Decision 22353-D01-2017
Direct Energy Regulated Services
Regulated Rate Option Energy Price Setting Plan
Monthly Filings for Acknowledgment
2016 Quarter 4
Costs Award
May 8, 2017
Alberta Utilities Commission
Decision 22353-D01-2017: Direct Energy Regulated Services
Regulated Rate Option - Energy Price Setting Plan
Monthly Filings for Acknowledgment 2016 Quarter 4 Costs Award
Proceeding 22353
May 8, 2017
Published by
Alberta Utilities Commission
Fifth Avenue Place, Fourth Floor, 425 First Street S.W.
Calgary, Alberta
T2P 3L8
Telephone: 403-592-8845
Fax: 403-592-4406
Website: www.auc.ab.ca
Website: www.auc.ab.ca
Contents
1
Introduction ........................................................................................................................... 1
2
Commission’s authority to award costs .............................................................................. 2
3
Assessment of costs ............................................................................................................... 3
3.1 Direct Energy Regulated Services ................................................................................. 3
4
Order ...................................................................................................................................... 4
Decision 22353-D01-2017 (May 8, 2017) • i
Alberta Utilities Commission
Calgary, Alberta
Direct Energy Regulated Services
Regulated Rate Option - Energy Price Setting Plan
Monthly Filings for Acknowledgment
2016 Quarter 4 Costs Award
1
Decision 22353-D01-2017
Proceeding 22353
Introduction
1.
On February 9, 2011, the Alberta Utilities Commission received an application from
Direct Energy Regulated Services (Direct Energy or DERS), requesting approval of a negotiated
settlement application. The settlement related to the energy price-setting plan (EPSP) for the
period of July 1, 2011 to June 30, 2014, applicable to regulated rate option customers in the
service area of ATCO Electric Ltd. in compliance with the Regulated Rate Option Regulation.
Direct Energy conducted the negotiated settlement in accordance with AUC Rule 018: Rules on
Negotiated Settlements.
2.
Direct Energy applied to initiate negotiations for the settlement on August 30, 2010. The
AUC issued Decision 2010-4801 on October 4, 2010, approving Direct Energy’s request to
negotiate a settlement.
3.
On May 5, 2011, the Commission approved the settlement agreement in Decision 2011199.2 A monthly rate setting mechanism was approved and it determines the monthly energy
rates prior to the beginning of each calendar month for the monthly energy charge for each rate
class. The following forms part of the settlement, which was approved in Decision 2011-199:
DERS will file the resulting Monthly Energy Rate with the AUC for acknowledgement
before the start of each calendar month in 2011 to 2014. Each month the Advisor will
write an opinion letter advising the AUC whether or not DERS has complied.3
4.
The settlement agreement provided for representatives of the consultation parties4 to the
settlement agreement to consult with Direct Energy with respect to forecast energy requirements
under the EPSP. Section 10(b) of Attachment 1 to the EPSP states:
Costs incurred by DERS and the Consultation Parties in relation to the energy price
setting plan including, ongoing costs related to the implementation of the energy price
setting plan, costs related to any dispute resolution matter, whether before the AUC or
Commission Observer and Advisor, and the costs of the Advisor and the AUC administration
costs will be included in the energy costs for the Regulated Rate Customers.5
1
2
3
4
Decision 2010-480: Direct Energy Regulated Services Regulated Rate Option Energy Price Setting Plan Request
to Enter into a Negotiated Settlement, Application 1606507, Proceeding 800, October 4, 2010.
Decision 2011-199: Direct Energy Regulated Services Application for Approval of a Settlement Agreement in
respect of the 2011-2014 Energy Price Setting Plan, Application 1607016, Proceeding 1077, May 5,
2011.
Ibid., settlement agreement, Attachment 1 – July 2011 to June 2014 Energy Price Setting Plan, Section 4(c),
page 44 of 84.
The consultation parties to the settlement agreement were: the Consumers’ Coalition of Alberta and the Office
of the Utilities Consumer Advocate.
Decision 22353-D01-2017 (May 8, 2017) • 1
Regulated Rate Option – Energy Price Setting Plan
Monthly Filings for Acknowledgment 2016 Quarter 4
Costs Award
Direct Energy Regulated Services
5.
Direct Energy, on behalf of itself and the consultation parties, engaged the services of an
advisor, Forte Business Solutions Ltd.
6.
On March 3, 2014, the Commission issued Decision 2014-051,6 a transition period
decision, with respect to the regulated rate tariffs and proposed EPSPs for each of the three
regulated rate option providers including Direct Energy.7 The decision allowed the operation of
Direct Energy’s EPSP after June 30, 2014, which was the date Direct Energy’s 2011-2014 EPSP
was set to expire. The Commission found with respect to Direct Energy:
…The Commission has given significant weight to the fact that DERS’ EPSP was arrived at
through negotiations between DERS and customer representatives. In approving DERS’ EPSP in
Decision 2011-199, the Commission was satisfied that the interests of all the parties involved,
including DERS’, were served.
The Commission considers that continuing with the existing EPSP balances the reasonable
opportunity for DERS to recover its prudent costs and expenses, while recognizing the principles
of certainty and reasonable rates in customer’s monthly bills through energy charges that are not
subject to deferral accounts, true-ups, or rate riders under sections 3(2) and 6(2) of the Regulated
Rate Option Regulation.
…Accordingly, the Commission finds that keeping the energy charges during the transition
period at the levels set in the current EPSP, which was negotiated, is fair and reasonable.
DERS shall adhere to the EPSP approved in Decision 2011-199, until the Commission otherwise
directs.8 (footnotes removed)
7.
On April 12, 2017, the Commission received a costs claim from Direct Energy for its
2016 Quarter 4 costs, filed in accordance with Decision 2011-199 and Decision 2014-051.
8.
No comments were received from parties on the costs claim of DERS. Accordingly, the
Commission considers that the record for this costs proceeding closed on April 21, 2017, the
deadline for filing comments.
2
Commission’s authority to award costs
9.
When assessing costs claims related to an EPSP pursuant to Section 21 of the Alberta
Utilities Commission Act, SA 2007, c A-37.2, the Commission takes guidance from AUC Rule
022: Rules on Costs in Utility Rate Proceedings (Rule 022). Appendix A of Rule 022 also
prescribes a Scale of Costs applicable to all costs claimed.
5
6
7
8
Ibid., settlement agreement, Attachment 1-July 2011 to June 2014 Energy Price Setting Plan, Section 10(b) pages
49 and 50 of 84 (pdf).
Decision 2014-051: Direct Energy Regulated Services, ENMAX Energy Corporation and EPCOR Energy Alberta
Inc., Regulated Rate Tariff and Energy Price Setting Plans – Generic Proceeding: Part A – Transition Period,
Application 1610120, Proceeding 2941, March 3, 2014.
The other two regulated rate option providers are ENMAX Energy Corporation and EPCOR Energy Alberta GP
Inc.
Ibid., paragraphs 49 to 52.
2 • Decision 22353-D01-2017 (May 8, 2017)
Regulated Rate Option – Energy Price Setting Plan
Monthly Filings for Acknowledgment 2016 Quarter 4
Costs Award
Direct Energy Regulated Services
10.
In exercising its discretion to award costs, the Commission must consider whether the
advisor acted responsibly in carrying out its duties under the EPSP, and whether the costs
claimed are reasonable, and directly and necessarily related to the advisor’s responsibilities.
11.
The Commission’s assessment of costs of the consultation parties is also subject to Rule
022 and the Commission’s discretion. The Commission must consider whether the activities
undertaken by the consultation parties to the EPSP are reasonable and directly and necessarily
related to the activities performed. The Commission expects that statements of justification will
provide enough information for the Commission to understand all material components of the
costs claimed.
3
3.1
Assessment of costs
Direct Energy Regulated Services
12.
Direct Energy submitted a costs claim application for recovery of costs paid in the total
amount of $27,900.00 for the advisor, Forte Business Solutions Ltd. The claim requested
approval of a total of 136 hours, with respect to the following costs:
a. $24,400.00 for 122 hours of work performed by Mr. Bob Hesson in providing target
price setting analysis in October, November and December of 2016.
b. $3,500.00 for 14 hours of services provided by Mr. Sheldon Fulton for EPSP monthly
reviews in October, November and December of 2016.
13.
The Commission has reviewed the costs claim for Forte Business Solutions Ltd. and the
fees claimed are in accordance with the Scale of Costs. The Commission finds that the tasks
described and hours claimed are reasonable and directly and necessarily related to the EPSP
activities for Quarter 4 of 2016.
14.
Accordingly, the Commission approves the costs claim submitted by Direct Energy for
the advisors’ costs in Quarter 4 of 2016 in the total amount of $27,900.00.
Decision 22353-D01-2017 (May 8, 2017) • 3
Regulated Rate Option – Energy Price Setting Plan
Monthly Filings for Acknowledgment 2016 Quarter 4
Costs Award
4
15.
Direct Energy Regulated Services
Order
It is hereby ordered that:
1) Direct Energy Regulated Services shall pay external costs, with respect to 2016
Quarter 4, in the amount of $27,900.00 to Forte Business Solutions Ltd.
Dated on May 8, 2017.
Alberta Utilities Commission
(original signed by)
Derrick Ploof
Director, Retail, Energy and Water - Edmonton
On behalf of the Alberta Utilities Commission
4 • Decision 22353-D01-2017 (May 8, 2017)