Decision 2003-036: ATCO Electric Ltd
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Decision 2003-036 ATCO Electric Ltd. Isolated Generation Reclamation Costs for Decommissioned Sites Negotiated Settlement May 13, 2003 Alberta Energy and Utilities Board ALBERTA ENERGY AND UTILITIES BOARD Decision 2003-036: ATCO Electric Ltd. Isolated Generation Reclamation Costs for Decommissioned Sites Negotiated Settlement Application No. 1285903 Published by Alberta Energy and Utilities Board 640 – 5 Avenue SW Calgary, Alberta T2P 3G4 Telephone: (403) 297-8311 Fax: (403) 297-7040 Web site: www.eub.gov.ab.ca Contents 1 BACKGROUND ................................................................................................................... 1 2 SITES AND ESTIMATED COSTS .................................................................................... 2 3 VIEWS OF THE PARTIES................................................................................................. 3 4 VIEWS OF THE BOARD.................................................................................................... 5 5 ORDER .................................................................................................................................. 6 APPENDIX A – NEGOTIATED SETTLEMENT AGREEMENT ......................................... 9 APPENDIX B – EXPLANATORY MEMORANDUM........................................................... 11 APPENDIX C – POWER PLANT DETAILS.......................................................................... 13 APPENDIX D – LIST OF DECOMMISSIONED SITES....................................................... 15 EUB Decision 2003-036 (May 13, 2003) • i ALBERTA ENERGY AND UTILITIES BOARD Calgary Alberta ATCO ELECTRIC LTD. ISOLATED GENERATION RECLAMATION COSTS Decision 2003-036 FOR DECOMMISSIONED SITES Application No. 1285903 NEGOTIATED SETTLEMENT File No. 5600-23 1 BACKGROUND On April 1, 2003, the Alberta Energy and Utilities Board (Board) received a Negotiated Settlement application in respect of the December 9, 2002 application of ATCO Electric Ltd. (AE), pursuant to section 35(1) of the Isolated Generation Units and Customer Choice Regulation (Regulation) for recovery from the Balancing Pool of isolated generating unit reclamation costs for decommissioned sites (Decommissioned Sites Application). On a related decision, AE had previously filed an application (Application No. 1252803) with the Board, pursuant to section 34(5) of the Regulation for recovery of a total of $14,765,876 for isolated generating unit reclamation costs for operating sites from the Balancing Pool (Operating Sites Application). AE was able to reach a negotiated settlement for the Operating Sites (Operating Sites Settlement), which the Board approved in Decision 2002-102 dated December 3, 2002. In the Explanatory Memorandum accompanying the Operating Sites Settlement, AE had indicated that the Negotiation Committee was very satisfied with the process that had resulted in the Settlement and had expressed a desire to use a similar process to deal with AE’s decommissioned sites. In the Decommissioned Sites Application, AE advised that the same Negotiation Committee that developed the Operating Sites Settlement was working on a similar settlement in respect of AE’s decommissioned sites. Therefore, AE requested that the Decommissioned Sites Application be held in abeyance to allow for the negotiation process to continue. As stated above, on April 1, 2003, the Board received the supplementary information respecting the completion of the Negotiated Settlement of the Decommissioned Sites Application (Decommissioned Sites Settlement) and the accompanying Explanatory Memorandum (Memorandum). AE, on behalf of the parties to the Settlement requested that the Board approve it as submitted. The Decommissioned Sites Settlement and the Memorandum are attached to this Decision as Appendix A and Appendix B, respectively. EUB Decision 2003-036 (May 13, 2003) • 1 Isolated Generation Reclamation Costs Decommissioned Sites Negotiated Settlement ATCO Electric Ltd. The Decommissioned Sites Settlement addresses the process agreed to by the parties for dealing with the reclamation of the decommissioned isolated generation sites covered in the Decommissioned Sites Application and the recovery by AE from the Balancing Pool of associated costs. The Memorandum addressed the key issues important to an understanding of the Settlement. The Memorandum also provided further explanation of some of the clauses in the Settlement where parties believed further explanation would assist the Board in understanding the terms of the Settlement. The Board published notice of the Decommissioned Sites Settlement agreement on April 14, 2003 and requested objections on or before April 23, 2003. The notice was circulated directly to all interested parties on the distribution list for AE’s 2003-2005 General Tariff Application. The Board received no objections to the Settlement and no further submissions in relation to either the Application or the Settlement. Accordingly, the Board considers the record of this proceeding to have closed on April 23, 2003. 2 SITES and ESTIMATED COSTS AE submitted that each of the decommissioned isolated generating sites for which it was applying for reclamation costs meets the criteria set out in section 35(1) of the Regulation. Namely, that AE was the owner of the isolated generating units, the isolated generating units were used for the purpose of providing service to customer within the service area of the electric system distribution system of AE that were not connected to the interconnected electric system, and that the isolated generating units were decommissioned before the coming into force of the Regulation. In its Application1, AE noted that the Regulation does not require cost estimates to be made prior to undertaking reclamation work at the decommissioned sites. Instead, the Regulation states in Section 35 that the work is to be done and then AE can apply to recover the costs from the Balancing Pool. Accordingly, AE stated that there are no detailed cost estimates for the decommissioned sites. However, AE stated that a review of the cost estimates for the remediation of the operating sites (Application No. 1252803) would find that there was sufficient diversity in the volumes of contaminated soil and the locations of the sites that a representative cost per m3 of remediated soil can be calculated and applied to the decommissioned sites, where similar diversity existed. Using this rationale, the Tier 1 cost estimate of $14.7 million for the Operating Sites and the total Tier 1 volume of 74,105 m3 for the Operating Sites yielded a cost of $198/m3. AE stated that applying this cost per cubic meter to the total Tier 1 volume of 56,665 m3 for the decommissioned sites (Appendix C of this Decision is reproduced from Appendix C of the Application) produced a ballpark cost estimate of $11.2 million for remediation of the decommissioned sites. AE stated that the cost to reclaim the surface of the decommissioned sites had not been estimated and those costs would be in addition to this amount. 1 Page 8 2 • EUB Decision 2003-036 (May 13, 2 003) Isolated Generation Reclamation Costs Decommissioned Sites Negotiated Settlement ATCO Electric Ltd. AE included a spreadsheet listing all decommissioned isolated generating sites (Appendix D of this Decision is reproduced from Appendix A to the Decommissioned Sites Application). AE noted in Section 1.C.7 of the Application, that some of the sites were contaminated with substances that were not representative of ATCO Electric’s operations. However, AE stated it is not always possible to trace this contamination conclusively to third parties. In those cases where a third party was identified, ATCO Electric intends to conduct the remediation and surface reclamation of the site jointly, with the third party picking up its fair share of the costs. In those cases where it was not possible to link any third party to the cause of the contamination, ATCO Electric did not see any alternative but to recover 100% of the cost of remediation and surface reclamation from the Balancing Pool through this Application. For sites that AE had sold, AE stated in its Application that AE had conducted a review of documentation regarding conditions of sale. The review indicated that no express transfer of liability occurred with transfer of title. AE stated that it might remain responsible for the remediation of any environmental releases that occurred at the decommissioned isolated generating plants. 3 VIEWS OF THE PARTIES In addition to AE, the following parties executed the Decommissioned Sites Settlement: • Alberta Association of Municipal Districts & Counties; • Alberta Direct Connect Consumer Association; • Alberta Federation of REA’s Ltd.; • Alberta Irrigation Projects Association; • Alberta Urban Municipalities Association; • The City of Calgary; • Consumers’ Coalition of Alberta; • Independent Power Producers Society of Alberta; • Industrial Power Consumers and Cogenerators Association of Alberta; • Public Institutional Consumers of Alberta; and • Senior Petroleum Producers Association. Although the Alberta Cogenerators Council (ACC) participated in the settlement discussions, the ACC did not sign the Settlement. Instead, the ACC indicated that it neither supported nor opposed the Settlement. Representatives of certain aboriginal communities also participated in the settlement process, but did not execute the Settlement. However, the Settlement was accompanied by a letter on behalf of those communities indicating their support