24.2(4) of the Transmission Regulation. In this case, Alberta PowerLine advised that the resulting arrangement is the project agreement. In Alberta PowerLine s view, the Commission must consider the provisions of the project agreement, 8 Decision D , paragraph Exhibit X0001, Alberta PowerLine Tariff Application, Project Agreement, PDF page 43. Decision D (January 23, 2018) 3

6 include the payments, price adjustment mechanisms, and other provisions governing the terms and conditions of service, as prudent. 15. Alberta PowerLine also cited the Commission s findings in Decision as support for its submissions regarding the scope of the review: 51. Section 24.2(3) of the Transmission Regulation requires the AESO to obtain the approval of the Commission prior to the AESO implementing any competitive process that it develops. Further, Section 24.2(4) of the Transmission Regulation directs the Commission to consider any resulting arrangements as prudent. The Commission must therefore be satisfied that the form and content of the competitive process will yield a result determined by competitive market forces. It is the operation of competitive market forces that justifies the removal of a regulatory assessment of prudence. 52. Once a successful bidder is chosen, that bidder becomes a TFO [transmission facility owner] and the monopoly supplier of the transmission services for the new transmission facility during the life of the contract. The arrangements that were included in the bid and were the basis of the acceptance of that bid, would include a financial bid and would pass through the competitive bid prices to customers in the form of rates which the Commission would have to consider to be prudent In its SIP, the AESO submitted that the provisions of the project agreement between the AESO and Alberta PowerLine for the WFMAC Project, including the payments and price adjustment mechanisms, are deemed prudent pursuant to Section 24.2(4) of the Transmission Regulation. Commission findings 17. Under Section 37 of the Electric Utilities Act, each owner of an electric transmission facility must submit to the Commission for approval a tariff application setting out the rates to be paid by the AESO for the use of the owner s transmission facility. An owner is defined in Section 1(jj) of the Electric Utilities Act as follows: (jj) owner, in respect of a generating unit, a transmission facility or an electric distribution system, means the owner, operator, manager or lessee of that unit, facility or system, or any person who is acting as an agent for the owner, operator, manager or lessee, and in the event that one of those persons becomes bankrupt or insolvent, includes any trustee, liquidator or receiver appointed in respect of the bankruptcy or insolvency; 18. The project agreement defines tariff application as any application submitted by Project Co to the AUC pursuant to Section 37 of the Act for the approval of a Project Co Tariff. Project Co is defined in the preamble of the project agreement as Alberta PowerLine. As noted in the preamble of the project agreement, Alberta PowerLine is responsible for developing, designing, building, owning, financing, operating and maintaining certain transmission facilities in relation to the WFMAC Project. Accordingly, the Commission finds Alberta PowerLine to be an owner pursuant to the Electric Utilities Act. 10 Decision : Alberta Electric System Operator, Competitive Process Pursuant to Section 24.2(2) of the Transmission Regulation, Part A: Statutory Interpretation, Proceeding 1449, Application , February 27, Decision , paragraphs Decision D (January 23, 2018)

7 19. Regarding the scope of the Commission s jurisdiction in this application, under Subsection 24.2(4) of the Transmission Regulation: (4) Where the Commission approves a competitive process developed under subsection (2), the Commission must consider any resulting arrangements, including any changes requiring the Commission s approval or determination pursuant to section 24.3(3) or (4), as prudent. 20. In Decision , the Commission approved the AESO s competitive process with conditions. The AESO initiated the Commission-approved competitive process and selected Alberta PowerLine as the successful bidder for the WFMAC Project. The AESO and Alberta PowerLine then entered into a project agreement for the WFMAC Project, which includes payment provisions, price adjustment mechanism provisions, and other provisions governing the terms and conditions of service between Alberta PowerLine and the AESO. Accordingly, pursuant to Section 24.2(4) of the Transmission Regulation, the Commission finds that the project agreement between the AESO and Alberta PowerLine is a resulting arrangement from a Commission-approved competitive process developed under Subsection 24.2(2) of the Transmission Regulation, and therefore the Commission considers the project agreement to be prudent. 21. For clarity, the Commission has not received an application pursuant to subsections 24.3(3) or (4) of the Transmission Regulation, and is not making any approvals or determinations in this decision in relation to these provisions. Dated on January 23, Alberta Utilities Commission (original signed by) Mark Kolesar Vice-Chair Decision D (January 23, 2018) 5

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9 Appendix 1 Proceeding participants Name of organization (abbreviation) Company name of counsel or representative Alberta PowerLine L.P. (Alberta PowerLine) Bennett Jones LLP Alberta Electric System Operator (AESO) Office of the Utilities Consumer Advocate (UCA) Consumers Coalition of Alberta (CCA) Alberta Utilities Commission Commission panel M. Kolesar, Vice-Chair Commission staff J. Graham (Commission counsel) L. Mullen D. Ward M. Kopp-van Egteren Decision D (January 23, 2018) 1