By: Nigel Bankes
PDF Version: How Should We Assess Transmission Upgrades When They are Requested by the DFO?
Decisions Commented On: (1) AUC Decision 23339-D01-2019, Alberta Electric System Operator Needs Identification Document Application AltaLink Management Ltd. Facility Applications Provost Reliability Upgrade Project, and January 22, 2019; and (2) AUC Decision 23393-D01-2019, Alberta Electric System Operator Needs Identification Document Application AltaLink Management Ltd. Facility Application Fincastle 336S Substation Upgrade, February 14, 2019.
These two decisions deal with the Alberta Utilities Commission’s (AUC) assessment of a needs identification document (NID) to build new transmission in a situation where the NID was prepared on the basis of a system access service request (SASR) originating from the incumbent distribution facility owner (DFO) – in this case, FortisAlberta. Both cases triggered a dissenting opinion from AUC Vice Chair Anne Michaud. In each case the principal difference between the dissent and the majority turned on the Alberta Electric System Operator’s (AESO) responsibility to assess the reasonableness of the need for system access where the impetus to prepare the NID came from the DFO. In both cases, Vice Chair Michaud takes the view that if the AESO fails to properly scrutinize the need for the DFO’s SASR request then there is no public interest assessment of such a request. In both cases Vice Chair Michaud would have sent the NID back to the AESO with the suggestion “that the NID application incorporates an analysis of the need for the project that includes a weighing of the expected increase in reliability against the potential impacts of the project, having regard for the fact that the AESO is not required in all circumstances to respond to a SASR with a proposed transmission solution.” (Provost Decision at para 313).
The argument that greater scrutiny may be required in the case of a NID prepared in response to a SASR request from a DFO draws on the understanding that a DFO (unlike the AESO) does not have a public interest mandate and may therefore have an incentive to overbuild to increase its rate base – unless dis-incented from doing so by the new approach to capital investment in Phase II of performance based regulation – a doubtful proposition at best. New transmission is expensive and the cumulative effects on consumer bills significant. An important element of assessing the need to upgrade existing transmission facilities is the applicable reliability standard: the higher the reliability standard the greater the capital expense. What is that standard? Who gets to set that standard and should it be the same for all that are connected to the transmission system?
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