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Decision 20761-D01-2015

EPCOR Distribution and Transmission Inc. 2015-2017 Transmission Facility Owner Tariff Costs Award December 22, 2015

The Alberta Utilities Commission

Decision 20761-D01-2015: EPCOR Distribution and Transmission Inc.

2015-2017 Transmission Facility Owner Tariff

Costs Award

Proceeding 20761

December 22, 2015

Published by

Alberta Utilities Commission

Fifth Avenue Place, Fourth Floor, 425 First Street S.W.

Calgary, Alberta

T2P 3L8

Telephone: 403-592-8845

Fax: 403-592-4406

Website: www.auc.ab.ca

http://efiling.auc.ab.ca/Proceeding3463/SitePages/ViewWIPDisposition.aspx?DispositionID=25749

http://www.auc.ab.ca/

Decision 20761-D01-2015 (December 22, 2015) • i

Contents

1 Introduction ........................................................................................................................... 1

2 Commission’s authority to award costs .............................................................................. 2

3 Commission findings – assessment of costs claimed .......................................................... 2 3.1 EPCOR Distribution & Transmission Inc. ..................................................................... 2

3.1.1 Fasken Martineau DuMoulin LLP .................................................................... 3 3.1.2 Dr. David Ryan and Ms. Donna White ............................................................. 4 3.1.3 Economic Research Associates Ltd. ................................................................. 4 3.1.4 Quanta Technology LLC .................................................................................. 5

3.1.5 Towers Watson ................................................................................................. 5 3.1.6 EDTI disbursements.......................................................................................... 6

3.2 Consumers’ Coalition of Alberta ................................................................................... 6 3.2.1 Wachowich & Company ................................................................................... 6 3.2.2 Regulatory Services Inc. ................................................................................... 7

4 GST ......................................................................................................................................... 8

5 Order ...................................................................................................................................... 9

Decision 20761-D01-2015 (December 22, 2015) • 1

Alberta Utilities Commission

Calgary, Alberta

EPCOR Distribution & Transmission Inc.

2015-2017 Transmission Facility Owner Tariff Decision 20761-D01-2015

Costs Award Proceeding 20761

1 Introduction

1. On November 25, 2014, EPCOR Distribution & Transmission Inc. (EDTI) filed a general

tariff application with the Alberta Utilities Commission for various approvals associated with its

transmission facility owner (TFO) function for the 2015, 2016 and 2017 test period (general

tariff application). The Commission assigned Proceeding 3539 and Application 1611027-1 to the

general tariff application. EDTI requested approval of its transmission rates, terms and

conditions of service and reserve and deferral accounts.

2. On November 27, 2014, the Commission issued a notice of application and requested

interested parties who wished to participate in the proceeding to submit a statement of intent to

participate (SIP) by December 11, 2014. The Commission received SIPs from the Alberta

Electric System Operator, AltaLink Management Ltd., ATCO Electric Ltd. - Transmission

Division, the Consumers’ Coalition of Alberta (CCA) and the Office of the Utilities Consumer

Advocate.

3. The Commission established a process schedule for dealing with the general tariff

application, which included the filing of information requests (IRs), IR responses, rebuttal

evidence, an oral hearing, argument and reply argument. The oral hearing was conducted from

June 10, 2015 to June 18, 2015.

4. The Commission considered the record with respect to the proceeding closed on July 23,

2015, the deadline date for filing reply argument.

5. In an August 20, 2015 letter, the CCA requested an extension to file its costs claim

application from August 22, 2015 to September 8, 2015.

6. On August 21, 2015, EDTI submitted its costs claim application to the Commission. The

Commission assigned Proceeding 20761 and Application 20761-A001 to the costs claim

application.

7. By way of an August 24, 2015 letter, the Commission granted the CCA’s request for an

extension and directed the CCA to file its costs claim application by September 8, 2015.

8. On September 8, 2015, the CCA submitted its costs claim application to the Commission.

In Proceeding 20761, the Commission assigned Application 20761-A002 to the CCA’s costs

claim application.

9. The Commission circulated a summary of costs claimed to interested parties on

September 11, 2015, and requested comments regarding the figures listed in the summary, or on

the merits of the costs claimed, by September 24, 2015.

2015-2017 Transmission Facility Owner Tariff Compliance Filing Costs Award EPCOR Distribution & Transmission Inc.

2 • Decision 20761-D01-2015 (December 22, 2015)

10. On September 24, 2015, EDTI submitted a revised costs claim application to reflect an

adjustment to the amounts claimed for a Towers Watson report, called the BENVAL report. The

amount was adjusted from 100 per cent to 50 per cent because the report related to both the

general tariff application and another proceeding before the Commission.1

11. A revised summary of the costs claimed and request for comments was circulated by the

Commission on September 25, 2015. The Commission requested comments regarding the figures

listed in the revised summary, or on the merits of the amended costs claimed on or before

October 8, 2015. No comments were received from parties.

12. The Commission considers the close of record for this costs claim proceeding to be

October 8, 2015.

13. On October 21, 2015, the Commission issued Decision 3539-D01-20152 with respect to

the general tariff application.

2 Commission’s authority to award costs

14. When assessing costs claims pursuant to Section 21 of the Alberta Utilities Commission

Act, SA 2007, c. A-37.2, the Commission applies AUC Rule 022: Rules on Intervener Costs in

Utility Rate Proceedings (Rule 022). Appendix A of Rule 022 also prescribes a Scale of Costs

applicable to all costs claimed.

15. In exercising its discretion to award costs, the Commission will, in accordance with

Section 11 of Rule 022, consider whether an eligible participant’s costs are reasonable and

directly and necessarily related to the proceeding; and whether the eligible participant acted

responsibly in the proceeding and contributed to a better understanding of the issues before the

Commission. The Commission will be mindful of a participant’s willingness to co-operate with

the Commission and other participants to promote an efficient and cost-effective proceeding.

16. As the costs of a utility proceeding are generally passed on to customers, it is the

Commission’s duty to ensure that the customers receive fair value for a party’s contribution. The

Commission only approves those costs that are reasonable and directly and necessarily related to

the party’s participation in the proceeding.

3 Commission findings – assessment of costs claimed

3.1 EPCOR Distribution & Transmission Inc.

17. EDTI submitted a costs claim in the total amount of $563,430.99. The costs claim

requested approval of the following costs:

$395,707.20 for Fasken Martineau DuMoulin LLP (Fasken Martineau), which

includes legal fees of $391,672.00 and disbursements of $4,035.20.

1 Proceeding 20633, Application 20633-A001, EPCOR Energy Alberta (GP) Inc.’s 2016-2017 Regulated Rate

Tariff Application. 2 Decision 3539-D01-2015: EPCOR Distribution & Transmission Inc. 2015-2017 Transmission Facility Owner

Tariff, Proceeding 3539, Application 1611027-1, October 21, 2015.



$9,735.00 for consulting services for Dr. David Ryan and Ms. Donna White, which

includes $8,600.00 in consulting fees, and disbursements of $1,135.00.

$34,358.93 for consulting services for Dr. Robert Evans of Economic Research

Associates Ltd., which includes consulting fees of $32,940.00 and disbursements of

$1,418.93.

$44,595.88 for Quanta Technology, which includes $35,702.18 in consulting fees and

disbursements of $8,893.70.

$69,805.73 for Towers Watson, which includes consulting fees of $55,592.50 and

disbursements of $14,213.23.

$9,228.25 for EDTI’s disbursements for transcript costs.

3.1.1 Fasken Martineau DuMoulin LLP

18. The costs claim for Fasken Martineau relates to 1,180.20 hours of legal services

performed by Mr. Jonathan Liteplo, Mr. Christopher Bystrom and Ms. Hannah Roskey. The

hours claimed consisted of 737.10 hours for preparation, 157.20 hours in attendance at the oral

hearing and 285.90 hours related to argument and reply argument. The duties performed by the

three legal counsel related to:

providing regulatory and legal advice relating to the general rate application.

assisting EDTI to ensure that legal and regulatory requirements of the application

were appropriately addressed.

providing strategy advice and assisting EDTI in evaluating potential approaches to

addressing legal issues with respect to the general rate application.

serving as a regulatory law resource for EDTI’s external consultants.

reviewing and providing advice on the narrative portions of the EDTI’s application

and attachments for EDTI to meet its evidentiary onus.

providing advice and assistance in the preparation of IR responses, IRs on

interveners’ evidence, and rebuttal evidence.

preparing for, and attendance at, the oral hearing.

preparing argument, reviewing interveners’ arguments, and preparing reply argument.

19. The Commission has assessed the costs claim for legal services provided by Fasken

Martineau and the costs claimed are in accordance with the Scale of Costs. Two senior counsel

charged 1,177.40 of the 1,180.20 hours claimed. They spent 734.30 hours for preparation, 157.20

hours for attendance and 285.90 hours for argument and reply argument. The Commission

considers the hours incurred are not commensurate with the tasks performed by counsel for

preparation, argument and reply argument. Although the Commission considers that one or more

external counsel may be required for review and revision of the general tariff application and the

appendices, the number of hours spent by senior counsel on these activities is significant, and for

certain activities was duplicative i.e. activities related to the review of the application, business

cases and information requests.



20. In light of these findings, the Commission finds that a reduction of 15 per cent is

warranted with respect to the legal fees claimed for Fasken Martineau. The Commission

approves legal fees in the total amount of $332,921.20.

21. The Commission has also reviewed the disbursements claimed for accommodation,

courier fees, photocopying and binding, and taxi charges and the fees claimed are in accordance

with the Scale of Costs. The Commission finds that the disbursements were reasonably incurred

by Fasken Martineau related to legal counsel’s involvement in the proceeding.

22. Accordingly, the Commission approves recovery of EDTI’s costs claim for legal services

in the total amount of $336,956.40, which is composed of $332,921.20 in legal fees and

$4,035.20 in disbursements.

3.1.2 Dr. David Ryan and Ms. Donna White

23. The costs claim includes fees, in the amount of $8,600.00, and relates to 43.00 hours of

consulting services by Dr. David Ryan and Ms. Donna White. The hours claimed include 28.00

hours for preparation of evidence, 13.00 hours for attendance at the oral hearing and two hours

for argument and reply argument. The consulting hours claimed are for work performed in

preparing evidence related to the 2015-2017 forecast cost escalators, which EDTI used in support

of its general tariff application. A disbursement of $1,135.00 was claimed for data acquisition

from The Conference Board of Canada.

24. The Commission has assessed the costs claim for consulting services provided by Dr.

Ryan and Ms. White and finds that the tasks described and hours claimed are reasonable, directly

and necessarily related to the proceeding and are in accordance with the Scale of Costs. The

Commission also approves the costs claim related to the disbursement for data acquisition from

The Conference Board of Canada as reasonable and in accordance with the Scale of Costs. The

disbursement was reasonably incurred in the preparation of evidence in support of EDTI’s

application.

25. Accordingly, the Commission approves recovery of costs for Dr. Ryan and Ms. White in

the total amount of $9,735.00, which is composed of $8,600.00 in consulting fees and $1,135.00

in disbursements.

3.1.3 Economic Research Associates Ltd.

26. The costs claimed for Economic Research Associates, in the amount of $32,940.00,

relates to 122.00 hours of consulting services performed by Dr. Robert Evans. The hours claimed

include 92.50 hours for review and preparation of information requests and preparation of

evidence for the hearing, 2.50 hours for attendance at the oral hearing and 27.00 hours for

drafting the argument and reply argument. Dr. Evans provided evidence on the estimated

forecast cost of new debt for EDTI’s transmission operations in the test years, provided evidence

on forward curve debt costs and made recommendations in respect of whether the forecast cost

of debt or forward curve should be used. Disbursements of $1,418.93 were claimed for accessing

Consensus Forecast survey data, accommodation, mileage, and photocopying.

27. The Commission has assessed the costs claim for consulting services performed by Dr.

Evans and finds that the tasks described and hours claimed are reasonable, directly and

necessarily related to the proceeding and are in accordance with the Scale of Costs. The

Commission also finds the disbursements claimed by Dr. Evans for accessing Consensus



Forecast survey data, accommodation, mileage, and photocopying to be reasonable for his

participation in the proceeding and the disbursements are in accordance with the Scale of Costs.

28. Accordingly, the Commission approves recovery of costs for Economic Research

Associates in the total amount of $34,358.93, which is composed of $32,940.00 in consultant

fees and $1,418.93 in disbursements.

3.1.4 Quanta Technology LLC

29. The costs claim for Quanta Technology LLC, in the amount of $35,702.18, relates to

141.65 hours of consulting services performed by Mr. Bill Snyder, Mr. John Spare, Mr. John

Widdifield, and Mr. Gerry Sheerin. Quanta had previously conducted a detailed engineering

review of EDTI’s transmission infrastructure assets and authored reports related to the review of

transmission infrastructure assets. The hours claimed include 95.65 hours for preparation, which

included responding to IRs on the previously authored reports and preparing for the oral hearing.

An additional 46.00 hours was claimed for attendance at the oral hearing.

30. The Commission has assessed the costs claim for consulting services provided by Quanta

Technology LLC and finds that the tasks described and hours claimed are reasonable, directly

and necessarily related to the proceeding and are in accordance with the Scale of Costs. The

Commission also finds the disbursements claimed are related to each of the individual

consultant’s involvement in the proceeding. The disbursements for accommodation, airfare,

parking, and taxi charges are reasonable and in accordance with the Scale of Costs.

31. Accordingly, the Commission approves recovery of costs for Quanta Technology LLC in

the total amount of $44,595.88, which is composed of $35,702.18 in consulting fees and

$8,893.70 in disbursements.

3.1.5 Towers Watson

32. The costs claimed for Towers Watson, in the amount of $55,592.50, is based on 331.25

hours for consulting services related to EDTI’s non-union salary escalators and total

compensation. The hours claimed included 323.25 hours for the preparation of two reports:

“Memorandum on Non-Union Salary Escalation Factors for 2015 and 2016,” and “2014

Competitive Compensation and Benefits Analysis.” The latter report was referred to as the total

compensation report. The tasks performed related to the two reports included analyzing data,

reviewing documents, reviewing the BENVAL analysis report, drafting correspondence and

attending to conference calls, drafting reports, reviewing the draft reports, preparing draft

responses to IRs and reviewing rebuttal evidence. An additional 8.00 hours was claimed for

attendance at the oral hearing.

33. The Commission has assessed the costs claim for consulting services performed by

Towers Watson and finds that the tasks described and hours claimed are reasonable, directly and

necessarily related to the proceeding and are in accordance with the Scale of Costs.

34. The costs claim for Towers Watson included disbursements in the amount of $14,213.23.

Of the amount claimed, $11,425.00 was claimed for the BENVAL report, which was used in

preparation of the total compensation report. EDTI’s costs claimed are 50 per cent of the

$22,850.00 total costs for the BENVAL report because the report was also used by EPCOR

Energy Alberta GP Inc. in Proceeding 20633. The remaining balance for disbursements includes

costs related to accommodation, airfare, Capital IQ™ data access charges, meals, and taxi

charges. The disbursements claimed are in accordance with the Scale of Costs. The



disbursements incurred relate to Towers Watson’s involvement in the proceeding and are

reasonable.

35. Accordingly, the Commission approves recovery of costs for Towers Watson in the total

amount of $69,805.73, which is composed of $55,592.50 in consulting fees, and $14,213.23 in

disbursements.

3.1.6 EDTI disbursements

36. EDTI claimed disbursements in the total amount of $9,228.25. The amounts claimed

consist of $5,733.25 for transcript services from AMICUS Reporting Group Ltd. and additional

transcript costs of $3,495.00 for Realtime Streaming and Realtime Connection.

37. In assessment of the costs claimed for transcript services from AMICUS Reporting

Group Ltd., the Commission finds the $5,733.25 in transcript costs were incurred related to

EDTI’s involvement in the oral hearing and these costs are in accordance with the Scale of Costs.

38. With respect to the disbursements for Realtime Streaming and Realtime Connection, the

Commission has determined that these costs are not reasonable and directly and necessarily

related to EDTI’s participation in the hearing. A live feed of the public hearing is available

through the Commission’s website in addition to the daily hearing transcript service available

through AMICUS Reporting Group, which was purchased by EDTI. The Commission considers

that the live feed available on the Commission’s website and the transcript services should have

provided adequate support for EDTI’s staff and the witness panel to respond to undertakings and

perform other activities related to the hearing. The Commission will, therefore, allow $5,733.25

for daily transcript fees but denies the additional disbursements of $3,495.00 for Realtime

Streaming and Realtime Connection.

39. Accordingly, the Commission approves EDTI’s disbursements for transcripts in the

amount of $5,733.25.

EDTI’s total costs awarded

40. In accordance with the above findings, the Commission approves recovery of costs for

EDTI in the total amount of $501,185.19, which includes $332,921.20 in legal fees, $132,834.68

in consulting fees and $35,429.31 in disbursements.

3.2 Consumers’ Coalition of Alberta

41. The CCA submitted a costs claim for recovery of costs paid in the total amount of

$149,422.40. The costs claim requested approval of the following legal and consulting costs:

$55,246.54 for Wachowich & Company, composed of legal fees of $46,882.50,

disbursements of $5,733.25 and GST of $2,630.79.

$94,175.86 for Regulatory Services Inc., composed of consulting fees of $88,280.00,

disbursements of $1,411.30 and GST of $4,484.56.

3.2.1 Wachowich & Company

42. The claim for Wachowich & Company relates to 133.95 hours of legal services

performed by Mr. James Wachowich. The hours claimed include:



79.70 hours for review of the general tariff application, review of information

requests, review of the CCA's evidence, drafting and review of correspondence and

preparation of the CCA’s motion for confidential treatment of certain information.

36.20 hours for attendance at the oral hearing.

18.05 hours for preparation of argument and reply argument.

43. Disbursements of $5,733.25 were claimed for transcript costs.

44. The Commission has assessed the costs claim of Wachowich & Company and finds that

the tasks described and hours claimed are reasonable, directly and necessarily related to the

proceeding and are in accordance with the Scale of Costs. The Commission also finds the

disbursements claimed for transcripts to be reasonable and in accordance with the Scale of Costs.

45. The Commission approves the costs claimed for Wachowich & Company in the total

amount of $55,246.54, which is composed of $46,882.50 in legal fees, disbursements of

$5,733.25 and GST of $2,630.79.

3.2.2 Regulatory Services Inc.

46. The claim for Regulatory Services Inc. relates to 345.00 hours for consulting services

provided by Mr. Raj Retnanandan and Mr. Jan Thygesen. The total hours claimed include:

209.25 hours for review of the general tariff application and preparation of information requests,

16.00 hours for attendance at the oral hearing and 119.75 hours for preparation of argument and

reply argument.

47. The costs claim for Mr. Retnanandan included: 169.75 hours for review of the general

tariff application, review of information requests, and review of responses to information

requests, 11.50 hours for attendance at the oral hearing and 62.25 hours for the preparation of

argument and reply argument. Mr. Retnanandan’s hours incurred relate to the following areas of

the application: the test period, the forecast assumptions, the accounting policies, the high level

metrics analysis, the change in capitalization of indirect labour, total compensation and Alberta

Electric System Operator direct assign projects.

48. The costs claim for Mr. Thygesen included: 39.50 hours for review of the general tariff

application and preparation of information requests, 4.50 hours for attendance at the oral hearing

and 57.50 hours for preparation of argument. Mr. Thygesen reviewed the debt rates and use of

the forward curve, corporate costs allocations and shared costs.

49. The Commission has assessed the costs claim for consulting services provided by

Regulatory Services Inc. and finds that the tasks described and hours claimed are reasonable,

directly and necessarily related to the proceeding and are in accordance with the Scale of Costs.

The Commission also finds Mr. Retnanandan’s disbursements claimed for accessing Conference

Board of Canada data, accommodation, airfare, and mileage to be reasonable for his

involvement in the hearing and the disbursements are in accordance with the Scale of Costs. The

amount claimed in the CCA’s “Form U3: Summary of Disbursements Claimed” miscalculated

the amounts of taxi charges supported by receipts. Accordingly, the Commission has adjusted the

costs to reflect the receipt amounts from $68.57 to $75.00, which increases the total

disbursements awarded from $1,411.30 to $1,417.73.



50. The Commission, therefore, approves recovery of costs for Regulatory Services Inc. in

the amount of $94,182.29, which is composed of $88,280.00 in consulting fees, $1,417.73 in

disbursements, and GST of $4,484.56.

51. Accordingly, the Commission approves recovery of the CCA’s costs claim in the total

amount of $149,428.83, which includes of $46,882.50 in legal fees, $88,280.00 in consulting

fees, $7,150.98 in disbursements and GST of $7,115.35.

4 GST

52. In accordance with the Commission’s treatment of GST on costs awards, EDTI is

required to pay only that portion of GST paid by interveners that may not be recoverable through

the GST credit mechanism. Eligible GST is approved by the Commission in the amount of

$7,115.35.

53. The Commission emphasizes that its treatment of the GST claim in no way relieves

participants or their consultants from their GST obligations pursuant to the Excise Tax Act, RSC

1985, c. E-15.



5 Order

54. It is hereby ordered that:

(1) EPCOR Distribution & Transmission Inc. shall pay its external costs in the amount of

$501,185.19.

(2) EPCOR Distribution & Transmission Inc. shall pay intervener costs to the

Consumers’ Coalition of Alberta in the amount of $149,428.83.

(3) EPCOR Distribution & Transmission Inc. shall record the approved costs in the

amount of $650,614.02 in its Hearing Costs Reserve Account.

Dated on December 22, 2015.

The Alberta Utilities Commission

(Original signed by)

Mark Kolesar

Vice-Chair


Kay Holgate

Commission Member


Kate Coolidge

Acting Commission Member

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