ENMAX Energy Corporation - auc.ab.ca · 43 Exhibit 25537-X0020, EEC-AUC-2020MAY22-005 and EEC-AUC-2020MAY22-006. 44 Exhibit 25537-X0020, EEC-AUC-2020MAY22-006(a)(iii). 45 These errors

Decision 25537-D01-2020

ENMAX Energy Corporation 2019-2022 Energy Price Setting Plan Compliance Filing July 7, 2020

Alberta Utilities Commission

Decision 25537-D01-2020

ENMAX Energy Corporation

2019-2022 Energy Price Setting Plan Compliance Filing

Proceeding 25537

July 7, 2020

Published by the:


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The Commission may, within 30 days of the date of this decision and without notice, correct

typographical, spelling and calculation errors and other similar types of errors and post the

corrected decision on its website.

Decision 25537-D01-2020 (July 7, 2020) i

Contents

1 Decision summary ................................................................................................................ 1

2 Introduction and background............................................................................................. 1

3 Non-routine and new issues ................................................................................................ 2 3.1 Auction monitoring (Commission Direction 2) ............................................................ 3

3.2 Auction development and hosting (Commission Direction 3) ..................................... 6 3.2.1 Comparison of EEC and NGX’s agreement with the EEA and NGX’s auction

development costs ............................................................................................. 7 3.2.1.1 Hosting fee ........................................................................................... 9

4 Routine issues ....................................................................................................................... 9 4.1 Backstop report (Commission Direction 5) .................................................................. 9

4.2 Errors and omissions (Commission Direction 9) ........................................................ 10 4.3 Commission directions 1, 4, 6, 7, 10 and 11 ............................................................... 12

5 Approval and implementation of EPSP ........................................................................... 14

6 Order ................................................................................................................................... 15

Appendix 1 – Proceeding participants ...................................................................................... 16

Appendix 2 – Summary of Commission directions .................................................................. 17

Decision 25537-D01-2020 (July 7, 2020) 1


Calgary, Alberta

ENMAX Energy Corporation Decision 25537-D01-2020

2019-2022 Energy Price Setting Plan Compliance Filing Proceeding 25537

1 Decision summary

1. In this decision, the Alberta Utilities Commission provides its findings on a compliance

filing from ENMAX Energy Corporation (EEC) for its 2019-2022 regulated rate option (RRO)

energy price setting plan (EPSP). The EPSP utilizes a competitive auction methodology for

procuring energy and for establishing the energy charge to be paid by its RRO customers. For the

reasons set out in this decision, the Commission has approved the 2019-2022 EPSP but requires

EEC to file revisions to its EPSP, with all schedules and appendixes to the EPSP, as a post-

disposition document on this proceeding subject to the directions and findings in this decision.

2 Introduction and background

2. On July 15, 2019, EEC filed an application with the Commission requesting approval of

its 2019-2022 EPSP. On March 19, 2020, the Commission issued Decision 24721-D01-2020,1

which determined that the proposed auction design satisfies the requirements set out in the

Regulated Rate Option Regulation, but it found that certain components of EEC’s 2019-2022

EPSP would require a compliance filing. Eleven directions were issued in the decision, with nine

directions relating to EEC’s compliance filing.

3. Direction 8 solely relates to future EPSP applications and is not included in the

Commission’s findings in this decision.

4. On May 19, 2020, EEC filed its 2019-2022 RRO EPSP compliance filing application.

Because EEC submitted that its application was mechanical in nature and addressed the

Commission’s directions from Decision 24721-D01-2020, it requested approval of the

compliance filing application through a streamlined process for compliance filings in accordance

with Bulletin 2016-18.2

5. The Commission issued a notice of application on April 28, 2020, inviting parties who

wished to intervene in this proceeding to submit a statement of intent to participate (SIP) to the

Commission by the participation closing deadline of May 8, 2020. The Commission received a

SIP from the Office of the Utilities Consumer Advocate (UCA).

6. After the receipt of the UCA’s SIP, the Commission determined the application could be

processed through a streamlined process in accordance with Bulletin 2016-18 that ultimately

included a round of information requests (IRs), argument and reply argument.

1 Decision 24721-D01-2020: ENMAX Energy Corporation, 2019-2022 Energy Price Setting Plan,

Proceeding 24721, March 19, 2020. 2 Bulletin 2016-18, Rates proceedings process improvements, October 18, 2016.

2019-2022 Energy Price Setting Plan Compliance Filing ENMAX Energy Corporation

Decision 25537-D01-2020 (July 7, 2020) 2

7. On June 2, 2020, the UCA filed a letter indicating that it would not be submitting

argument and reply argument. On June 8, 2020, EEC filed its argument in order to complete the

record. The Commission considers that the close of record for this proceeding is June 8, 2020.

8. In reaching the determinations set out within this decision, the Commission has

considered all relevant public and confidential materials comprising the record of this

proceeding. Where general information was included in the confidential filings that did not

disclose confidential information on EEC’s procurement protocol or other components of the

EPSP, the Commission has referred to this general information in this decision.

9. References in this decision to specific parts of this record are intended to assist the reader

in understanding the Commission’s reasoning relating to a particular matter and should not be

taken as an indication that the Commission did not consider all relevant portions of the public

and confidential record with respect to that matter.

3 Non-routine and new issues

10. Non-routine elements in EEC’s 2019-2022 EPSP compliance filing include a URICA

Energy Management Corp.’s (URICA) proposal for auction monitoring that would be undertaken

for EEC, ICE NGX Canada Inc. (NGX) auction software and platform development costs, and

NGX auction hosting service fees.3 In this decision the Commission has addressed the non-

routine items and new items raised by EEC in the subsections that follow. The Commission

addresses EEC’s compliance with the routine directions in Section 4 of this decision, and other

matters related to the EPSP approval in Section 5.

11. With respect to auction monitoring, EEC retained URICA to prepare a reporting proposal

in response to a Commission direction in Decision 24721-D01-20204 to provide auction

performance statistics. Under the proposal, URICA would monitor the descending clock auctions

and prepare monthly reports. These monthly reports would include factual information, including

an auction review, a market review and additional commentary.5 URICA proposed to offer

auction monitoring services for a fee of $3,750 per month during the term of EEC’s 2019-2022

EPSP related to the descending clock auctions.6 The fee was estimated using an average of three

auctions per delivery month, based on an average of five hours per auction and a rate of $250 per

hour for analysis. In the event that supplemental auctions are required, URICA stated that it

would not increase its monthly fee, which will remain fixed for the term of the EPSP.

12. EEC submitted that, during the original EPSP proceeding, Proceeding 24721, it was

engaged in discussions with NGX regarding the development of auction software, the scope of

work, the differences between EPCOR Energy Alberta GP Inc.’s (EEA) NGX auctions and

EEC’s proposed auctions, the extent to which NGX can leverage the work it has already done for

the EEA auctions, and the resulting costs.7 EEC added that its procurement process is similar to

3 Exhibit 25537-X0017, AUC process schedule, page 1. 4 Decision 24721-D01-2020, paragraph 155. 5 Exhibit 25537-X0025, EEC argument, paragraph 5. 6 Exhibit 25537-X0007, Appendix 6 – URICA Proposal – Descending Clock Auction Monitoring, page 1. 7 Proceeding 24721, Exhibit 24721-X0043, Responses to UCA IRs, EEC-UCA-2019SEP12-007(a)-(b).


Decision 25537-D01-2020 (July 7, 2020) 3

EEA’s, and it expects the development of its auction software will involve certain

customizations, such as accommodating for a supplemental round of auctions.8

13. For NGX auction software and platform development costs, EEC stated that it entered

into a Memorandum of Understanding (MOU) agreement with NGX on November 28, 2019, and

a Professional Services Agreement (PSA) with NGX on April 7, 2020.9 Generally, the MOU and

PSA between NGX and EEC relate to the development and operation of the auction for EEC’s

EPSP by NGX and the fees to be paid to NGX for such services. As part of the NGX costs, EEC

requested approval of a one-time development charge from NGX of $500,000, subject to any

adjustment costs associated with any changes requested by either EEC or NGX, and approval of

$12,500 per month for auction hosting fees, both to be recovered through the RRO energy

charge.10

14. EEC proposes that the one-time auction development charge of $500,000 be recovered

over 12 months, but emphasized that any changes to the EPSP resulting in modifications to the

auction software would result in additional charges.11

15. EEC added that the NGX auction software will be ready for user acceptance testing by

May 29, 2020, and EEC will complete testing of the software by June 26, 2020.12 If testing is

successful, EEC confirmed that the implementation date of the auction market and clearing

services will be July 24, 2020.

3.1 Auction monitoring (Commission Direction 2)

16. In paragraph 155 of Decision 24721-D01-2020, the Commission directed EEC to submit

a proposal for an auction monitoring report and process. EEC retained URICA to prepare a

proposal, which EEC included as Appendix 6 to its application. EEC added that this direction

appears to align with an IR from the UCA13 and that URICA’s proposal was accordingly guided

by the information requested in that IR. The cost of URICA providing this service is $3,750 per

month, which EEC proposes to recover through its energy charges.14

17. Appendix 6 stated that the $3,750 per month charged by URICA is based on a rate of

$250 per hour, and an average of three auctions per month at an average of five hours per

auction. The auction monitoring report is proposed to provide the following information:

(a) Counterparty overview

(i) Number of confirmed suppliers for the auction

(ii) Number of confirmed bidders for the auction

(iii) Resulting transactions by counterparty and review of supply ratios by

counterparty, for the existing auction, the delivery month to date, the year to

day and the EPSP program to date

8 Exhibit 24721-X0043, Responses to UCA IRs, EEC-UCA-2019SEP12-007(a)-(b). 9 The Commission granted the MOU and PSA confidential treatment on June 9, 2020. 10 Exhibit 25537-X0001, application, paragraph 5. 11 Exhibit 25537-X0001, application, paragraphs 19-20. 12 Exhibit 25537-X0001, application, paragraph 21. 13 Exhibit 24721-X0031, EEC-UCA-2019SEP12-016. 14 Exhibit 25537-X0001, application, paragraph 16.


Decision 25537-D01-2020 (July 7, 2020) 4

(iv) Market position of bidders

(b) Auction results and performance

(i) Auction results by round

(ii) Supplemental phase

(iii) Results of competitive assessments determinations for the existing auction,

the delivery month and the EPSP to date

(iv) Auction execution – number of rounds, auction length, price change in each

round, prices realized, supplemental phase pricing review

(v) Review of auction performance for the EPSP to date

(vi) Additional participant commentary or issues both to date and on current

auction

(c) Market review and commentary

(i) Relevant notable news items prior to or on the day of the auction

(ii) Review of existing market conditions potentially affecting the delivery

month

(iii) Underlying market conditions15

18. When asked why it is necessary for URICA to observe the auctions, URICA replied that

active oversight would allow it to view real-time bidding behaviour, patterns and/or submission

timing and would give necessary insight to allow URICA to provide valuable translations to the

Commission, the Consumers’ Coalition of Alberta and the UCA.16

19. In response to a Commission IR, URICA stated that the hourly commitment is divided

into approximately 20 per cent for counterparty overview, 60 per cent for auction results and

performance, and 20 per cent for market review and commentary. EEC added that its staff could

provide certain basic details such as the number of confirmed suppliers and bidders, and auction

results, but cannot provide market or auction performance analysis.17

20. EEC also stated that it will inform confirmed suppliers, as part of the initial auction

information package, that a market monitoring report will be provided to the Commission on a

confidential basis.18

21. In response to a Commission IR, URICA stated that it is difficult to envision a scenario in

which URICA reporting on the transactions would discourage supplier participation in the

auction. URICA does not trade in the Alberta market and only represents clients in open request

for quotation (RFQ) competitions. Furthermore, URICA is bound by confidentiality agreements

15 Exhibit 25537-X0007, URICA proposal, PDF pages 2-3. 16 Exhibit 25537-X0020, EEC-AUC-2020MAY22-001(h). 17 Exhibit 25537-X0020, EEC-AUC-2020MAY22-001(a)-(b). 18 Exhibit 25537-X0020, EEC-AUC-2020MAY22-001(e).


Decision 25537-D01-2020 (July 7, 2020) 5

and the report will be provided to the Commission on a confidential basis.19 With respect to the

market review and commentary, URICA stated that an understanding of the market, trends and

developments would provide context and potential explanation of auction results. It added that

reporting of the auction results alone would not provide the same understanding.20

22. Further, EEC commented that it does not consider URICA’s involvement in the backstop

mechanism to be a conflict of interest with the auction monitoring services, and added that the

auction monitoring would complement the backstop monitoring services.21

23. In its application, EEC stated that it will file URICA’s report with its monthly RRO filing

to the Commission and requested that any confidential treatment granted for the first report be

extended to all future monthly RRO filings.22

Commission findings

24. The Commission directed EEC to submit a proposal for an auction monitoring report and

process in the compliance filing. The Commission expressed the view that tracking auction

performance statistics would be helpful for auction monitoring purposes. In compliance with

Direction 2, EEC responded by providing the URICA proposal that includes numerous services

and items related to EEC’s auctions. This proposal is at a monthly cost of $3,750 per month that

would be treated as an energy charge and it would attract both a risk margin and a return margin.

25. EEC stated that Direction 2 appears to align with an IR from the UCA. In that IR, the

UCA asked EEC to provide the following information for each EEA descending clock auction,

to date:

i. the number of Confirmed Suppliers

ii. the number of Bidders

iii. the number of Bidders with a financial position and the number of Bidders with a

physical position

iv. whether the auction failed the Competitiveness Assessments

v. whether the auction was cancelled; and

vi. whether the auction was a Contingency Auction23

26. Given the expected costs for the auction monitoring process proposed by EEC through

the use of URICA, the Commission finds that the services go beyond what is reasonably

necessary to provide auction monitoring that would be beneficial to the Commission and rate

payers. This is particularly apparent for certain URICA services, such as URICA’s participant

commentary on a current auction or commentary on notable news items prior to or on the day of

the auction. The Commission considers the UCA’s list of items for auction monitoring, with the

exception of item (iii) to be reasonable, but notes that EEC’s proposal for analyses and expertise

that would be provided by URICA goes beyond this list.

19 Exhibit 25537-X0020, EEC-AUC-2020MAY22-001(f). 20 Exhibit 25537-X0020, EEC-AUC-2020MAY22-001(i). 21 Exhibit 25537-X0020, EEC-AUC-2020MAY22-001(g). 22 Exhibit 25537-X0001, application, paragraph 16. 23 Proceeding 24721, Exhibit 24721-X0043, EEC-UCA-2019SEP12-016, PDF page 41.


Decision 25537-D01-2020 (July 7, 2020) 6

27. In addition, while the Commission accepts EEC’s submission that it cannot provide as

much analysis as would be performed by URICA, the Commission does not consider that the

additional services warrant the high monthly cost. A sufficient level of auction monitoring and

process information should be available directly from EEC. Unless there are problems with

auction competitiveness that would become evident through the auction competitiveness

assessment(s) conducted for the auctions, most of the information in the UCA’s IR posed to EEC

should be readily available from EEC itself. For these reasons, the Commission denies EEC’s

proposal for URICA to provide auction monitoring services and its request to include the

$3,750 per month cost for URICA services.

28. Upon further consideration, the Commission concludes that it is not necessary for EEC to

report its auction statistics each month. The Commission considers that it is sufficient for EEC to

report on auction statistics only for delivery months where there are concerns with the

competitiveness of any auctions, including but not limited to, any auctions that fail the

competitiveness assessments. Any reports to the Commission must be filed in conjunction with

that delivery month’s energy charge filing and must include the following: the number of

confirmed suppliers and bidders; competitive assessment results; the results of the specific

auctions being reported; and whether there were any cancelled or contingency auctions for the

delivery month. The information is intended to inform the Commission on the status of the

operation of the auctions and energy procurement under the 2019-2022 EPSP and is not intended

to disturb any reporting that may be required by the Market Surveillance administrator under its

mandate and duties specified in the Alberta Utilities Commission Act.

29. In accordance with the Commission’s denial for external auction monitoring and

processes, the Commission directs EEC to remove the auction monitoring process and report,

and the auction monitoring fee from its EPSP and illustrative energy charge model, and to

remove any references in all schedules or appendices to the EPSP.

30. The Commission will not require EEC to report the number of bidders with a physical or

financial position as recommended by the UCA because this level of detail is unnecessary for

general reporting purposes; however, the Commission may require additional information from

EEC upon request.

3.2 Auction development and hosting (Commission Direction 3)

31. In paragraph 179 of Decision 24721-D01-2020, the Commission directed EEC to provide

an estimate of the auction development and deployment costs and lead time in a compliance

filing. In response to the Commission’s direction, EEC negotiated a one-time charge of $500,000

with NGX for developing the auction software to be recovered over 12 months. This one-time

development charge does not include the cost of any future modifications to the auction

software. The specific terms of this charge are included in the PSA filed on the confidential

record.

32. In Proceeding 24721, EEC submitted that the procurement process in its proposed EPSP

is substantially similar to what is currently used by EEA, with minor modifications to

accommodate differences between EEC’s and EEA’s RRO businesses and is also reflective of


Decision 25537-D01-2020 (July 7, 2020) 7

the learnings from EEA’s EPSP.24 EEC described the differences of its auctions and the hosting

by NGX to be:

• hosting three Auctions instead of four;

• procuring 40% of its RRO Obligation as Full-Load Product instead of 50%;

• if required, holding a Supplemental Phase after the closing Round to gather Exit

Prices for Retained Withdrawal Units;

• setting Monthly Targets for Peak and Full-Load Products based on the Target for Flat

Products for the Month instead of the Target for Peak Products for the Month; and

• retaining the flexibility to purchase one extra Peak Block in auctions where there

would be less than two Peak Blocks procured.25

33. EEC submitted that while its procurement process is similar to EEA, EEC expects that

the development of its auction software will involve certain customizations.26

3.2.1 Comparison of EEC and NGX’s agreement with the EEA and NGX’s auction

development costs

34. In an IR to EEC, the Commission referred to an EEA post-disposition document filed on

July 20, 2018, in connection with Proceeding 22357 regarding EEA’s 2018-2021 EPSP, where

EEA indicated that NGX’s cost to develop the software for the descending clock auctions was

capped at a maximum of $250,000.27

35. Related to its auction development costs, EEC submitted these costs are external costs

that are prudently incurred because NGX is a business independent from EEC.28 EEC added that

it is not able to speculate on the total development costs charged to EEA because there is no

publicly available information that would indicate how much NGX charged EEA for total

development costs. However, EEC was able to solicit the following response from NGX:29

NGX has new ownership since the negotiation of the EPCOR contract. The EPCOR

contract was structured differently and was originally quoted to EPCOR in 2016. As this

was an existing multi-year partnership, NGX agreed to absorb a significant amount of the

costs of development of both the auction platform and the clearing functionality required

to support it.

The price charged by NGX to ENMAX Energy reflects the passage of time, differences

in the EPSPs, the effort required by NGX, as well as the additional technical resources

and support, and world-class cybersecurity that NGX is now able to provide as a result of

its acquisition by ICE.

24 Proceeding 24721, Exhibit 24721-X0002, Appendix 1, paragraph 16. 25 Proceeding 24721, Exhibit 24721-X0035, EEC-AUC-2019SEP12-007(a)-(b). 26 Proceeding 24721, Exhibit 24721-X0043, EEC responses to UCA IRs, EEC-UCA-2019SEP12-007(a)-(b). 27 Proceeding 22357, EEA post-disposition documentation, 2018-07-20 EPSP Implementation Update Letter,

paragraph 6. 28 Exhibit 25537-X0029, EEC-AUC-2020MAY22-004(a). 29 Exhibit 25537-X0029, EEC-AUC-2020MAY22-004(a).


Decision 25537-D01-2020 (July 7, 2020) 8

36. EEC submitted that it approached and treated commercial negotiations with NGX as it

would with any other third-party company, with intent to obtain the best possible value,30

notwithstanding it is of the view that “NGX is the best placed contractor to deliver a descending

clock auction platform that meets its specifications.”31

Commission findings

37. Decision 24721-D01-2020 was issued on March 19, 2020. In the timeline of events

leading up to final negotiations with NGX, as disclosed in the current proceeding, EEC

submitted that it was in contact with NGX on June 28, 2019, in order for EEC to provide NGX

with a copy of the auction protocols developed by National Economic Research Associates.32

On September 16, 2019, EEC indicated that NGX provided EEC with a quote containing initial

scope and schedule. However, EEC regarded this as preliminary information intended to start

commercial negotiations and did not disclose these preliminary costs on the record of the original

proceeding.33

38. In EEC’s 2019-2022 EPSP application in Proceeding 24721, EEC assured the

Commission in its application that its descending clock auction is substantially similar to EEA’s

auction.34

39. Other than the software customizations to accommodate for the differences in RRO

volumes between EEC and EEA, EEC had not alerted the Commission that the cost would vary

materially from the EEA precedent, other than the changes in NGX ownership and the passage of

time.

40. The Commission views that the $500,000 is significantly different than a similar auction

development cost charged to EEA and views that EEC could have submitted, on the record, a

budgetary quote from NGX at the time EEC proposed a move to the descending clock auction in

the original proceeding. In Proceeding 24721, the UCA posed an IR to EEC for a cost estimate

for the auction development, but as of October 10, 2019, EEC indicated that it was still in

discussions with NGX about scope and costs.35 The Commission considers that the budgetary

quote on the descending clock auction development costs should have been available for review

to the Commission and interveners early in the process for more full and proper consideration.

Accordingly, the Commission directs EEC in all future EPSP application for contracts for third-

party service for an itemized budgetary quote for services and any other corollary services to be

included with its original EPSP applications rather than waiting to provide this information in the

compliance filing. The cost put forward by EEC in this compliance filing represents a material

deviation from the historical costs that NGX has charged for auction development costs. The

Commission notes the lack of support, itemization or derivation of costs for the $500,000 quote,

and is not satisfied with the reasons provided by EEC and NGX for the quantum of costs. For

these reasons, the Commission denies EEC’s request for $500,000 in auction development costs

30 Exhibit 25537-X0029, EEC-AUC-2020MAY22-004(h). 31 Exhibit 25537-X0029, EEC-AUC-2020MAY22-004(d). 32 Exhibit 25537-X0029, EEC-AUC-2020MAY22-004(d). 33 Exhibit 25537-X0029, EEC-AUC-2020MAY22-004(d). 34 Proceeding 24721, Exhibit 24721-X0002, 2019-07-15-EEC Application ENMAX 2019-2022 EPSP Narrative,

paragraph 13. 35 Proceeding 24721, Exhibit 24721-X0043, 2019-10-10-EEC Responses to UCA IRs, EEC-UCA-2019SEP12-

007(a)-(b).


Decision 25537-D01-2020 (July 7, 2020) 9

to be recovered through the EPSP. Instead, the Commission, in its discretion, grants $250,000 to

EEC, to be recovered over 12 months.

41. In the event future modifications to NGX’s auction software are required to support

amendments to EEC’s auction platform or design, the Commission reminds EEC that any

changes in costs for inclusion in rates must be approved by the Commission before they can be

included in rates, and any expected increases to NGX auction software costs must be reviewed

for recovery only on a prospective basis under the EPSP.36

3.2.1.1 Hosting fee

42. EEC submitted that the $150,000 annual fee charged by NGX includes continuous

support and cybersecurity, and maintenance and updates of the descending clock auction and

clearing services.37 EEC added that these are necessary tasks to operate an auction platform and

clearing services in an increasingly complex cyber environment.

43. In part, NGX referred to the new ownership structure and the value of technical support

as reasons why an annual fee is charged, but it did not offer information as to whether this

hosting fee was charged to EEA.38

Commission findings

44. The Commission recognizes NGX is operating under a different environment than when

it negotiated service terms with EEA in 2016. As NGX’s service terms with EEA are unique

compared to its service terms with EEC, the Commission will only examine the relevancy of

hosting services for EEC’s descending clock auction software.

45. The Commission finds there is merit in NGX’s explanation to provide continuous

technical support and cybersecurity enhancements in order to host the descending clock auctions,

and the Commission accepts that there will be reasonable costs each year to maintain

cybersecurity. Further, an itemized description of these services was provided in Schedule B of

the PSA and provides transparency into the services provided.39 Accordingly, the Commission

grants the $150,000 annual hosting fee for the term of EEC’s 2019-2022 EPSP, to be collected

monthly on a pro-rata basis.

4 Routine issues

4.1 Backstop report (Commission Direction 5)

46. In paragraph 218 of Decision 24721-D01-2020, the Commission directed EEC to update

its EPSP to indicate that a backstop report will be provided to the Commission for any month in

which the backstop mechanism is triggered.

47. EEC stated that it amended its EPSP to indicate that a backstop report will be provided,

detailing the circumstances leading up to a backstop being triggered, the tasks undertaken by

URICA to administer and obtain backstop supply, the details of the backstop procurement and

36 See sections 3(2) and 6(2) of the Regulated Rate Option Regulation. 37 Exhibit 25537-X0029, EEC-AUC-2020MAY22-004(c). 38 Exhibit 25537-X0029, EEC-AUC-2020MAY22-004(c). 39 Exhibit 25537-X0031-C, PSA, PDF page 47.


Decision 25537-D01-2020 (July 7, 2020) 10

any other details that are relevant to backstop supply. However, in response to a Commission IR,

EEC confirmed that its proposed EPSP does not expressly require EEC to file the backstop

report with the Commission. EEC suggested adding the following wording to Section E(a)(x) of

Appendix B.1 to the EPSP:

Upon completion of the RFQ and confirmation execution, URICA will provide a

summary report of the entire process of each instance of backstop initiation to ENMAX

Energy detailing all aspects of the RFQ and will also provide digital versions of

necessary audit tracks such as the verbal execution recording. ENMAX Energy will

include this report, on a confidential basis, with its monthly energy charge submission to

the AUC for the month where the backstop mechanism is triggered. The summary

backstop report produced for each backstop RFQ will include: … [emphasis in original]

48. The Commission agrees with EEC’s proposed wording and directs EEC to update

Section E(a)(x) of Appendix B.1, as noted above, as part of its revised EPSP to be filed on the

record of this proceeding as a post-disposition document. With that change made, the

Commission finds that EEC has complied with this direction.

4.2 Errors and omissions (Commission Direction 9)

49. In paragraph 229 of Decision 24721-D01-2020, the Commission directed EEC to include

in the compliance filing a consolidated list of all errors and omissions in the EPSP from

Proceeding 24721 that were corrected in the compliance filing. EEC included the following

response:

32. The identified errors and omissions in the EPSP were identified and addressed in

Exhibit 24721-X0003.01 as part of the responses to the Round 1 IRs. One

additional error was corrected in response to the Round 2 IRs and filed as

Exhibit 24721-X0003.02.

33. For ease of reference, and in compliance with this direction, ENMAX Energy has

combined the two blacklined documents in this application to show all the

corrected errors and omissions in Appendix 2. This document contains comments

that note which IR each change was in response to. Any changes that do not have

comments were not made in response to a specific Commission IR but were further

minor corrections made by ENMAX Energy at the time of the Round 1 IR

responses and where filed as a part of Exhibit 24721-X0003.01.

34. Except as described in paragraph 35 below, the only changes or updates to the

EPSP since Exhibit 24721-X0003.02 have been made in this compliance filing to

address the Commission’s directions from the Decision and are blacklined in

Appendix 3. ENMAX Energy confirms that there are no additional corrections of

errors or omissions made to the EPSP as part of this compliance filing, and that no

additional corrections of errors or omissions were made after Exhibit 24721-

X0003.02.

35. An updated version of the Illustrative Energy Charge Model was also filed in

response to Round 1 and Round 2 IRs. These documents were filed as Exhibit

24721-X0006.01 and Exhibit 24721-X0006.02.

36. While preparing this application, ENMAX Energy found an error in the Illustrative

Energy Charge Model. Values were hardcoded where formulas should have existed


Decision 25537-D01-2020 (July 7, 2020) 11

and a check-value cell for backstop volumes was updated for correctness. Changes

have been made to tab “6 Backstop” and are blacklined in Appendix 5.40

50. During its review of the EPSP41 and the illustrative energy charge model42 that were

submitted by EEC as part of the compliance filing, the Commission noted some additional

corrections that might be required to these two documents. As part of the interrogatory process,

the Commission listed these possible corrections and asked EEC to agree or disagree that the

corrections were required. EEC agreed that the corrections were required,43 with the exception of

one proposed correction to the illustrative energy charge model.44

Commission findings

51. The Commission reviewed the errors and omissions related to the EPSP from Proceeding

2472145 and all errors and omissions were accounted for and corrected in EEC’s compliance

filing. The Commission, therefore, finds that EEC has complied with the Commission’s direction

from paragraph 229 of Decision 24721-D01-2020 regarding errors and omissions.

52. The Commission reviewed the corrections incorporated by EEC in the illustrative energy

charge model filed in this proceeding,46 as noted by EEC in paragraph 36 of the compliance

filing application,47 and the Commission approves these corrections.

53. The Commission suggested in IR EEC-AUC-2020MAY22-006(a)(i) and EEC-AUC-

2020MAY22-006(a)(ii) that two corrections were possibly needed to the illustrative energy

charge model that was filed as part of the compliance filing. EEC confirmed that these two

corrections should be made.48 The correction in part (a)(i) of the IR results in adding the term

“AMF” to a formula in the illustrative energy charge model, and the correction in part (a)(ii)

results in changing an incorrect reference in the illustrative energy charge model that resulted

from adding the term “AMF” to Schedule F of the EPSP. Because the Commission has denied

EEC’s proposed AMF and has previously directed in this decision that EEC remove the AMF

from the 2019-2022 EPSP, the corrections suggested by the Commission in parts (a)(i) and (a)(ii)

of the IR are no longer necessary.

54. The Commission suggested in IR EEC-AUC-2020MAY22-006(a)(iii) that another

correction was possibly required to the illustrative energy charge model. EEC disagreed that this

correction was required. The Commission reviewed EEC’s disagreement49 and considers that the

explanation provided by EEC is logical. Therefore, the correction suggested in part (a)(iii) of the

IR is not required.

55. Based on EEC’s agreement with the corrections to the EPSP submitted as part of the

compliance filing application, the Commission directs EEC to make the following corrections as

40 Exhibit 25537-X0001, application, paragraphs 32-36. 41 Exhibit 25537-X0002. 42 Exhibit 25537-X0005. 43 Exhibit 25537-X0020, EEC-AUC-2020MAY22-005 and EEC-AUC-2020MAY22-006. 44 Exhibit 25537-X0020, EEC-AUC-2020MAY22-006(a)(iii). 45 These errors and omissions were contained in the blacklined document that EEC filed as Appendix 2 of the

compliance filing, Exhibit 25537-X0003. 46 Exhibit 25537-X0005. 47 Exhibit 25537-X0001, application, paragraph 36. 48 Exhibit 25537-X0020, EEC-AUC-2020MAY22-006(a). 49 Exhibit 25537-X0020, EEC-AUC-2020MAY22-006(a)(iii).


Decision 25537-D01-2020 (July 7, 2020) 12

part of its revised EPSP to be filed on the record of this proceeding as a post-disposition

document:

(a) Schedule A

(i) Page 3 of 10: place “Letter of Credit (LOC)” in the correct place

alphabetically.

(ii) Page 4 of 10: remove “hedge” from the description of “Energy Price Setting

Plan or EPSP.”

(iii) Page 7 of 10: delete the term “PILOT Regulation” and its associated

definition.

(b) Schedule E

(i) Page 5 of 29: correct formatting for Section 2(c)(ii) and (iii).

(ii) Page 5 of 29: correct formatting for Section 2(c)(iii) and 2(d).

(iii) Page 9 of 29: correct formatting for Section 3(ii) and (iii).

(iv) Page 10 of 29: correct formatting for Section 3(b)(i) and (ii).

(v) Page 10 of 29: correct formatting for Section 3(b)(ii) and (c).

(vi) Page 10 of 29: correct formatting for Section 3(c) and (d).

(c) Schedule F, Section B(7): add the word “and” after the word “Month” in the

description.

(d) Appendix B.1, Section A(b): change “form” to “from” in the description.

(e) Appendix C, Section 4: change “section 4” to “Section 5.”

4.3 Commission directions 1, 4, 6, 7, 10 and 11

56. In paragraph 145 of Decision 24721-D01-2020, the Commission made the following

direction:

145. In the scenario where EEC needs to procure an additional peak product block for

a delivery month, the Commission directs EEC to exclude the procurement cost of the

additional block in the base energy charge and clearly convey this in its monthly filings.

The Commission views that this additional peak block should not be used in the

calculation of the monthly energy charge because the monthly energy charge should be

based on the price of the full-load product. The Commission also views that the

additional peak product block will be treated the same as the other peak blocks and will

be used to calculate the CRC [commodity risk compensation]: the procurement of the

flexible peak hedging block should not affect the application of the CRC to 60 per cent of

EEC’s RRO load obligation, but rather netted against the CRC gains and losses for EEC.

57. EEC stated that it edited Schedule F of the EPSP and the auction tab of its illustrative

energy charge model to reflect this direction, which is Direction 1. EEC also added that in cases

where it needs to procure the additional peak block, it will clearly convey in its monthly rate


Decision 25537-D01-2020 (July 7, 2020) 13

filing that it has been excluded.50 The Commission has reviewed Schedule F and the illustrative

energy charge model, and confirms that EEC has updated its illustrative energy charge model

such that the cost of the additional peak block will not be included in the energy charge. The

Commission finds that, for the purposes of this compliance filing, EEC has complied with this

direction but also notes that this direction is an ongoing direction that applies for the term of the

EPSP.

58. In paragraph 190 of Decision 24721-D01-2020, Direction 4, the Commission directed

EEC to disclose the base energy charge and CRC components separately in its energy charge

model. EEC edited its illustrative energy charge model to comply with this direction. The

Commission confirms that tab 1, Calculations, of EEC’s illustrative energy charge model now

shows the base energy charge and CRC separately. Accordingly, the Commission finds that EEC

has complied with this direction.


EEC to amend its EPSP such that the backstop RFQ is sent to all confirmed backstop suppliers.

EEC stated that it made the necessary changes to its EPSP to comply with this direction.51 The

Commission reviewed EEC’s EPSP and confirms that Section E(a)(v) of Appendix B.1 now

requires URICA to distribute the RFQ to all confirmed backstop suppliers. Accordingly, the

Commission finds that EEC has complied with this direction.


EEC to include in Schedule 2 of its Rule 00552 filings the applicable pre-tax reasonable return

rates in dollars per megawatt hour. EEC stated that it will include this information in its future

Rule 005 filing. For the purposes of this application, the Commission reviewed EEC’s 2019

Rule 005 filing and confirms that EEC included its pre-tax reasonable return in dollars per

megawatt hour. EEC has complied with this direction but the Commission notes that this

direction is ongoing.


EEC to submit a motion for confidential treatment of information in accordance with

Bulletin 2020-05.53 In Direction 11 at paragraph 233, the Commission stated that it would be

efficient if all of EEC’s confidential documents from Proceeding 24721 were migrated to the

compliance filing record and directed EEC to provide a list of confidential documents filed in

Proceeding 24721. EEC applied for and was granted an extension of the confidential ruling from

Proceeding 24721. EEC also filed copies of its confidential documents from that proceeding on

the confidential record of the current proceeding. Accordingly, the Commission finds that EEC

has complied with these two directions.

62. EEC will be submitting a confidential version of its EPSP as part of its post-disposition

filing on this proceeding. Because these documents will be filed as a post-disposition filing, the

Commission’s confidentiality rulings of August 19, 2019,54 in Proceeding 24721; April 21,

50 Exhibit 25537-X0001, application, paragraph 12. 51 Exhibit 25537-X0001, application, paragraph 28. 52 Rule 005: Annual Reporting Requirements of Financial and Operational Results. 53 Bulletin 2020-05, Amendments to AUC Rule 001 to facilitate exchange of confidential documents,

February 10, 2020. 54 Proceeding 24721, Exhibit 24721-X0017, AUC letter - Confidentiality ruling, August 19, 2019.


Decision 25537-D01-2020 (July 7, 2020) 14

2020,55 in Proceeding 25515; and June 9, 2020,56 in the current proceeding are still applicable.

Because the post-disposition filing from EEC is due by July 31, 2020, the Commission would

not expect that individuals from the UCA would need an extension to the filing of their statutory

declarations to review the post-disposition filing. As mentioned in Section 5 of this decision, the

Commission does not anticipate that further process will be required once the post-disposition

document is filed, absent any errors or corrections that may need to be addressed.

63. However, if the UCA considers that certain individuals will require leave to delay the

filing of their statutory declarations, the UCA should first contact EEC regarding the confidential

documents to be retained by each individual. The UCA shall then file a letter with the

Commission providing a list of individuals and the documents retained by each of them, as well

as a request for an extension to the 30-day time period for destruction of confidential documents

and the filing of statutory declarations.57

5 Approval and implementation of EPSP

64. The Commission considers the directions to EEC that require it to file a revised EPSP,

with all schedules and appendixes to the EPSP as a post-disposition document on this

proceeding, will not affect the essential functioning of the EPSP and implementation of the

auction. Rather, certain components of EEC’s 2019-2022 EPSP require revision to conform with

the Commission’s findings and the associated disallowance of certain EPSP costs, as directed in

this decision. Consequently, nothing precludes EEC from immediately commencing work with

NGX to implement the auction and the Commission approves EEC to start implementing the

auctions.

65. If EEC files its revised EPSP in accordance with the Commission’s directions in this

decision and consistent with Decision 24721-D01-2020, and absent any errors in the EPSP and

any other corresponding schedules, no further process will be required.

66. The Commission notes EEC’s request for this compliance filing to be considered by way

of a streamlined process and EEC’s further request to have the Commission issue its decision by

July 10, 2020. The Commission is actively undertaking efforts to enhance regulatory efficiency

within its application processing and aims to complete its application reviews, and issue

decisions in a timely and fair manner. However, there is an onus on applicants to ensure that

their applications are free from errors and complete. In the case of EEC’s 2019-2022 EPSP, the

Commission already issued Decision 24721-D01-2020 directing EEC to correct a number of

errors in its EPSP. Despite this direction, EEC’s EPSP filed in the compliance filing contained

several errors, which delayed processing time. Further, the Commission notes that EEC

submitted its request for confidential treatment of the two agreements with NGX at the time of

filing its IR responses. Given that EEC had requested a decision be rendered on this application

55 Disposition 25515-D01-2020: EEC request for continuation of confidentiality, Proceeding 25515, April 21,

2020. 56 Exhibit 25537-X0026, AUC letter – Confidentiality ruling, June 9, 2020. 57 Confidentiality undertaking form (Form RP5), Rule 001: Rules of Practice, Required form for a recipient of

confidential information under Section 28 of Rule 001, Section 7. Section 7 sets out the requirements to

expunge or destroy confidential documents and requires that a statutory declaration be executed and filed

“within 30 days of the expiration of any appeal or review period of the Commission’s decision in respect of the

original proceeding, or any Commission decision in respect of any associated compliance application

proceeding, unless otherwise directed by the Commission.…”


Decision 25537-D01-2020 (July 7, 2020) 15

by July 10, 2020, it would have been optimal if EEC had filed its confidentiality motion

immediately or soon after the Commission issued its IRs, thereby expediting the processing of

the application rather than waiting to file that request with its responses to IRs. Earlier notice or

filing of motions is preferred, and this guidance is intended to assist EEC and interveners in their

applications and interlocutory filings in future RRO proceedings.

6 Order

67. It is hereby ordered that:

(1) The Commission approves ENMAX Energy Corporation’s 2019-2022 energy

price setting plan, subject to the filing of a revised version of the energy price

setting plan as a post-disposition document in this proceeding in accordance with

the findings and directions in this decision.

(2) ENMAX Energy Corporation shall file a revised energy price setting plan that

reflects the findings, directions and conclusions in this decision, as a post-

disposition document in this proceeding, by no later than July 31, 2020.

Dated on July 7, 2020.


(original signed by)

Carolyn Dahl Rees

Chair

(original signed by)

Tracee Collins

Commission Member


Decision 25537-D01-2020 (July 7, 2020) 16

Appendix 1 – Proceeding participants

Name of organization (abbreviation) Company name of counsel or representative

ENMAX Energy Corporation (EEC)

Office of the Utilities Consumer Advocate (UCA)

Reynolds, Mirth, Richards & Farmer LLP

Alberta Utilities Commission Commission panel C. Dahl Rees, Chair T. Collins, Commission Member Commission staff

A. Sabo (Commission counsel) E. Chu C. Arnot D. Mitchell


Decision 25537-D01-2020 (July 7, 2020) 17

Appendix 2 – Summary of Commission directions

This section is provided for the convenience of readers. In the event of any difference between

the directions in this section and those in the main body of the decision, the wording in the main

body of the decision shall prevail.

1. In accordance with the Commission’s denial for external auction monitoring and

processes, the Commission directs EEC to remove the auction monitoring process and

report, and the auction monitoring fee from its EPSP and illustrative energy charge

model, and to remove any references in all schedules or appendices to the EPSP.

.......................................................................................................................... paragraph 29

2. The Commission views that the $500,000 is significantly different than a similar auction

development cost charged to EEA and views that EEC could have submitted, on the

record, a budgetary quote from NGX at the time EEC proposed a move to the descending

clock auction in the original proceeding. In Proceeding 24721, the UCA posed an IR to

EEC for a cost estimate for the auction development, but as of October 10, 2019, EEC

indicated that it was still in discussions with NGX about scope and costs. The

Commission considers that the budgetary quote on the descending clock auction

development costs should have been available for review to the Commission and

interveners early in the process for more full and proper consideration. Accordingly, the

Commission directs EEC in all future EPSP application for contracts for third-party

service for an itemized budgetary quote for services and any other corollary services to be

included with its original EPSP applications rather than waiting to provide this

information in the compliance filing. The cost put forward by EEC in this compliance

filing represents a material deviation from the historical costs that NGX has charged for

auction development costs. The Commission notes the lack of support, itemization or

derivation of costs for the $500,000 quote, and is not satisfied with the reasons provided

by EEC and NGX for the quantum of costs. For these reasons, the Commission denies

EEC’s request for $500,000 in auction development costs to be recovered through the

EPSP. Instead, the Commission, in its discretion, grants $250,000 to EEC to be recovered

over 12 months. ............................................................................................... paragraph 40

3. The Commission agrees with EEC’s proposed wording and directs EEC to update

Section E(a)(x) of Appendix B.1, as noted above, as part of its revised EPSP to be filed

on the record of this proceeding as a post-disposition document. With that change made,

the Commission finds that EEC has complied with this direction. ................. paragraph 48

4. Based on EEC’s agreement with the corrections to the EPSP submitted as part of the

compliance filing application, the Commission directs EEC to make the following

corrections as part of its revised EPSP to be filed on the record of this proceeding as a

post-disposition document:

(a) Schedule A

(i) Page 3 of 10: place “Letter of Credit (LOC)” in the correct place

alphabetically.

(ii) Page 4 of 10: remove “hedge” from the description of “Energy Price Setting

Plan or EPSP.”


Decision 25537-D01-2020 (July 7, 2020) 18

(iii) Page 7 of 10: delete the term “PILOT Regulation” and its associated

definition.

(b) Schedule E

(i) Page 5 of 29: correct formatting for Section 2(c)(ii) and (iii).

(ii) Page 5 of 29: correct formatting for Section 2(c)(iii) and 2(d).

(iii) Page 9 of 29: correct formatting for Section 3(ii) and (iii).

(iv) Page 10 of 29: correct formatting for Section 3(b)(i) and (ii).

(v) Page 10 of 29: correct formatting for Section 3(b)(ii) and (c).

(vi) Page 10 of 29: correct formatting for Section 3(c) and (d).

(c) Schedule F, Section B(7): add the word “and” after the word “Month” in the

description.

(d) Appendix B.1, Section A(b): change “form” to “from” in the description.

(e) Appendix C, Section 4: change “section 4” to “Section 5.” .................. paragraph 55

Documents

ENMAX Energy Corporation - auc.ab.ca · 43 Exhibit 25537-X0020, EEC-AUC-2020MAY22-005 and EEC-AUC-2020MAY22-006. 44 Exhibit 25537-X0020, EEC-AUC-2020MAY22-006(a)(iii). 45 These errors