Decision 25644-D01-2021 FortisAlberta Inc. Application for Orders Confirming the Boundaries of FortisAlberta Inc. Exclusive Municipal Franchise Areas February 17, 2021 Alberta Utilities Commission Decision 25644-D01-2021 FortisAlberta Inc. Application for Orders Confirming the Boundaries of FortisAlberta Inc. Exclusive Municipal Franchise Areas Application 25644-A001 Proceeding 25644 February 17, 2021 Published by the: Alberta Utilities Commission Eau Claire Tower 1400, 600 Third Avenue S.W. Calgary, Alberta T2P 0G5 Telephone: 310-4AUC (310-4282) in Alberta 1-833-511-4AUC (1-833-511-4282) outside Alberta Email: [email protected] Website: www.auc.ab.ca The Commission may, within 30 days of the date of this decision and without notice, correct typographical, spelling and calculation errors and other similar types of errors and post the corrected decision on its website. Contents 1 Decision summary ............................................................................................................. 1 2 Details of the application and procedural background ................................................. 1 3 Discussion of issues and Commission findings ............................................................... 2 3.1 Annexed distribution service area and REA members are being served by the REA within the annexed boundary ..........................................................................3 3.2 Annexed distribution service area and no REA members are being served by the REA within the annexed boundary ..........................................................................4 3.3 Scope and wheeling charges ..................................................................................11 4 Order ................................................................................................................................ 11 Appendix A – List of affected municipalities ........................................................................... 15 Appendix B – Service area approvals for the affected REAs ................................................. 16 Decision 25644-D01-2021 (February 17, 2021) i Alberta Utilities Commission Calgary, Alberta FortisAlberta Inc. Decision 25644-D01-2021 Application for Orders Confirming the Boundaries of Proceeding 25644 FortisAlberta Inc. Exclusive Municipal Franchise Areas Application 25644-A001 1 Decision summary 1. In this decision, the Alberta Utilities Commission: (a) Confirms FortisAlberta’s service area boundaries as presented in the application (FortisAlberta’s expanded service areas); (b) Alters as required, the service area boundaries of rural electrification associations (REAs) to prevent incursion into FortisAlberta’s exclusive service areas under municipal franchise agreements (MFAs); (c) Orders, consistent with the bylaws issued by the Town of Penhold and the Town of Bruderheim, the transfer, as soon as practicable, of REA facilities and customers (members) located within FortisAlberta’s expanded service areas under the MFAs granted to FortisAlberta by those municipalities; (d) Orders the eventual transfer of existing REA customers and associated facilities within the remainder of FortisAlberta’s expanded service areas to FortisAlberta consistent with the Commission’s findings in Decision 22164-D01-2018;1 and (e) Denies, at this time, FortisAlberta’s request for the transfer of REA assets that are located within FortisAlberta’s expanded service areas but are not used to serve an REA member within those service areas namely, those located within the Town of Millet, the Town of Fort Macleod and the Summer Village of West Cove. 2 Details of the application and procedural background 2. On June 4, 2020, FortisAlberta filed an application with the Commission under Section 29 of the Hydro and Electric Energy Act (HEEA), asking for the following orders: (i) confirmation of the current limits of FortisAlberta’s exclusive service areas as determined by applicable MFAs; (ii) alteration, as required, of REA service area boundaries to prevent incursion into exclusive service areas governed by MFAs; and (iii) eventual transition of existing REA customers and associated facilities to FortisAlberta. 1 Decision 22164-D01-2018: FortisAlberta Inc. Application for Orders Confirming Boundaries of FortisAlberta Inc. Exclusive Municipal Franchise Areas, Proceeding 22164, Application 22164-A001, July 16, 2018, paragraph 153(c) and (d). Decision 25644-D01-2021 (February 17, 2021) 1 Application for Orders Confirming the Boundaries of FortisAlberta Inc. Exclusive Municipal Franchise Areas FortisAlberta Inc. 3. In support of its application, FortisAlberta indicated that it had undertaken an internal review of the current boundaries of its various municipal franchise areas. From this review, FortisAlberta identified zones of overlap as between itself and REAs. It identified in Appendix F,2 that the updated service area boundaries would affect the following REAs: Battle River Power Cooperative REA Ltd., EQUS REA Ltd., Mayerthorpe and District REA Ltd., North Parkland Power REA Ltd., and Tomahawk REA Ltd.3 4. The Commission established an initial process for the proceeding and issued rulings pertaining to service of the application on affected members and on a request for confidential treatment. 5. Statements of intent to participate (SIPs) were received from Battle River, the Alberta Federation of REAs (AFREA), Epcor Distribution and Transmission Inc., EQUS, Mayerthorpe and David Kaun. Of particular note was the EQUS SIP that raised as an issue whether FortisAlberta intended to include electric distribution system assets owned by the REA that pass through the annexed boundaries of an urban municipality that do not provide service to any REA member inside those boundaries. 6. The Commission pursued this issue through information requests (IRs) to FortisAlberta. Following receipt of FortisAlberta‘s responses, the Commission issued a letter setting out the scope and process for the remainder of the proceeding.4 The Commission considers that the record for this proceeding closed on November 18, 2020, the date that the FortisAlberta reply argument was due. 7. In reaching the determinations set out within this decision, the Commission has considered all relevant materials comprising the record of this proceeding. Accordingly, references in this decision to specific parts of the record in this proceeding are intended to assist the reader in understanding the Commission’s reasoning relating to a particular matter and should not be taken as an indication that the Commission did not consider all relevant portions of the record with respect to that matter. 3 Discussion of issues and Commission findings 8. FortisAlberta’s application concerns two distinct matters: (a) The confirmation of service area boundaries and the transfer of REA members and facilities within an annexed distribution service area where there are REA members being served by the REA within that service area; and (b) The confirmation of service area boundaries and the transfer of REA facilities within an annexed distribution service area where there are electric distribution system assets owned by the REA that pass through the annexed boundaries of the urban municipality, do not provide service to any REA member inside those boundaries but are a part of REA 2 Exhibit 25644-X0005, June 4, 2020. 3 No current customers were identified by FortisAlberta in the overlapping service area of Tomahawk. 4 Exhibit 25644-X0080, October 29, 2020. Decision 25644-D01-2021 (February 17, 2021) 2 Application for Orders Confirming the Boundaries of FortisAlberta Inc. Exclusive Municipal Franchise Areas FortisAlberta Inc. facilities used to serve REA members outside of the annexed distribution service area (pass-through assets). 3.1 Annexed distribution service area and REA members are being served by the REA within the annexed boundary 9. In Proceeding 22164, the Commission examined the legislative and public interest considerations to determine whether to alter electric distribution service area boundaries to align with MFAs entered into between FortisAlberta and various municipalities whose corporate boundaries had expanded through annexation and overlapped with an existing REA service area. In all those instances examined in that proceeding, there were REA members being served by the REA within the annexed distribution service area. For the reasons set out in its decision, Decision 22164-D01-2018, the AUC confirmed FortisAlberta’s exclusive franchise areas to correspond to the corporate limits of the municipalities. However, the Commission did not require the immediate transfer of existing REA facilities and members in the annexed (formerly overlapping) distribution service areas absent a municipal bylaw requiring those members to connect to FortisAlberta. It found that: 153. […] (c) Any existing REA member, who is currently taking electric distribution service from one of the affected REAs within the corporate limits of a municipality identified in Appendix A to this decision, may continue to be served by the REA until such time as the municipality passes a bylaw requiring the REA members in the municipality to take electric distribution service from FortisAlberta. If a municipality does not pass any such further bylaw, the affected REA has the Commission’s approval to continue to serve an existing REA member within the municipality’s boundaries until the earliest of: (i) the existing REA member electing to transfer to FortisAlberta, (ii) a change