EPCOR Energy Alberta GP Inc.

Transcription

1 Decision EPCOR Energy Alberta GP Inc Non-energy Regulated Rate Tariffs Costs Award December 22, 2014

2 The Alberta Utilities Commission Decision : EPCOR Energy Alberta GP Inc Non-energy Regulated Rate Tariffs Costs Award Application Nos and Proceeding No December 22, 2014 Published by The Alberta Utilities Commission Fifth Avenue Place, Fourth Floor, 425 First Street S.W. Calgary, Alberta T2P 3L8 Telephone: Fax: Web site:

3 Contents 1 Introduction Commission s authority to award costs Assessment of costs claimed EPCOR Energy Alberta GP Inc Fasken Martineau DuMoulin LLP Costs claimed for Towers Watson, Economic Research Associates Limited, EDC Associates Ltd., Dr. Ryan and EEA disbursements Consumers Coalition of Alberta GST Order... 8 AUC Decision (December 22, 2014) i

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5 The Alberta Utilities Commission Calgary, Alberta EPCOR Energy Alberta GP Inc. Decision Non-energy Regulated Rate Tariffs Application Nos and Costs Award Proceeding No Introduction 1. On December 19, 2013, EPCOR Energy Alberta Inc. (EEAI) filed an application with the Alberta Utilities Commission (the AUC or the Commission) requesting approval of its non-energy regulated rate tariffs (RRT) for service provided by EEAI to eligible customers in the EPCOR Distribution & Transmission Inc. (EDTI) and FortisAlberta Inc. (FAI) service areas, for the period from January 1, 2014 to December 31, The Commission assigned Proceeding No and Application No to the application. 2. The Commission issued a notice of the application on December 23, 2013, and requested that interested parties who wished to intervene in the proceeding submit a statement of intent to participate (SIP) to the Commission by January 6, On January 6, 2014, the Commission issued an alert of amended notice of application that specified a new deadline of January 14, 2014 for filing of SIPs. 4. The Commission received SIPs from the Consumers Coalition of Alberta (CCA), the Office of the Utilities Consumer Advocate (UCA), AltaLink Management Ltd. (AltaLink), Direct Energy Marketing Limited (DEML), and FAI. 5. On February 26, 2014, the Commission issued Decision , 1 approving the appointment of EPCOR Energy Alberta GP Inc. (EEA), in its capacity as the general partner of EPCOR Energy Alberta Limited Partnership, to provide regulated rate option service to eligible customers within the EDTI and FAI distribution service territories. 6. Effective March 1, 2014, EEA became the RRO service provider. 7. In correspondence dated March 7, 2014, EEA requested leave to amend the application pursuant to Section 15 of AUC Rule 001: Rules of Practice. The proposed amendment sought to incorporate a site count credit mechanism as a result of EEA s expectation that it would provide billing and customer services to a competitive retailer in Alberta during the test period. 8. By correspondence dated March 12, 2014, the AUC approved EEA s request to amend its application and requested comments from parties on further process steps. 9. In a letter dated March 20, 2014, and after having reviewed comments from parties regarding the need for further process, the Commission determined there were two outstanding matters for which further information was required: the site count forecast and the proposed risk margin. The Commission established a process schedule for filing information requests and 1 Decision : EPCOR Energy Alberta Inc. and EPCOR Energy Alberta GP Inc., Approval of Arrangement to Provide Regulated Rate Option Service, Application No , Proceeding ID No. 2818, February 26, AUC Decision (November 22, 2014) 1

6 Non energy Regulated Rate Tariffs Cost Award EPCOR Energy Alberta GP Inc. responses to information requests on the two outstanding matters. In an April 10, 2014 letter, the Commission established the remainder of the process steps for the proceeding including the filing of intervener evidence, argument and reply argument. 10. On June 2, 2014, the UCA filed a letter requesting further process steps because of EPCOR Utilities Inc. s May 20, 2014 announcement concerning the establishment of a new unregulated affiliate company, Alberta Limited Partnership, operating as ENCOR (ENCOR). The UCA stated that further process was required because there was no opportunity to follow-up on the impact of the introduction of an unregulated competitive affiliate on the application. 11. After receipt of comments from parties on additional process steps, the Commission issued a ruling dated June 23, 2014, directing EEA to file its service agreement between the EEA and the competitive affiliate, Alberta Limited Partnership operating as ENCOR, no later than June 30, The Commission set out the schedule for further process steps, including the filing of rebuttal evidence, argument and reply argument. 12. The Commission considers the record for the proceeding to have closed on August 6, 2014 with the filing of reply argument. 13. On September 5, 2014, EEA submitted its costs claim application and on September 8, 2014, the CCA filed its costs claim application. Both applications reflected the costs claimed for Proceeding No The Commission created Proceeding No and assigned Application Nos and to deal with the costs claim applications. 14. On September 11, 2014, the Commission circulated a summary of costs claimed to interested parties and requested comments on the merits of the summary of costs by September 20, On September 16, 2014, EEA submitted an amended costs claim. Because of EEA s amended costs claim, on September 17, 2014, the Commission sent out a revised summary of costs to parties with a deadline for submission of comments by September 26, The Commission issued an information request on November 5, 2014 related to EEA s costs claim application. The Commission asked EEA to provide a receipt or invoice to support the claim for a Towers Watson disbursement for the provision of a BENVAL analysis report. The BENVAL analysis report was used in the preparation of the subsequent Towers Watson report submitted to the record of the non-energy RRT proceeding, entitled the 2013 Competitive Compensation and Benefits Analysis. 16. On November 4, 2014, the Commission issued Decision in respect of EEA s non-energy RRT application. 17. On December 17, 2014, EEA provided its response to the Commission s information request related to the costs claimed for the BENVAL analysis report. The Commission considers the close of record for this costs proceeding to be December 17, Decision , EPCOR Energy Alberta GP Inc Non energy Regulated Rate Tariffs. Application No , Proceeding No. 2986, November 4, AUC Decision (December 22, 2014)

7 Non energy Regulated Rate Tariffs Cost Award EPCOR Energy Alberta GP Inc. 2 Commission s authority to award costs 18. When assessing costs claims pursuant to Section 21 of the Alberta Utilities Commission Act, SA 2007, c. A-37.2, the Commission applies AUC Rule 022: Rules on Intervener Costs in Utility Rate Proceedings (AUC Rule 022). Appendix A of AUC Rule 022 also prescribes a Scale of Costs applicable to all costs claimed. 19. In exercising its discretion to award costs, the Commission will, in accordance with Section 11 of AUC Rule 022, consider whether an eligible participant s costs are reasonable and directly and necessarily related to the proceeding; and whether the eligible participant acted responsibly in the proceeding and contributed to a better understanding of the issues before the Commission. The Commission will be mindful of a participant s willingness to co-operate with the Commission and other participants to promote an efficient and cost-effective proceeding. 20. As the costs of a utility proceeding are generally passed on to customers, it is the Commission s duty to ensure that the customers receive fair value for a party s contribution. The Commission only approves those costs that are reasonable and directly and necessarily related to the party s participation in the proceeding. 3 Assessment of costs claimed 3.1 EPCOR Energy Alberta GP Inc. 21. EEA submitted a costs claim in the total amount of $269, and requested approval of the following costs: $181, for Fasken Martineau DuMoulin LLP comprised of legal fees of $181, and disbursements of $ for telephone and photocopying charges. $26, for Towers Watson comprised of consulting fees of $20,567.95, and disbursements of $6, $19, for consulting services for Dr. Robert Evans of Economic Research Associates Limited. $11, for EDC Associates Ltd. (EDC) comprised of consulting fees of $9,025.00, and disbursements of $2, $1, for Dr. David Ryan comprised of $1, in consulting fees, and disbursements of $124.00; and $28, for EEA s disbursements to issue the notice of application for the proceeding, for external printing costs and for a one-time rating fee from Dominion Bond Rating Service (DBRS) Fasken Martineau DuMoulin LLP 22. EEA s claim for Fasken Martineau DuMoulin LLP relates to hours of legal services incurred. The hours claimed for two senior counsels, Mr. Jonathan Liteplo and Mr. AUC Decision (December 22, 2014) 3

8 Non energy Regulated Rate Tariffs Cost Award EPCOR Energy Alberta GP Inc. Christopher Bystrom, include hours for preparation and hours related to argument and reply argument. The duties performed by the two legal counsel were described as: providing regulatory and legal advice relating to the application. assisting EEA to ensure that applicable legal and regulatory requirements of the application were appropriately addressed. providing strategy advice and assisting EEA in evaluating potential approaches to addressing legal issues with respect to the application. serving as a regulatory law resource for EEA s external consultants. reviewing and providing advice on the narrative portions of EEA s application and attachments for EEA to meet its evidentiary onus. assisting company personnel with drafting complex portions of the application. providing advice and assistance in the preparation of EEA s responses to information requests from the Commission and interveners, information requests on interveners evidence, and rebuttal evidence. preparing final argument, reviewing interveners final arguments, and preparing reply argument. 23. The Commission acknowledges that the proceeding involved a significant number of process steps, and required additional hours for legal work performed for the preparation of responses to numerous information requests, the preparation of an amended application, and to address the issues arising in the proceeding as a result of the formation of EEA and ENCOR. The Commission has reviewed EEA s costs claim application relating to its retention of Fasken Martineau DuMoulin LLP, and finds that the hours incurred are reasonable given the tasks described, and that the costs incurred are in accordance with the Commission s Scale of Costs. The Commission approves the costs claimed for work performed by Fasken Martineau DuMoulin LLP in the amount of $181, The disbursements for internal photocopying of $ and telephone charges of $ claimed are in accordance with the Scale of Costs, and the Commission approves the disbursements, as filed. 24. Accordingly, the Commission approves total recovery costs for Fasken Martineau DuMoulin LLP in the amount of $181, Costs claimed for Towers Watson, Economic Research Associates Limited, EDC Associates Ltd., Dr. Ryan and EEA disbursements Towers Watson 25. EEA submitted a costs claim for recovery of fees paid to Towers Watson in the amount of $20, This amount relates to hours of consulting services. The hours claimed relate to the preparation of two reports: 2013 Competitive Compensation and Benefits Analysis, and Memorandum on Non-Union Salary Escalation Factors for 2014 and Activities performed included drafting of the two reports, reviewing the draft reports, and preparing draft responses to information requests, reviewing benchmark results, reviewing the BENVAL analysis used to generate the reports, correspondence and conference calls, and analyzing data. A disbursement of $6, was claimed for the BENVAL analysis report, used by Towers Watson to prepare its report on competitive compensation and benefits. 4 AUC Decision (December 22, 2014)

9 Non energy Regulated Rate Tariffs Cost Award EPCOR Energy Alberta GP Inc. 26. The Commission finds that the consulting fees and hours claimed by Towers Watson are reasonable based on the preparation of the two reports submitted on the record of the proceeding. The costs incurred are in accordance with the Scale of Costs. The Commission therefore approves the fees claimed for Towers Watson in the amount of $20, With respect to the $6, disbursement for the BENVAL analysis report used in the 2013 Competitive Compensation and Benefits Analysis report, the Commission is guided by section 11.1(a) of AUC Rule 022, which states: The Commission may award costs, in accordance with the scale of costs, to an eligible participant if the Commission is of the opinion that: (a) the costs are reasonable and directly and necessarily related to the hearing or other proceeding 28. The Scale of Costs under AUC Rule 022 sets out the scale for professional fees and disbursements. For disbursements, the Scale of Costs specifies that: The Commission will not consider expense claims that are based upon percentages of the fees claimed. All receipts relating to a claim for disbursements must be legible and clearly identify the date upon which the receipt was issued. The Commission will not request clarification for receipts that do not satisfy these requirements, and the related claim may not be approved. (emphasis in original) 29. Disbursements set out in the Scale of Costs include: office disbursements such as courier or postage charges, photocopies, computer charges, transcripts; and personal disbursements such as meals, accommodation, travel, taxi and parking expenses. 30. The Commission considers that the Towers Watson invoice paid by EEA for the BENVAL analysis report is insufficient to determine that the costs charged by Towers Watson are supported. The Commission does not have any information on how the costs for preparation of the report were calculated by Towers Watson, the underlying costs incurred by Towers Watson to prepare the report, the basis for and amount of the flat fee, how the algorithm derives the amount charged, whether there is an actual charge to access external data sources for comparator organizations, and the amount of any charges for access to external data sources. 31. Although any one of these factors is not determinative of whether a disbursement should be awarded, it is unclear to the Commission, given the requirements of AUC Rule 022, whether the components of the amount charged for the BENVAL analysis report include professional fees for a service or disbursements for charges incurred for preparation of the report. The invoice shows the amount billed for the report under professional fees but clearly indicates that no specific hours were charged related to the line item for the BENVAL analysis report. Without this information, it is not possible to determine the amount claimed for the BENVAL analysis report as distinct from the amount claimed for any disbursement costs incurred. 32. The Commission finds that the amount billed by Towers Watson is a disbursement rather than a professional fee, but Towers Watson did not identify the calculation of the disbursement or specify any costs it paid to external parties for data or other charges. The Commission does not have sufficient information to award full costs for this disbursement without further information on the underlying charges incurred by Towers Watson for the BENVAL analysis report that would allow the Commission to determine whether the costs were reasonably and necessarily related to the proceeding. AUC Decision (December 22, 2014) 5

10 Non energy Regulated Rate Tariffs Cost Award EPCOR Energy Alberta GP Inc. 33. Accordingly, the Commission finds it reasonable to award a reduced amount for the report equivalent to 50 per cent of the amount claimed. The Commission approves the disbursement for Towers Watson s BENVAL analysis report, in the amount of $3, The Commission approves total costs for Towers Watson in the amount of $23,627.95, which is comprised of $20, in consulting fees and disbursements of $3, Economic Research Associates Limited 35. EEA submitted a costs claim for recovery of fees paid to Dr. Robert Evans of Economic Research Associates Limited in the amount of $19, This amount relates to 72.5 hours of consulting services. Dr. Evans provided assistance relating to EEA s costs of debt, return margin and risk margin. His evidence was provided in two reports entitled, 2014 Costs of New Long- Term Debt and Required Risk and Return Margins for RRO Services. The hours claimed include 9 hours for consultation and preparation of direct evidence, 22 hours for preparation of responses to information requests, 4.5 hours for review of intervener evidence, 15 hours for preparation of rebuttal evidence, and 22 hours for assistance in preparation and review of argument and reply argument. 36. The Commission finds that the hours incurred by Dr. Evans are reasonable given the tasks described in the costs claim for consulting services and observes that the costs incurred are in accordance with the Scale of Costs. The Commission approves total costs for Economic Research Associates Limited in the amount of $19, EDC Associates Ltd. 37. EEA submitted a costs claim for recovery of costs paid to EDC in the amount of $11, This amount relates to 47 hours of consulting services for preparation of a report EPCOR Fundamental Price Forecast The Commission finds that the costs claimed and hours incurred by EDC are reasonable based on the preparation of its report, which was relied on by EEA. The costs incurred are in accordance with the Scale of Costs. 38. EEA claimed $2, for EDC s activities associated with time spent to run complex models for the EPCOR Fundamental Price Forecast report to obtain monthly price forecast analysis and the Alberta pool price forecast. The amount charged for modelling was claimed as a disbursement. The consulting hours for modelling on the central process unit were charged at an hourly rate of $ and 21.5 hours were claimed for this activity. The Commission finds that the amount of hours related to modelling are consulting hours for work performed and, accordingly, considers the amount claimed is a professional fee under the Scale of Costs rather than a disbursement. The consulting hours claimed for modelling by EDC are within the Scale of Costs and the Commission approves the $2,150.00, as filed. 39. For the above reasons, the Commission finds that the hours incurred by EDC are reasonable given the tasks described in the costs claim for consulting services. Accordingly, the Commission approves recovery of costs paid to EDC for consulting fees, in the total amount of $11, Dr. David Ryan 40. EEA claimed recovery of costs paid to Dr. Ryan in the amount of $1, The claim related to $1, claimed for 8 hours of consulting services relating to the 2014 and AUC Decision (December 22, 2014)

11 Non energy Regulated Rate Tariffs Cost Award EPCOR Energy Alberta GP Inc. forecast cost escalators used by EEA. A disbursement of $ was claimed for electronic research and data acquisition from The Conference Board of Canada. 41. The Commission has reviewed EEA s costs claim for the consulting fees of Dr. Ryan. The Commission finds that the hours incurred are reasonable given the tasks described and that the costs incurred are in accordance with the Commission s Scale of Costs. The Commission approves total costs for Dr. Ryan in the amount of $1, EEA disbursements 42. EEA claimed disbursements in the amount of $28,214.01, which is comprised of $15, for publishing the notice of application, $1, for external printing costs and $11, for a DBRS one-time rating fee. The external printing costs included a claim for GST and the disbursements claimed for publishing the notice of application and for data acquisition did not include GST. The Commission reduces the disbursement amounts claimed to correct for the inclusion of GST for external printing costs of $66.32 ($1, multiplied by 5%) and approves total disbursements for EEA in the amount of $28, In accordance with the above findings, the Commission approves total costs recovery for EEA in the amount of $266,061.24, comprised of $181, in legal fees, $52, in consulting fees, and $31, in disbursements. 3.2 Consumers Coalition of Alberta 44. The CCA submitted a costs claim for recovery of costs paid in the total amount of $43, The costs claim requested approval of the following legal and consulting costs: $5, for Wachowich & Company, comprised of legal fees of $5, and GST of $269.50; and $37, for Regulatory Services Inc. comprised of consulting fees of $35, and GST of $1, The claim for Wachowich & Company relates to 15.4 hours of legal services. The hours claimed include 11.4 hours for review of the application, review of information requests, review of correspondence on the proceeding and preparation of process letters; and four hours for preparation of argument and reply argument. The Commission finds that the hours incurred are reasonable given the tasks described and that the costs incurred are in accordance with the Scale of Costs. The Commission approves legal fees for Wachowich & Company in the amount of $5, and GST of $ The claim for Regulatory Services Inc. relates to hours for consulting services of Mr. Azad Merani and Mr. Raj Retnanadan. The costs claim for Mr. Merani included 75.5 hours for preparation and review of the application, preparation of information requests, and review of responses to information requests; and 33 hours for the preparation of argument and reply argument. The costs claim for Mr. Retnanadan included: hours for review of the application and preparation of information requests; and 18 hours for preparation of argument and reply argument. The Commission finds that the hours incurred are reasonable given the tasks described and that the costs incurred are in accordance with the Scale of Costs. The Commission approves consulting fees for Regulatory Services Inc. in the amount of $35, and GST of $1, AUC Decision (December 22, 2014) 7

12 Non energy Regulated Rate Tariffs Cost Award EPCOR Energy Alberta GP Inc. 47. Accordingly, the Commission approves the CCA s costs claim in the total amount of $43, GST 48. In accordance with the Commission s treatment of GST on costs awards, EEA is required to pay only that portion of GST paid by interveners that may not be recoverable through the GST credit mechanism. Eligible GST is approved by the Commission in the amount of $2, The Commission emphasizes that its treatment of the GST claim in no way relieves participants or their consultants from their GST obligations pursuant to the Excise Tax Act, RSC 1985, c. E Order 50. It is hereby ordered that: (1) EPCOR Energy Alberta GP Inc. shall pay its external costs in the amount of $266, (2) EPCOR Energy Alberta GP Inc. shall pay intervener costs to the Consumers Coalition of Alberta in the amount of $43, (3) EPCOR Energy Alberta GP Inc. shall record in its Hearing Costs Reserve Account the approved external and intervener costs, in the amount of $309, Dated on December 22, The Alberta Utilities Commission (Original signed by) Mark Kolesar Vice Chair (Original signed by) Bill Lyttle Commission Member (Original signed by) Neil Jamieson Commission Member 8 AUC Decision (December 22, 2014)