Category: Utility Regulation Page 1 of 5

By: Nigel Bankes

PDF Version: The Regulation of District Energy Systems in Alberta: Part 3

Decision Commented On: AUC Decision 26717-D01-2022, Calgary District Heating Inc. Exemption from Provisions of the Public Utilities Act, March 2, 2022

As the title indicates, this is my third post dealing with the regulation of district energy systems in Alberta. My first post, “Regulatory Forbearance and The Status of District Energy Systems Under the Public Utilities Act”, dealt with an application by ENMAX for relief from the entirety of Part 2 of the Public Utilities Act, RSA 2000, c P-45, (PUA) as it might apply to a proposed district energy system in Edmonton (Edmonton DE Decision). The Alberta Utilities Commission (AUC) denied the application. It concluded that ENMAX had not discharged its onus to show that (at para 35) “sufficient competition will exist such that regulation of ENMAX in its provision of thermal energy within the exclusive franchise area is unnecessary; or, stated in another way, that it would be in the public interest to exempt DE Edmonton and ENMAX (as its owner and operator) from Part 2 of the Public Utilities Act.” Rather, the evidence that customers who agreed to take service from the district energy facility and removed their existing boilers would effectively be captive to the service provided by ENMAX. While there was some discussion of whether more limited exemptions would protect these customers, it became clear that ENMAX’s application was in the nature of an “all-or-nothing application.” Accordingly, the AUC found it unnecessary to opine on the acceptability of a more limited set of exceptions.

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By: Nigel Bankes

PDF Version: Off-Grid Energy for Bitcoin Mines in Alberta: A Problematic Legal Regime

Decision Commented On: Alberta Utilities Commission (AUC), Decision 26379-D02-2021, Allegations against Link Global Technologies Inc., Phase 1, August 19, 2021

I don’t know much about Bitcoin operations, but I do know that they need a lot of power to run large computers, and it therefore makes sense for them to locate near cheap sources of power. Over the last several months, there have been a number of stories about Bitcoin operators checking out Alberta locations. For example, Collin Gallant published a nice piece in the Medicine Hat News in April 2021. But this last week (August 25, 2021) the CBC ran with a more detailed story about one of the Bitcoin operators mentioned in Gallant’s piece (Link Global Technologies Inc.) that had co-located close to a shut in gas well to take advantage of cheap fuel to power their gas turbine generators.

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By: Nigel Bankes

PDF Version: Important AUC Decision on the Treatment of Customer Contributions: Getting the Price Signals Right

Decision Commented On: AUC Decision 26061-D01-2021, Commission-Directed Examination of Distribution Facility Owner Payments under the Independent System Operator Tariff Customer Contribution Policy (23 April, 2021)

This decision has a long and complicated history arising most immediately out of Decision 22942-D02-2019 dealing with the Alberta Electric System Operator’s (AESO) 2018 tariff (for ABlawg comment on some aspects of that decision see here) as well as the AUC’s subsequent variance decision: Decision 24932-D01-2020.

This decision by the Alberta Utilities Commission (the Commission or the AUC) grapples with what are known in utility parlance as contributions in aid of construction (CIAC). Here is a straightforward example of a CIAC. Suppose that you live on an ordinary city block where the costs to tie in your house for utility service will be approximately the same for your house as would be for any other house on the block. You would not expect to pay extra to be tied in, and that this cost would simply be part of the utility’s general rate base. But suppose that you live on an acreage and some distance from the main distribution lines (gas, electricity, or water). In that case, it is entirely possible that you may be asked for a CIAC representing the actual incremental cost of the tie-in (or perhaps that amount above the cost of a standard tie-in). This is fair to other utility customers since your tie-in costs are more than the average and might not make economic sense to the utility, and it avoids inappropriate cross- subsidization. Since you have covered the capital costs of the tie-in, these costs do not form part of the utility’s rate base on which it is entitled to earn a return even if the utility owns that tie-in.

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