PUBLIC UTILITIES - Operation of utility - Tariff - Damage to equipment or utility system

Law360 Canada (May 23, 2023, 9:17 AM EDT) -- Appeal by ATCO Electric Ltd. (ATCO) from a decision of the Alberta Utilities Commission (Commission) which denied ATCO the ability to recover some costs it suffered resulting from Fort McMurray wildfire, because Commission would not permit ATCO to include those costs in its prudently incurred costs and expenses when setting its rates. In 2016, a great deal of ATCO’s property was destroyed by wildfires. That destroyed equipment was removed and replaced as required. ATCO applied for a Z Factor adjustment to its tariff to recover the balance of the loss. The insurance available did not extend to the assets destroyed by the wildfires that were the subject of this appeal. ATCO applied for a Z Factor adjustment because of the costs related to the Fort McMurry wildfire. In the decision under appeal, the Commission did not allow ATCO to continue to recover from its customers the remaining net book value of the assets destroyed in the wildfire. The Commission removed from the calculation of tariffs expenses that had previously been accepted as having been prudently incurred. It concluded that the property losses from the Fort McMurray wildfires were extraordinary retirements. As a result, “the remaining net book value of the destroyed assets associated with the (Fort McMurray) wildfire must be for the account of ATCO shareholders”. ATCO was directed to remove the remaining net book value of those assets from the applicable mass property accounts. ATCO argued that under the mandatory language in the Electric Utilities Act, it was entitled to a “just and reasonable tariff” and the owner of an electric utility must be provided with a reasonable opportunity to recover prudently incurred costs. The issue on this appeal was whether the Commission correctly interpreted and applied the legal standards that governed in the circumstances....
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