Written by Deirdre Sheehan, Marie Buchinski and Colm Boyle
On March 18, 2020, the Government of Alberta directed that certain residential, farm, and small commercial utility customers in Alberta be given an option to defer the payment of electricity and natural gas bills for 90 days, if they are experiencing financial hardship as a direct result of the COVID-19 pandemic (Utility Payment Deferral Program). In furtherance of relieving economic hardship for Albertans, on April 15, 2020, Alberta Energy directed the Alberta Electric System Operator (AESO), to assist the government in delivering the Utility Payment Deferral Program and to also "explore other opportunities to mitigate cost increases during these challenging economic times."
In response to the direction from Alberta government, the AESO filed an application with the Alberta Utilities Commission (AUC) requesting that it be permitted to defer the payment of certain AESO tariff charges, including those determined under its demand transmission rate (DTS Rate), through two separate programs:
- Retail Consumers Deferral Program: The first program permits the owners of electric distribution systems (and the City of Medicine Hat) to defer for the period of March 18, 2020, to June 19, 2020, payment of charges determined under the AESO's DTS Rate and certain other AESO tariff charges associated with consumers that have elected to defer payment of their utility accounts under the Utility Payment Deferral Program. This would effectively mean that consumers who have elected to defer payment under the Utility Payment Deferral Program would also have the transmission charge component of their electricity bills deferred.
- Transmission-Connected Deferral Program: The second program permits certain transmission-connected customers (i.e., those customers that have entered into an arrangement directly with the AESO for system access service; designated legal owners of industrial systems; and the City of Medicine Hat) to defer payments of any increase to their charge determined by the AESO's DTS Rate for the period of April 1, 2020, to June 30, 2020.
On April 27, 2020, the AUC determined that the AESO’s deferral programs were in the public interest, and approved the application without a hearing, having determined that no party would be directly and adversely affected by the AESO’s proposal to defer tariff payments. The AUC authorized the AESO as follows:
- to establish the deferral programs, and to extend them if requested by the Government of Alberta, but directed that the AESO advise the AUC in writing if the programs are extended;
- to establish any deferral accounts that may be required to implement the deferral programs and to collect associated carrying costs.
For the Retail Consumers Deferral Program, the AUC determined that disposition of the AESO’s deferral accounts will be determined pursuant to the Government of Alberta’s policy determination with respect to the recovery of these costs. The mechanism for the AESO to collect any shortfall will be subject to AUC approval. However, for the Transmission-Connected Deferral Program, the deferred amounts and carrying costs will be recovered from the customers who benefitted from the deferral. Any proposal by the AESO to collect amounts accrued in deferral accounts and to be recovered through a rate rider will require AUC approval.
Consumer groups representing industrial power consumers intervened in the proceeding, raising the concern that transmission-connected consumers that have not entered into an arrangement directly with the AESO for system access service, but rather have service through distribution utilities, are not eligible for the relief provided in the Transmission-Connected Deferral Program. These groups recommended that the distribution utilities work with the AESO to enable such customers' eligibility for payment deferral. However, the AUC dismissed these requests stating that they were outside the scope of the AESO's application. It remains to be seen if the Government of Alberta will direct further utility bill relief measures to address these concerns.
We will continue to monitor ongoing developments as regulators and other entities implement measures to address the COVID-19 public health emergency. Should you have questions on how these developments affect you or your operations, please contact the Bennett Jones Regulatory group.