On January 20, 2015, the Alberta Utilities Commission
("AUC" or the "Commission") released Decision
790-D02-2015, Milner Power Inc. and ATCO Power Ltd. Re: Complaints
regarding the ISO Transmission Loss Factor Rule and Loss Factor
Methodology, Phase 2 Module A, which can be accessed here (click here for decision).
In previous decisions, AUC 2012-104 (found here) and AUC 2014-110 (found here), the AUC determined and confirmed
that the Independent System Operator ("ISO")'s Line
Loss Rule was unjust, unreasonable, unduly preferential,
arbitrarily and unjustly discriminatory on the basis that the rule
disadvantaged generators that are loss savers and does not properly
charge loss creators for their losses. The AUC determined in
those decisions that the Line Loss Rule was ultimately inconsistent
with the Electric Utilities Act ("EUA") and the
Transmission Regulation made thereunder.
In this most recent Milner Power decision, the AUC determined
that it has the jurisdiction to grant tariff-based relief as a
remedy for its previous findings with respect to the Line Loss
Rule. The AUC determined that such relief may involve
retrospective adjustments to the ISO tariff going back to when the
Line Loss Rule first came into force, being January 1, 2006.
In reaching that decision, the AUC and the parties to this
application considered two primary issues: a) how to deal with
changes to the EUA and the Transmission Regulations since the
inception of the Line Loss Rule and whether previous iterations of
the legislation would provide Milner Power and the other applicants
with the tariff-based relief they sought; and b) whether the AUC
had the jurisdiction to make retroactive rate changes.
With respect to the first issue, after thorough consideration of
the changes to the EUA and the Transmission Regulation from January
1, 2006 to the date of this Decision and the legislative intent
behind the changes to that legislation, the Commission determined
that the changes were not of such a nature as to deprive Milner
Power and the other applicants from the tariff-based relief they
sought. The Commission determined that, while complex, the
scheme of ratemaking and rulemaking under the EUA (both in its
current and previous iterations) provide no conflict to the
Commission's jurisdiction to ensure that rates are just and
reasonable, and that changes resulting from successful complaints
with respect to ISO rules are able to be effected.
With respect to the second issue, the Commission noted several
binding decisions from the Supreme Court of Canada that held that a
regulatory authority can exercise its authority to retroactively
set rates, particularly in circumstances where the ratemaking takes
place vis-à-vis a negative disallowance scheme. In
such circumstances, the Commission approves rates and rules until
such time as a complainant raises an issue, and the Commission is
afforded the opportunity to examine the rate or rule more
closely. In these circumstances, the initial decision of the
Commission would be considered interim in a sense, and the
Commission determined that it was well within its jurisdiction to
retroactively deal with rates, particularly where new information
leads to the finding that the rates were unjust or
Moving forward, the Commission will now be required to undertake
the difficult task of determining the method and quantification of
working out the tariff-based relief that the complainants are
entitled to as a result of this decision.
Canada is a constitutional monarchy, a parliamentary democracy and a federation comprised of ten provinces and three territories. Canada's judiciary is independent of the legislative and executive branches of Government.
The Government of Alberta recently announced a number of policy changes that will impact the Alberta Electricity Market, composed of its generators, transmitters, distributors, retailers, electricity consumers and wholesale electricity market.
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