Rule 022: Rules on Costs in Utility Rate Proceedings

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The Alberta Utilities Commission is initiating the review of the rules governing cost recovery in rates proceedings to improve participation and encourage efficient, issue-focused proceedings, as set out in the AUC 2021-2024 Strategic Plan. At this time, the Commission will focus on Rule 022: Rules on Costs in Utility Rate Proceedings and will review Rule 009: Rules on Local Intervener Costs the cost recovery rules in facilities proceedings at a later date.

The objective of this consultation is to receive feedback on how Rule 022 can be amended to promote consistent and effective participation in Commission proceedings.

The Commission is seeking stakeholder input regarding five main topics: utility cost recovery process, eligibility for costs, scale of costs and claims for professional fees, process for cost awards and other issues or considerations.

Please submit your responses by November 17, 2021.

The Commission’s review of Rule 022 will consist of the following written and oral stakeholder consultation process. More information can be found in Bulletin 2021-18.


Consultation activity

Date

Stakeholders may file submissions on the topics addressed in this bulletin and any other comments on cost recovery in utility rates proceedings.

November 17, 2021

Commission will host a two-davirtual stakeholder consultation session to hear submissions on the topics addressed in this bulletin and any other comments on cost recovery in utility rates proceedings.

December 8 and 9, 2021

The Alberta Utilities Commission is initiating the review of the rules governing cost recovery in rates proceedings to improve participation and encourage efficient, issue-focused proceedings, as set out in the AUC 2021-2024 Strategic Plan. At this time, the Commission will focus on Rule 022: Rules on Costs in Utility Rate Proceedings and will review Rule 009: Rules on Local Intervener Costs the cost recovery rules in facilities proceedings at a later date.

The objective of this consultation is to receive feedback on how Rule 022 can be amended to promote consistent and effective participation in Commission proceedings.

The Commission is seeking stakeholder input regarding five main topics: utility cost recovery process, eligibility for costs, scale of costs and claims for professional fees, process for cost awards and other issues or considerations.

Please submit your responses by November 17, 2021.

The Commission’s review of Rule 022 will consist of the following written and oral stakeholder consultation process. More information can be found in Bulletin 2021-18.


Consultation activity

Date

Stakeholders may file submissions on the topics addressed in this bulletin and any other comments on cost recovery in utility rates proceedings.

November 17, 2021

Commission will host a two-davirtual stakeholder consultation session to hear submissions on the topics addressed in this bulletin and any other comments on cost recovery in utility rates proceedings.

December 8 and 9, 2021

Discussions: All (5) Open (5)
  • Utility cost recovery process

    about 2 months ago
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    Currently, the utility cost recovery process varies between utilities (and, in some cases, between different business units of the same utility, such as distribution and transmission) and the types of costs and proceedings at issue. For example, some utilities file cost claims under Rule 022 to recover certain external legal and consulting costs whereas others do not. Some utilities maintain hearing cost reserve accounts whereas others do not. As part of this consultation, the Commission asks each gas and electric utility (or each regulated business unit of a utility, if there is more than one and the practice varies between business units), default supply provider and regulated rate provider to summarize how it recovers the various costs (internal staff, external legal and consulting, disbursements, etc.) of rates proceedings. 

    1. Should the Commission establish a uniform requirement for how all utilities, regulated rate and default supply providers recover their costs in rates proceedings? 
    2. If so, should utilities, regulated rate and default supply providers seeking to recover external legal and consulting costs always be required to file a cost claim under Rule 022? For example, should a cost order be a mandatory pre‑requisite to record any such costs in a hearing reserve or otherwise include those costs in a utility’s tariff or rates? Why or why not?
    3. If utilities, regulated rate and default supply providers are not required to file cost claims under Rule 022 before seeking to recover these costs from ratepayers, please explain how these costs should be recorded and how the Commission can ensure these amounts are just and reasonable.
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  • Eligibility for costs

    about 2 months ago
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    Section 3.1 of Rule 022 currently provides that the Commission may award costs to an intervener or a group of utility customers that has a substantial interest in the subject matter of a proceeding and who does not have the means to raise sufficient financial resources to enable the intervener to present its interest adequately in the proceeding. 

    Section 4 provides a list of types or classes of interveners that are ineligible to claim costs unless the Commission orders otherwise. 

    1. Should eligibility for interveners and utility customer groups be expanded or reduced beyond the financial need criterion in Section 3.1?
    2. If so, what change(s) should be made and why?
    3. Should the list of ineligible interveners in Section 4 be changed?
    4. If so, what change(s) should be made and why?
    5. Does the current system allow costs awards to parties representing substantially the same interests and therefore result in duplicative funding?
    6. If so, how is such duplication best addressed?
    7. In the interests of accountability and transparency, what should the Commission do to ensure intervention adequately and fairly represents customers who will be impacted by a particular application?
    8. For example, should eligibility for cost recovery by a customer group require a description of that group’s membership, governance structure and sources of funding?
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  • Scale of costs and claims for professional fees

    about 2 months ago
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    Section 9.2 of Rule 022 provides that an eligible participant may only claim costs in accordance with the scale of costs. The scale of costs is set out in Appendix A of Rule 022 and was last reviewed in 2008. The first section of the scale of costs provides maximum hourly rates that can be claimed for (a) legal fees; and (b) fees of consultants, analysts and experts. The maximum hourly rates are on a sliding scale based on years of experience. The scale for consultants, analysts and experts does not distinguish between experts and non-experts.   

    Recommendation #15 from the Report of the Procedures and Processes Review Committee, which was adopted by the Commission, provides “[n]on-expert opinion evidence should be discouraged through reduction of costs allowed to utilities and eligible interveners.” 

    1. Should the scale of costs be reviewed and updated?
    2. If so, are there any applicable criteria or methodologies the Commission should employ to do so?
    3. Are there any changes to Rule 022, whether in the scale of costs or otherwise, that could be made to address the recommendation that
      non-expert opinion evidence should be discouraged through reduction of costs allowed, or is this recommendation best implemented on a case-by-case basis?
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  • Process for costs awards

    about 2 months ago
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    Section 9.1 of Rule 022 provides that an eligible participant may apply to the Commission for an award of costs incurred in a hearing or other proceeding by filing a costs claim, and Section 9.3 requires the cost claim to be filed within 30 days of the proceeding being closed. While Section 7.1 of Rule 022 provides that an eligible intervener in a hearing or other proceeding may, at any time before or during the proceeding, make a request to the Commission for an advance of funds, in most rates proceedings, eligible participants do not submit an application for cost recovery until after the record of the proceeding has closed. 

    The Office of the Utilities Consumer Advocate (UCA) regularly intervenes in rates proceedings on behalf of residential, farm and small business consumers of electricity and natural gas in accordance with its statutory mandate. The UCA’s interventions are funded through government collection of certain fees that are ultimately recovered from electric and natural gas customers. The UCA does not recover its costs under Rule 022.

    Recommendation #11 from the Report of the Procedures and Processes Review Committee, adopted by the Commission, provides: “[p]enalize abuse or inefficient use of the interrogatory process through reduction of costs allowed to utilities and eligible interveners.”

    1. Should the Commission adopt a different model or approach to fund, in whole or in part, intervention in rates proceedings?

      This could include modified timing (e.g. advance approval of a capped intervention budget) or more broad changes to the funding of intervention entirely (e.g. yearly budgets for intervention based on historical costs or outcomes) and should be consistent with the Commission’s commitment to regulatory efficiency and minimizing red tape.

    2. How can the Commission ensure customers are adequately and fairly represented in rates proceedings while also ensuring the overall costs of these interventions (which will ultimately be borne by customers) are reasonable?

      For example, should the Commission adopt an approach whereby eligible parties can only claim a percentage (such as 50 per cent) of their costs of participation and require parties to fund the remainder of their costs through other means (e.g. shareholder cost, member dues, etc.)?

    3. Should the Commission introduce provisions that expressly authorize it to impose costs on a party to penalize the party for abuse or inefficient use of the Commission’s process?

    4. Should the Commission expand, reduce or alter the criteria in Section 11.2 of Rule 022 to incorporate the principles cited on page 46 of the Report of the Procedures and Processes Review Committee?

      For example, add ‘Submitted evidence at a cost disproportionate to the value of that evidence on the matters at issue.’

    5. What, if any, changes are required to Rule 022 to encourage and support greater use of negotiated settlements, including the mediated settlement approach?

    6. As part of its pilot of the mediated settlement approach, the Commission has paid the fees for the mediators. In future, who should pay for the costs of the mediator(s) and how should these be recovered?

    7. Are any changes required to the applicable deadline(s) for filing costs claim applications?
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  • Other issues or considerations

    about 2 months ago
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    Please identify and describe any other issues the Commission should consider as part of this review. 

    The Commission’s review of Rule 022 will consist of the following written and oral stakeholder consultation process.

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Page last updated: 27 September 2021, 11:38