TABLE OF CONTENTS

                                                                                                                                                                                                              Page no.

Executive summary. i

1.0          Introduction. 1

1.1          Application and Approvals Sought. 1

1.2          Background. 2

1.3          Regulatory Process. 2

2.0          2021 Revenue Requirement and Revenue Surplus. 3

2.1          Forecast Revenue Requirement. 4

2.2          Forecast Revenue Surplus. 5

2.3          Revenue Surplus Deferral Account. 7

3.0          Forecast Capital Projects. 9

4.0          Changes to the RSAM Rider. 10

5.0          Next Revenue Requirement Application. 11

COMMISSION ORDER G-78-21

APPENDIX A       List of Acronyms
APPENDIX B       Exhibit List

 

Executive summary

FortisBC Energy Inc. (FEI) requests that the British Columbia Utilities Commission (BCUC) maintain existing 2020 delivery rates for 2021 for the Fort Nelson service area (FEFN). FEI forecasts existing delivery rates will result in a revenue surplus that exceeds its 2021 cost of service or revenue requirements (Revenue Requirements) by $132,000. FEI proposes to record this 2021 revenue surplus in a deferral account and use the surplus to mitigate or phase in future rate increases. FEI also seeks approval to adjust the Revenue Stabilization Adjustment Mechanism (RSAM) rate rider for 2021 to a refund of $0.333/GJ.

 

The Panel makes the following key findings:

•         FEI’s 2021 forecast Revenue Requirements and load forecast for FEFN provide a reasonable basis for setting rates for 2021;

•         A Certificate of Public Convenience and Necessity application for the Recreation Centre District Station Project is not required since the purpose of the project is to replace an under-rated valve and the total estimated costs are not of the magnitude that would warrant the additional costs of a major project filing;

•         FEI’s proposal to hold the forecast revenue surplus in a deferral account to mitigate or phase in future rate increases is appropriate for 2021. This approach has the benefit of maintaining stability in rates and is an efficient way to deal with a small forecast revenue surplus that would otherwise have a minimal impact on customer rates; and

•         The proposed RSAM rate rider refund reflects updated 2020 preliminary actual data and the method of calculating the rate rider is consistent with past practice.

The Panel approves no rate increase for 2021 and maintains the existing delivery rates for FEFN on a permanent basis, effective January 1, 2021. The Panel also approves setting the RSAM Rider 5 to a refund of $0.333/GJ for Rate Schedule (RS) 1, RS 2, and RS 3 on a permanent basis, effective January 1, 2021.

 

Maintaining existing delivery rates for 2021 and approval of the 2021 RSAM rate rider refund address the ratepayer concerns expressed in letters of comment in this proceeding, stating that recent increases in commodity rates are having negative effects on families and businesses and that any further rate increase would be detrimental.

1.0              Introduction

FortisBC Energy Inc. (FEI) requests that the British Columbia Utilities Commission (BCUC) maintain existing 2020 delivery rates for 2021 for the Fort Nelson service area (FEFN). FEI forecasts existing delivery rates will result in a revenue surplus that exceeds its 2021 cost of service or revenue requirement (Revenue Requirement). FEI proposes to record this 2021 revenue surplus in a deferral account and use the surplus to mitigate or phase in future rate increases. FEI also seeks approval to adjust the Revenue Stabilization Adjustment Mechanism (RSAM) rate rider for 2021 to a refund of $0.333/GJ.

 

This decision sets out the key issues to be decided by the Panel, provides an overview of relevant evidence, considers FEI’s proposals and ratepayer letters of comments and outlines the reasons for its decision. The Panel addresses the following key issues:

•         Reasonableness of the 2021 FEFN forecast Revenue Requirement and appropriateness of deferral treatment for the forecast 2021 revenue surplus;

•         Status and impact of forecast capital projects;

•         Proposed changes to the 2021 RSAM rate rider; and

•         Issues related to FEFN’s next Revenue Requirement application (RRA).

1.1              Application and Approvals Sought

On November 6, 2020, FEI filed FEFN’s 2021 RRA with the BCUC that was supplemented with additional information[1] and evidence[2] (Application). FEI seeks the BCUC’s approval to:

•         maintain existing 2020 delivery rates for FEFN on a permanent basis, effective January 1, 2021;

•         set the RSAM rate rider (i.e., RSAM Rider 5) to a refund of $0.333 per gigajoule (GJ) for rate schedule (RS) 1, RS 2, and RS 3 on a permanent basis, effective January 1, 2021; and

•         establish a non-rate base deferral account (2021 Revenue Surplus deferral account) to record the forecast 2021 revenue surplus of $132,000 and any BCUC direct costs or Participant Assistance/Cost Award costs related to the review of the Application, attracting a weighted average cost of capital (WACC) return and with amortization to be determined in the next Revenue Requirement proceeding.[3]

FEI filed the Application pursuant to sections 58 to 60 of the Utilities Commission Act (UCA). The UCA sets out the framework for approval of rates and includes:

•         Section 59(5) which defines an “unjust” or “unreasonable” rate and section 59(4) that states the determination of what is “unjust” or “unreasonable” is a question of fact of which the BCUC is the sole judge;

•         Section 60 which provides the BCUC the authority to establish rates and includes mandatory considerations, including the requirement that rates not be “unjust, unreasonable, unduly discriminatory or unduly preferential”; and

•         Section 60(1)(b.1) which establishes that in setting a rate, the BCUC may use “any mechanism, formula or other method of setting the rate that it considers advisable, and may order that the rate derived from such a mechanism, formula or other method is to remain in effect for a specified period.”

The Panel conducts its review of the Application based on this legislative authority.

1.2              Background

FEFN represents a small portion of FEI’s overall customer base.[4] In 2021, FEI forecasts it will serve approximately 2,331 customers in the Fort Nelson area with estimated annual consumption of approximately 492.3 TJ of natural gas.[5] Although FEFN is not a stand-alone legal entity, its Revenue Requirement and rates are determined on a separate basis.[6]

In the FEFN 2019-2020 RRA Decision[7], the BCUC directed FEI to provide the following information in its next RRA:

•         A discussion of the potential for postage stamp rates in FEFN along with the rest of FEI, including specific information;[8] and

•         An update on the scope, timing and cost of the Recreation Centre District Station project.[9]

The BCUC also approved the Certificate of Public Convenience and Necessity (CPCN) for the acquisition of the Prophet River First Nation (PRFN) gas distribution system and directed FEI to file with the BCUC, among other things, semi-annual progress reports on the PRFN Extension. A CPCN was requested for this project due to public interest considerations.[10]

FEI’s responses to these directives are discussed in further detail in Sections 3.0 and 5.0 below.

1.3              Regulatory Process

Since no rate increase is being sought, FEI requested a limited regulatory review process for the Application, with any stakeholder participation limited to letters of comment. FEI noted that given FEFN’s small size and small customer base, regulatory proceeding costs for more significant regulatory review processes can have a material rate impact and could significantly erode any revenue surplus available to offset any future rate increases.[11]

In light of these concerns, the BCUC established a written public hearing process and regulatory timetable for the review of the Application including the filing of supplemental information, one round of BCUC information requests (IRs), letters of comment from stakeholders, and FEI’s final argument.[12]

On December 4, 2020, the BCUC approved FEI to maintain delivery rates at existing 2020 rates and to change the RSAM rate rider to a refund of $0.054 per GJ, on an interim and refundable basis, for FEFN effective January 1, 2021.[13]

On January 14, 2021 FEI filed an Evidentiary Update to update the Application based on 2020 preliminary actual data, which resulted in an updated forecast 2021 revenue surplus and 2021 RSAM rate rider.[14]

By letter dated January 21, 2021, the Panel requested that FEI:[15]

•         Provide the bill impact for each FEFN customer class if there is no deferral account treatment for the forecast 2021 revenue surplus and a delivery rate change is implemented effective January 1, 2021; and  

•         Elaborate in its final argument the reasons for its proposal to maintain existing rates and place the forecast 2021 revenue surplus in a deferral account.

 

FEI filed a delivery rate and bill impact of the forecast 2021 revenue surplus[16] and its final argument on January 28, 2021.

2.0              2021 Revenue Requirement and Revenue Surplus

In this Section, the Panel reviews the following items:

•         FEFN’s Revenue Requirement cost components including operating and maintenance costs (O&M), property taxes, depreciation and amortization, other revenue, financing costs, income taxes, and allowed return on equity (ROE);

•         Forecast revenues and margin based on the 2021 demand forecast and FEFN’s existing delivery rates; and

•         The proposed deferral treatment of the 2021 revenue surplus.

To set 2021 delivery rates, the Panel considers FEFN’s total Revenue Requirement or its “cost of service”. FEFN’s Revenue Requirement reflects the total amount of revenue that must be collected in rates to recover its forecast costs of service and to provide FEI an opportunity to earn a reasonable return. Table 1 sets out FEI’s forecast 2021 FEFN Revenue Requirement and revenue surplus compared to the 2020 Revenue Requirement approved by the BCUC and 2020 projected actual amounts.

 

Table 1: 2021 FEFN Revenue Requirement and Revenue Surplus ($000’s)[17]

 

2.1              Forecast Revenue Requirement

FEFN’s 2021 Revenue Requirement is forecast to decrease by approximately $120,000, or 5 percent, compared to the 2020 approved Revenue Requirement and by approximately $255,000, or 10 percent, compared to the 2020 projected Revenue Requirement. The primary drivers for the decrease in the 2021 forecast as compared to the 2020 approved are lower O&M, income taxes and financing costs, partially offset by an increase in property taxes.[21] These items are discussed below.

 

O&M Expenses

 

O&M expenses are forecast to decrease in 2021 by approximately $70,000, or 8 percent, compared to the 2020 approved amount, primarily due to lower International Brotherhood of Electrical Workers (IBEW) labour costs, partially offset by a higher shared services fee from FEI.[22]

FEI explains that IBEW labour costs forecast for 2021 are expected to be consistent with those projected for 2020 and the 2019 actuals since FEFN staff turnover has been reduced, resulting in lower training costs. In addition, certain processes have been streamlined resulting in less required support from Prince George IBEW staff starting in 2019. These factors have contributed to the lower IBEW costs observed in 2019 and 2020, which are expected to continue in 2021.[23]

The shared services fee from FEI is forecast to increase in 2021 due to higher O&M costs expected for FEI.[24]

 

Property Taxes

 

Property taxes are forecast to increase by approximately $23,000, or 18 percent, in 2021 compared to the 2020 approved amount.[25] In 2019, FEI and BC Assessment reviewed the inventory of properties subject to property tax, including areas within the Fort Nelson Indian Band reserve. This review, combined with updates to pipeline tax rates, resulted in increased property taxes for FEFN, along with the rest of FEI’s service territory, starting in 2020.[26] Any forecast variances related to property taxes are recorded in the approved Property Tax deferral account and returned to or collected from customers in the following year.[27]

Financing Costs

 

FEI explains that financing costs are determined by a combination of the amount of financing required to finance rate base and the forecast interest rates.[28] FEFN’s 2021 approved debt component is set at 61.5 percent of rate base and debt consists of 60.34 percent long-term debt and 1.16 percent short-term debt.[29]

 

FEI forecasts a decrease in financing costs of approximately $20,000, or 5 percent, in 2021 compared to 2020 approved,[30] primarily due to lower long term debt interest rates (2021 average of 4.78 percent compared to 2020 average of 5.17 percent) and lower forecast amount of short-term financing in 2021 ($145,000 in 2021 compared to $317,000 in 2020).[31]

 

Income Taxes

 

In 2021, FEI forecasts a decrease in income taxes of approximately $51,000, or 42 percent, compared to the 2020 approved amount, primarily driven by lower taxable income due to higher net salvage removal costs in 2021. Net salvage removal costs are forecast to be $120,000 higher in 2021 compared to 2020 approved, representing approximately 85 percent of the total increase in adjustments of $142,000 to taxable income.[32]

2.2              Forecast Revenue Surplus

FEI states there are two key drivers of the 2021 revenue surplus:

•         Higher use per customer (UPC) leading to an increased 2021 demand forecast, as discussed below; and

•         Reduced O&M expenses due to lower IBEW labour costs partially offset by an increase in property taxes as discussed above.[33]

Demand Forecast

 

FEI updated the 2021 customer count and use rate and recalculated the demand forecasts in each rate class using the 2020 preliminary actuals. FEI submits this the best information on which to base its forecast, given it is the most recent data available, includes the impact of the COVID-19 pandemic and using year-end data is consistent with FEI’s forecast methods.[34] This update results in the forecast 2021 revenue surplus of $132,000 set out in Table 1 above.[35]

Table 2 outlines FEFN’s forecast 2021 number of customers compared to the 2020 approved and 2020 actual for each rate class.

Table 2: FEFN Number of Customers[36]

Due to the low customer count in RS 3 and the high average use rate, FEI has forecast the customer count for 2021 based solely on the 2020 preliminary actual data, so that the 2021 customer forecast equals the 2020 preliminary actual customer count. As FEI is unaware of any new RS 3 customers that will be taking service in 2021, or any that will be ceasing service, FEI has not forecast any additions to the 2020 preliminary actual customer total.[39]

FEI notes that as of November 2020, the single RS 25 customer moved to RS 3, which is reflected in the increased demand forecast for RS 3 in 2021 and the matching reduction in the demand forecast for RS 25.[40]

 

FEI submits that the update to its 2021 demand forecast using the 2020 preliminary actual customer totals and use rates results in the best forecast available.[41]

 

Revenue at Existing Rates

 

FEI forecasts its 2021 revenue using 2020 preliminary actual customer count and use rate data.[42] FEI explains that variances between approved and actual use rates are being captured in the RSAM deferral account.[43]

Table 3 outlines FEI’s forecast 2021 FEFN revenue at existing rates compared to the 2020 approved and 2020 projected amounts.

Table 3: FEFN Revenue at Existing Rates ($000’s)[44]

In 2021, FEFN’s revenue is forecast to increase by approximately $179,000, or 6 percent, compared to 2020 approved revenue at existing rates.[45] The 2021 forecast increase in revenue is due to the 2021 increase in demand forecast, as discussed above. FEI explains that three of the customers included in the 2021 demand forecast have higher than average UPCs compared to the customers used to develop the 2019 and 2020 demand forecast, resulting in higher forecast 2021 delivery revenue.[46]

2.3              Revenue Surplus Deferral Account

FEI requests approval to establish the 2021 Revenue Surplus deferral account to record the forecast 2021 revenue surplus of $132,000 and any BCUC direct costs or Participant Assistance/Cost Award (PACA) costs related to the review of the Application, attracting a WACC return and with amortization to be determined in the next Revenue Requirement proceeding.[47] FEI forecasts zero PACA costs as there is no intervener participation in this proceeding.[48]

FEI proposes to hold the forecast surplus in the 2021 Revenue Surplus deferral account to mitigate or phase in future rate increases, including any that result from FEI’s upcoming application to move FEFN to common rates with FEI[49], as discussed below.

Table 4 outlines the proposed additions to the 2021 Revenue Surplus deferral account and the forecast balance at the end of 2021.[50]

Table 4: 2021 Revenue Surplus Deferral Account

 

FEI states that a WACC return is appropriate because it is consistent with the treatment of FEFN’s previously approved deferral accounts and is also consistent with the BCUC’s previously approved treatment of revenue surpluses in FEI.[53]

 

FEI explains that returning the $132,000 revenue surplus, after offsetting the Application costs, to FEFN customers would result in an average rate decrease of approximately 4.6 percent or an approximate total bill decrease of 3%. The dollar savings resulting from flowing the surplus to delivery rates for an average customer in RS 1, RS 2 and RS 3 are annual savings of $30, $95 and $1,012, respectively.[54] If FEI flows the surplus to delivery rates and after the proposed changes to the RSAM and the approved changes to the Storage and Transport and Cost of Gas Charges are included, the overall bill impact is an approximate 2 percent decrease for RS 1, RS 2 and RS 3 customers.[55]

 

FEI submits that recording the forecast revenue surplus in the deferral account is preferable and:[56]

•         Results in rate stability by smoothing rates and mitigating future rate increases, thereby reducing rate volatility;

•         Provides options for potentially phasing in a transition to common rates with the rest of FEI; and

•         Benefits FEFN customers in the near future resulting in low intergenerational inequity.

FEI argues that even if the BCUC does not approve a transition to common rates, the BCUC would be able to direct FEI to refund the balance in the account to FEFN customers. Further, a WACC return on the surplus recognizes the financing that is associated with the timing difference between when the revenues are collected from customers and when they are returned to customers.[57]

Panel Determination

The Panel finds the 2021 forecast Revenue Requirements reflected in Table 1 provide a reasonable basis for setting rates for the test period. Forecast O&M costs are comparable to recent expenditures and any variances are supported by sufficient evidence. FEI has appropriately reduced 2021 forecast O&M costs for actual savings achieved in 2019 and 2020. The increase in forecast property taxes reflects a recent tax assessment and since the property taxes are outside FEI’s control, any forecast variances related to property taxes will be recorded in the approved Property Tax deferral account. Forecast financing costs and allowed ROE amounts are based on the BCUC approved deemed capital structure and allowed ROE and financing costs reflect reductions in long-term debt interest rates. Other Revenue Requirement items are comparable to the previous test periods or are sufficiently supported by reasonable explanations.

The Panel finds the load forecast reasonable for the purpose of determining the forecast revenue and revenue surplus reflected in Table 1 and for setting rates for the test period. FEI’s approach incorporates forecast 2021 customer count, use rate and demand forecasts based on 2020 preliminary actuals. The Panel agrees with FEI that this approach is appropriate since it reflects the most recent data available and includes the impact of the COVID-19 pandemic. Further, the Panel notes that variances between forecast and actual use rates will be captured in the RSAM deferral account.

Regarding FEI’s proposal to hold the forecast surplus in a deferral account to mitigate or phase in future rate increases, the Panel is persuaded this is an appropriate approach for the 2021 test period. The Panel agrees that maintaining stability in rates is an important rate setting principle, and the proposed approach is an efficient way to deal with a small forecast revenue surplus that would otherwise have a minimal impact on customer rates. Further, maintaining existing delivery rates is responsive to the ratepayer comments about the detrimental impact of any rate increases. Holding the 2021 surplus for a future test period will help mitigate future increases. Accordingly, the Panel approves FEI’s request to establish the 2021 Revenue Surplus deferral account to record the forecast 2021 revenue surplus of $132,000 and any BCUC direct costs. The non-rate base deferral account is approved to attract interest based on a WACC return and the amortization or recovery mechanism is to be determined in the next RRA for FEFN.

Based on the above findings and determinations, FEI is approved to maintain the existing delivery rates on a permanent basis for FEFN, effective January 1, 2021.

3.0              Forecast Capital Projects

Recreation Centre District Station Project

 

In the FEFN 2019-2020 RRA Decision, the BCUC directed FEI to provide an update in its next RRA on the scope, timing and cost of the Recreation Centre District Station project to replace an under-rated valve.[58]

FEI outlines the need, alternatives and estimated cost of the project. FEI’s currently preferred option is to modify the station at the existing site at an estimated total capital cost of $682,000. The project is planned to be completed by the end of 2023,[59] with construction and installation planned for 2022.[60]

 

In FEI’s view, this option meets the definition of an “extension” under section 45(5) of the UCA, as this option would potentially increase the capacity of the system. However, FEI does not believe that it is necessary to seek approval of the Recreation Centre District Station project as a “major project” (i.e., as either a CPCN or a section 44.2 filing). FEI submits that the estimated cost of the project of $682,000 is not of a magnitude that would warrant the filing of a CPCN or section 44.2 application.[61]

 

FEI points out that in contrast to FEFN’s historical CPCN projects (such as the Prophet River First Nation (PRFN) gas distribution system Extension, and FEI’s application for a CPCN to construct and operate a transmission pressure pipeline crossing of the Muskwa River), the Recreation Centre District Station Project is not an asset purchase, has no significant public interest considerations, and has a cost well below $1 million. FEI submits that there are no considerations which support requiring a CPCN for the project and requiring a CPCN would impose undue administrative burden and costs on FEFN. FEI requests that the BCUC not exercise its discretion to require a CPCN for this project.[62]

 

FEI explains there is no rate impact in 2021 associated with this project. However, this project would result in an approximate 0.1 percent increase to rates if it were flowed through, in the absence of a Revenue Surplus deferral account.[63]

 

PRFN Extension

 

FEI filed as a compliance filing its semi-annual report on the PRFN gas distribution system extension with the BCUC on September 8, 2020. Additionally, FEI includes this report as Appendix C to the Application.[64]

The total CPCN forecast cost for the PRFN extension is approximately $104,000. The extension is expected to be complete in 2021. FEI states that as the PRFN extension was approved as a CPCN, the costs will enter rate base on January 1 of the year following the assets being placed into service. Therefore, there is no impact to the test year 2021 Revenue Requirement from the completion of the PRFN extension in 2021.[65]  FEI is not requesting that the PRFN extension semi-annual progress report be reviewed as part of this Application.[66]

Panel Determination

The Panel finds that a CPCN application for the Recreation Centre District Station Project is not required. The purpose of the project is to replace an under-rated valve and the total estimated costs are not of the magnitude that would warrant the additional costs of a major project filing. Further, FEI states the project has no significant public interest considerations. However, FEI is directed to provide an update on the scope, timing and cost of the Recreation Centre District Station project in its next RRA.

 

Given that the PRFN extension does not impact FEFN delivery rates for 2021, the semi-annual compliance filing has not been reviewed as part of this Application.

4.0              Changes to the RSAM Rider

The RSAM deferral account captures variances between forecast and actual use rates. The resulting margin variance in 2020 is added to the opening 2021 balance. Consistent with past practice, FEI proposes that this amount be recovered over two years through an adjustment to the RSAM rate rider.[67]

Effective January 1, 2021, the FEFN RSAM rate rider was approved on an interim basis from a recovery of $0.177 per GJ to a refund of $0.054 per GJ.[68]

Based on updated information, FEI now seeks approval of the RSAM rate rider based on 2020 preliminary actual data and provides the calculation of the revised refund of $0.333/GJ for 2021, as follows:[69]

Table 5: Calculation of the RSAM Rider 5 for 2021

FEI states the adjustment to the RSAM rate rider will result in a credit on customer bills.[70]

Panel Determination

The Panel approves FEI’s request to set the RSAM Rider 5 to a refund of $0.333 per GJ for RS 1, RS 2, and RS 3 on a permanent basis for FEFN, effective January 1, 2021. FEI is directed to refund the difference between the interim and permanent RSAM rate rider, with interest calculated at the average prime rate of FEI’s principal bank for its most recent year. The Panel agrees with FEI that it is appropriate to update the RSAM rate rider refund from the amount used to set interim rates based on the updated 2020 preliminary actual data. Further, the method of calculating the RSAM rate rider is consistent with past practice.

5.0              Next Revenue Requirement Application

Previous BCUC Directive Regarding Common Rates

 

In the FEFN 2019-2020 RRA Decision, the BCUC directed FEI to provide a discussion of the potential for postage stamp rates in FEFN along with the rest of FEI, including the following information, in its next RRA:

 

•         The forecast rate impact of moving to postage stamp rates for each of FEFN’s rate schedules for 2021 and 2022 (or the applicable test period, if different from the two years referenced);

•         FEI’s assessment of the pros and cons of moving to postage stamp rates in the near future;

•         FEI’s assessment of the likelihood of the occurrence of factors and circumstances that could result in a reduced or increased rate impact in the near future;

•         Proposed mechanisms to reduce or mitigate negative rate impacts to an acceptable level; and

•         A proposed time period to implement postage stamp rates.[71]

 

FEI proposes to provide the requested information in a common rates application for FEFN which it expects to file by May 2021, with a planned implementation date of January 1, 2022.[72] FEI does not believe that a variance to the above-noted BCUC directive is necessary since the upcoming filing of the common rates application represents FEFN’s next RRA.[73]

FEI does not believe that any process in advance of filing for common rates is required, as it would only serve to delay the determination on whether common rates for FEFN is appropriate and could result in duplicative review processes.[74] FEI intends to engage and consult with FEFN’s customers, through virtual workshops, to inform customers of the potential change to their bills from a move to common rates, and to seek timely feedback to help inform FEI’s common rates application.[75]

 

FEI submits that its plan to file a common rates application is the best path forward, and states that:

In order to make an informed decision, the BCUC will need to consider a full evidentiary record on the merits of common rates for FEFN. Any intermediary process, based on lesser information, can only delay what is required to resolve the issue.[76]

 

 

 

 

 

Ratepayer Comments on Rate Increases

 

In this proceeding, Carol Seidel submits a letter of comment stating that the rate increase in October 2020 is having negative effects on families and businesses,[77] and Joan Kinzett comments that any rate increase would be detrimental.[78]

FEI states that it is sensitive to rate impacts on its customers and seeks to provide safe and reliable service to its customers at the lowest reasonable cost. FEI recognizes that the commodity cost portion of customer bills has increased in 2020. FEI flows its commodity costs through to customers without any markup, and all changes in commodity rates are approved by the BCUC. Further, FEI notes that it is not seeking any delivery rate increase in this proceeding and FEI’s adjustment to the RSAM rate rider will result in a credit on customer bills.[79]

Panel Determination

The Panel does not agree that FEI’s upcoming filing of the common rates application represents FEFN’s next RRA for the purposes of complying with the FEFN 2019-2020 RRA Decision’s directive regarding common rates. Even though FEI requests deferral account treatment for the 2021 test period, it was necessary for the Panel to review the 2021 forecast Revenue Requirement and revenue surplus to make a determination on the amount of the revenue surplus to be added to the 2021 Revenue Surplus deferral account, as set out in Section 2.

 

In the Panel’s view, the previous directive regarding common rates was not a direction for FEI to file a common rates application. However, given FEI’s intention to file a common rates application for FEFN by May 2021, with a planned implementation date of January 1, 2022, the Panel accepts FEI’s proposal to provide the requested information in its upcoming common rates application which FEI states will represent its next RRA. If FEI does not file its planned common rates application, it can file the directed information in a 2022 RRA. In any event, FEI is directed to comply with the BCUC directive in Order G-48-19 dated March 5, 2019 regarding common rates in its next RRA.

 

To assess the appropriateness of moving FEFN ratepayers to FEI common rates, a key consideration will be the impact of common rates on FEFN ratepayers. In this context, the Panel acknowledges the comments of customers in this proceeding who state that recent increases in the commodity rates are having negative effects on families and businesses and that any further rate increase would be detrimental. The Panel also notes that FEI states it is sensitive to rate impacts on its customers and that it seeks to provide safe and reliable service to customers at the lowest reasonable cost. The Panel urges FEI to take these considerations into account as it moves forward with its common rates application or next RRA.

 

 

 

Dated at the City of Vancouver, in the Province of British Columbia, this                 16^th               day of March 2021.

 

 

 

 

Original signed by:______________________

K. A. Keilty

Panel Chair / Commissioner

 

 

 

Original signed by:______________________

A. K. Fung, QC

Commissioner

 

 

 

 

 

 

 

FortisBC Energy Inc. - Fort Nelson Service Area

Application for Deferral Account Treatment for 2021 and

Changes to the Revenue Stabilization Adjustment Mechanism Rider

 

2021 Revenue Surplus deferral account	Non-rate base deferral account
Application	Application for Approval of Deferral Account Treatment for 2021 and Changes to the Revenue Stabilization Adjustment Mechanism Rider for the Fort Nelson Service Area
BCUC	British Columbia Utilities Commission
CPCN	Certificate of Public Convenience and Necessity
FEFN	Fort Nelson service area
FEFN 2019-2020 RRA	FortisBC Energy Inc. Application for Approval of 2019-2020 Revenue Requirements and Rates for the Fort Nelson Service Area
FEI	FortisBC Energy Inc.
GJ	Gigajoule
IBEW	International Brotherhood of Electrical Workers
IR	Information request
O&M	Operations and maintenance
PACA	Participant Assistance/Cost Award
ROE	Return on equity
PRFN	Prophet River First Nation
RRA	Revenue Requirement application
RS	Rate Schedule
RSAM	Revenue Stabilization Adjustment Mechanism
UCA	Utilities Commission Act
UPC	Use per customer
WACC	Weighted average cost of capital

 

 

 

 

 

 

IN THE MATTER OF

the Utilities Commission Act, RSBC 1996, Chapter 473

 

and

 

 

FortisBC Energy Inc. - Fort Nelson Service Area

Application for Deferral Account Treatment for 2021 and

Changes to the Revenue Stabilization Adjustment Mechanism Rider

 

EXHIBIT LIST

 

Exhibit No.                                                                          Description

 

Commission documents

 

A-1	Letter dated November 18, 2020 – Appointing the panel for review of FortisBC Energy Inc. - Fort Nelson Service Area’s Application for Deferral Account Treatment for 2021 and Changes to the Revenue Stabilization Adjustment Mechanism Rider
A-2	Letter dated November 25, 2020 – BCUC Order G-299-20 establishing the regulatory timetable
A-3	Letter dated December 4, 2020 – BCUC Order G-316-20 establishing an amended regulatory timetable
A-4	Letter dated December 22, 2020 – BCUC Information Request No. 1 to FEI
A-5	Letter dated January 21, 2021 – Panel request to FEI regarding written final argument

 

 

 

 

Applicant documents

 

B-1	FortisBC Energy Inc. (FEI) - Fort Nelson Service Area Application for Deferral Account Treatment for 2021 and Changes to the Revenue Stabilization Adjustment Mechanism (RSAM) Rider dated November 06, 2020
B-2	Letter dated December 2, 2020 - FEI submitting request for interim rates and timetable extension
B-3	Letter dated December 9, 2020 - FEI submitting Supplemental Information
B-4	Letter dated January 14, 2021 – FEI submitting response to BCUC Information Request No. 1
B-5	Letter dated January 14, 2021 – FEI submitting evidentiary update
B-6	Letter dated January 28, 2021 – FEI submitting Delivery Rate and Bill Impact of Forecast 2021 Revenue Surplus

 

 

Interested party documents

 

D-1	Seidel, C. (Seidel) – Submission dated December 29, 2020 request for Interested Party Status
D-1-1	Seidel - Letter of Comment dated December 29, 2020

 

 

Letters of comment

 

E-1	Kinzett, J. – Letter of Comment dated December 29, 2020